We dare you to listen to attorney/public speaker/startup advisor Lorine Pendleton talk and not be inspired. Named by Marie Claire as one of the “50 Most Connected Women in America” and by Black Enterprise as one of “20 Angel Investors You Should Know,” she is committed to changing the economic landscape of this country, one woman and one person of color at a time.
An advocate and graduate of the Pipeline Angels program, a training program for women angel investors and angel group, as well as Portfolia, a new investment platform for women investors that unlocks untapped female wealth and invests in the companies we as women want to see in the marketplace, Lorine Pendleton also serves as the NY Chair of TIGER 21, a peer-to-peer learning network for high-net-worth individuals. She was a guest judge on “Queen Boss,” the BET/Centric TV business pitch series.
We think you’ll agree that it isn’t at all surprising that Pendleton was recently featured in Worth Magazine as one of 16 female financial powerhouses.
Pendleton took a minute to speak with us about the moment that sparked her angel investing, what she looks for in a startup, and all the work she’s doing to open doors for people of color and for women.
Your work as an entertainment lawyer and successful start-up investor is impressive, to say the least. If you had to boil your success down to a handful of key choices you’ve made or principles you’ve stuck to, what would they be?
First I want to say, I’m still a work in progress. I’ve done a lot but I’m nowhere near where I want to be.
I believe there is definitely luck in life but I actually define luck in life as preparation meeting opportunity. From a very young age, my parents always taught me, and my brothers, that we had to work really hard, that because of our skin color, we would be discriminated against. So we had to be over-prepared because people weren’t going to expect that from us or might have some misconceptions or biases. So we always had to knock it out of the park.
I have had opportunities come about for a number of reasons, because of the school I went to or people in my network. But if I wasn’t qualified or prepared, it wouldn’t have worked out. Or maybe I would have gotten that opportunity but I would’ve failed. If you want to get into VC or you want to get into angel investing or you want to start a company or business, really learn about what it takes to get to that point and what you need to do to make that happen. That’s reading, studying people who are doing this, who you can emulate and learn from.
And networking is so important. Networking should never be a one-way street. The most effective networking is to give without expecting anything. So if you can help someone, you do it out of the goodness of your heart. And I do believe that the universe will bring it back to you somehow.
We’re so inspired by your commitment to angel investing. Who inspired you to get to a place where you can give back so generously?
The playing field isn’t level. My parents always taught us, these are the cards you were dealt and either you can wallow in your self-pity or you find a way to navigate it.
Five and a half years ago, I was watching CNN and Soledad O’Brien came on. Her show was called Black in America. [That particular episode] was about this accelerator program for African Americans and Latinos. It was a group of eight who were starting companies. They were sent to Silicon Valley for two months, they were mentored, they met with investors, they met with entrepreneurs, and they all had a tech type of product. Soledad O’Brien had recited this stat: less than one percent of VC money goes to African American startups.
Looking at these entrepreneurs who were incredibly bright, I realized it was a strong possibility that none of them would be getting funded and thought it was appalling. I said at that moment, I want to do something that changes that. I wanted to level the playing field and close the funding gap. I knew what I needed to do but I didn’t know how to do it.
A few weeks later, in my inbox, I opened up The Daily Worth, and there was an interview with the Pipeline Angels founder. Pipeline Angels is a boot camp for women to teach them how to be angel investors. I applied. I got in. That launched my angel investing career.
As the NY chair of TIGER 21 (a peer-to-peer learning and membership group for high-net-worth individuals), what sorts of things are you doing to increase membership among people of color and women?
TIGER 21 reached out to me to join their team, maybe because of my profile in angel investing. I asked them how many members were women, how many members were diverse and they said: we’re not where we should be. I said well, that’s really important for me.
There are women who are high net worth, and in fact, every year, more and more women are becoming wealthier. There’s going to be a mass shift in the wealth in this country — actually, right now 51% of the wealth in this country is controlled by women and that number is projected to increase to 66% by 2026.
So I reached out to my network of women and people of color. I call them my circle of influencers. And they are themselves high net worth or they work with people who are high net worth. I’ve had lunches where they come in and we have a TIGER 21 member talk about how this organization has helped and benefited them. So they go out and they’re brand ambassadors. TIGER 21 is not a household name in some circles and it’s not its intent to be that because are highly selective and confidential. But we want more people knowing about it especially women and diverse individuals.
I’m also targeting women’s organizations and organizations for people of color and educating them on what we do. And then I’ve been working with some of our members who are women and are diverse and asking them to think about people in their network who could join.
Think about it, it’s like a dinner party. I wouldn’t want to go to a dinner where everybody in the room looks like me. I find dinner parties interesting if you have people from a diversity of industries, backgrounds, gender, all of that.
As an investor, what draws you to a company and what makes a company most enticing to invest in?
First of all, what is this company doing, what problem are they solving? You know, is it a vitamin or a painkiller? I think if it’s a big enough pain point, people are going to buy it. The second thing is a solution. So, how is their product or service going to address that? What are they doing that’s different from what someone else is doing? Is it a better product, not as expensive, easy to use? And then the size of the addressable market: if it’s a small market, a narrow market, that’s not a business that’s going to scale from an investor’s perspective.
Being an entrepreneur and launching a company is not an easy thing. Most people think you’re crazy. You’re creating something out of nothing. I have to feel that you have what it takes, you’re going to be resilient. There are going to be times where you’re going to want to quit, but are you going to pick yourself up and make this happen?
But to me, one of the most important things is the team. There’s an expression that I’m the jockey, not the horse. You can have an OK idea but if you have a standout team, they can make that OK idea into something really big. You can have a great idea but if the team can’t execute on it, it doesn’t matter how good the idea is.
You’ve noted that the main hurdle for women and diverse-led businesses is access to capital. How is the landscape for women and people of color changing because of investors like you? And what else needs to change?
The National Women’s Business Council looked at women in the United States in terms of the revenue they generate. Last year, they generated 1.6 trillion dollars in revenue. So if women-led companies were a country and if you looked at that revenue being the gross domestic product, they would be the fifth largest country in the world. They’d be just behind Germany, but ahead of France, the UK, and Italy.
But of the companies in the United States that are women-led, only 3% make over a million dollars a year. So that needs to improve. I’ve been working with this company, Million Dollar Women. Julia Pimsleur runs these boot camps for entrepreneurs to help them scale their companies really quickly. Her goal is to get a million women making over a million in revenue. I’m working with her on a non-profit arm called Women Who Dare because she’s getting a lot of women of color wanting to take her course and they may have some funding challenges in even just signing up for the course.
71% of new companies are owned by women of color, but they’re the ones getting the least amount of funding. On average, black women’s businesses’ annual revenue is $36,000, versus white women, which is over $200,000. Why is that? It’s because of the type of businesses they’re going into. They tend to go into personal care businesses, nail salons, hair salons, elder care, childcare. Those aren’t scalable businesses. For scalable businesses, they are at a disadvantage because they can’t get the funding to grow. Only 0.2% of venture money when to black women. If women of color were given more access to capital this would create a benefit to society. These companies would employ more people, they would decrease unemployment, they would generate more taxes and more money would flow in our economy.
Pipeline Angels’ Angel Investing Boot Camp sounds fascinating. When you did it a few years back, what area did you find you grew the most in?
Certainly, the financial part was the missing link. We had speakers, our mentors, teaching us how to evaluate a company, how you value a company, how you perform due diligence. When you do due diligence, you look underneath the hood. If it’s a technology company, do they own the IP? You do kind of a background check on the founders, you get references, talk to their customers, talk to people they used to work with, look at the market, analyze the market, look at their business model, look at their finances. So they taught us how to do that and we had mentors who helped us along the way.
Many of us want to help change the financial landscape for women and diverse-led businesses and some of us might even have some capital to share but don’t know where to start. Do you have any tips?
I’m an investment partner in Portfolia. All the people who give money are angel investors and then we have lead investors who make the investment decisions. The cool thing about Portfolia is that the people who invest are all women. We invest in companies that we want to see in the marketplace, that align with our values, that we can give the insight to help them grow. Each fund is up to 99 investors. It’s highly collaborative and it’s highly educational. Every month we have companies present and have pitch sessions and the lead investors will ask questions.
It’s a great way to diversify your portfolio because we invest in about 6-10 companies per fund. Whereas when I started out investing, I was investing in one company. This way I have exposure to a lot more companies. And really what they say for an angel investor is you have to invest in at least 20 companies if you’re going to get a return on your investment.
Just for fun, complete this sentence: “Other than my phone, I never leave home without ___.”
My sense of purpose.
I want to do whatever I can do to change the world. If I can help entrepreneurs, specifically people of color and women build their own house, they never have to worry about a glass ceiling. I see that as the new women’s movement and the new civil rights movement, coming from an economic place. For a long time, women and people of color, particularly black and Latino people, have not had a seat at the table. And so I think having economic viability will change things.