Tag: investing
Baltimore Investor Only Backs Women-Run Companies

Baltimore Investor Only Backs Women-Run Companies

By Carrie Wells, The Baltimore Sun (TNS)

BALTIMORE — Kelly Keenan Trumpbour believes women should put their money where their mouths are.

The 37-year-old invests her money solely in companies run by women, driven by a philosophy of female empowerment and a desire to shake up the traditional white male corporate culture. She founded See Jane Invest two years ago to help educate other women on how to become investors.

Trumpbour, who sits on the board of directors for Baltimore Angels, an early-stage investment group, has invested in four women-run companies so far and plans on backing a few more this year. She typically invests about $10,000 at a time.

“If you had more women running companies, imagine how the economic landscape might change,” Trumpbour said. “In order to have a more diverse corporate world, I believe in backing companies with money.”

As someone who invests only in female-run firms, Trumpbour doesn’t have a lot of company. She and others involved in venture and angel investing in Baltimore said she is the only one in the area who follows that particular strategy.

The startup and venture capital scene in the U.S. has long had a reputation of being male-dominated. Women partners in venture capital firms have even declined from 10 percent in 1999 to 6 percent last year, according to the Diana Project at Babson College. The same study found that only 2.7 percent of venture capital-funded companies had a woman CEO.

“There’s been so many different things being said about the investment world being a lot of guys,” said Greg Cangialosi, CEO of event ticket seller MissionTix and co-chair of the Baltimore Angels. “I think there is a real need for more women to get involved. Women entrepreneurs may see things differently, or I’ve spoken to several women entrepreneurs who felt intimidated or had a hard time getting a meeting” with an investor.

Trumpbour came to Baltimore from Detroit about 15 years ago, working for various political and nonprofit groups, including serving time on the board of the Women Under Forty Political Action Committee, a group that financially supports younger female political candidates, and co-founding Running Start, a nonprofit focused on encouraging young women to run for office.

In 2010, she and her husband, Jason Trumpbour, decided they wanted to start a family. But her attempts to get pregnant came with health complications that landed her in the hospital. After a couple of years of trying, she came to terms with switching gears.

“I was in this very frustrating place, where I thought I was about to become a parent, and that didn’t happen,” she said.

She kicked the tires on the notion of giving money to charitable foundations, as many of her peers did. But she said it wasn’t as appealing as investing in women-owned companies, so she started familiarizing herself with the city’s startup scene and founded See Jane Invest. Her background in raising money for female candidates ended up guiding her decision.

“I’m so tired of just giving my money away,” she said. “I think there’s a lot that can happen here in the startup scene, but if I’m going to put my money and time into it, there should be something in it for me, and that should be a profit.”

The first company Trumpbour put money into was Allovue, a Baltimore-based educational software firm that has raised about $1.7 million in seed funding and is conducting pilot programs in schools in Baltimore and New Haven, Conn. The company’s software helps school districts track both spending and outcomes.

Allovue founder Jess Gartner, a friend of Trumpbour’s, shares her philosophy on the need for more diverse investors.

“It’s not an accident that most of the capital is in the hands of white men and most of the money invested is with white men,” Gartner said. “The world is not a meritocracy, and I think Silicon Valley has been trying to push a meritocracy narrative for a long time, and that’s not the way the world works.”

Gartner said Trumpbour came prepared and asked thoughtful questions about the fledgling company’s strategy. Now, Trumpbour helps promote the company in conversations with other investors or in investment articles she writes.

“Investing is a long and exhausting process, and Kelly was a very thoughtful and respectful investor, both of my time and me as a person,” Gartner said. “When you’re trying to start as a company, your time is the most valuable thing you have, and there are some investors who take advantage of that.”

Trumpbour also invested in Hip Chicks Farms, a California-based company that makes frozen chicken products without artificial ingredients.

Serafina Palandech, Hip Chick’s president, said finding investors as a woman can still be rife with sexism. After months of meetings with a man who seemed interested in her company, she took a plane to Los Angeles to meet up and finalize the investment documents. But when she arrived, she discovered he was more interested in her than her company.

“When I got down there, he had rented a hotel room for us,” she said. “This was months of my time, and he had no intention of investing. It’s out of control.”

Palandech met Trumpbour later at a meeting of the Pipeline Fellowship angel investing boot camp for women in Washington, D.C., last year.

“My experience of going out there and presenting to investors is that it can be a stretch and a challenge for traditional angel groups to understand what we’re trying to do ethically, morally, and also from a business standpoint what the chance of success is,” Palandech said. “There’s a lot of investors that don’t get it. Kelly immediately understood it and got it.”

Since then, Palandech said, she’s attracted more investors, including two who are male, and is distributing her product on the East Coast. She said she appreciated having a female investor, especially given her earlier encounter.

“I think that before I met Kelly and Pipeline, I was beginning to doubt my ability,” Palandech said. “I think she gave me confidence to move forward in a fledgling company such as ours.”

Photo: Connie Martinez cuts a client’s hair at her business, Connie’s Hair Salon, in Fort Collins, Colo., on October 22, 2014. (Theo Stroomer/MCT)

Sterling Raskie: Your Year’s Money Checklist

Sterling Raskie: Your Year’s Money Checklist

By Sterling Raskie, AdviceIQ (TNS)

As winter fades, it’s time to seriously gear up to make your financial goals for 2015 real. They range from the simple and quick to the complex and long term. Here’s a checklist to get you started and keep you going.

PAY YOURSELF FIRST
This concept, often pontificated, is relatively easy to understand and simple to implement. When you get paid, have a certain portion of your earnings (we recommend at least 10 percent) automatically deducted from your check and deposited into your 401(k), 403(b), 457, or other retirement plan at your work.

Contribute enough of a percentage to get your employer match. Your employer doesn’t offer a plan? Set up and automatically save to an individual retirement account. If you’re ambitious, you can actually contribute to both.

PAY DOWN DEBT
Want a guaranteed rate of return? Simply pay off your debt early and you save yourself that interest rate tacked onto the balance, rather than paying it to the lender.

The type of debt matters. Some also argue whether to pay off a mortgage early; that choice is yours. Consider paying off consumer debt such as credit card balances and student and car loans as soon as possible.

GIVE YOURSELF A RAISE
This probably isn’t too hard to do, especially since organizing documentation for tax time looms.

Go through your 2014 receipts and credit card and bank statements and look for purchases that were entirely discretionary that you didn’t need to buy. See which you may be able to eliminate for this year, such as excessively dining out or picking up an expensive coffee every day, to name just two.

Use the excess cash to fund your retirement plan and or pay down debt.

CHECK INSURANCE
Prior to institution of the Affordable Care Act (aka Obamacare), which was billed as seeking to expand coverage and improve affordability of health care coverage, nearly 32 million underinsured persons younger than 65 were in households spending a high share of income on medical care _ as many as a third of residents in states like Idaho, Florida, Nevada, New Mexico and Texas. Nationally, more than half of people with low incomes and 20 percent of those with middle incomes were either underinsured or uninsured in recent years.

Some of these folks likely just can’t afford insurance; others are probably just negligent about their policies. Check your health care as well as your auto, homeowners, life and other insurance to make sure you remain properly covered or even carry excess coverage such an umbrella policy.

RESEARCH WAYS TO MAKE COVERAGE MORE AFFORDABLE
Many times you can raise the deductibles on your auto and home policies or, if you drive an older car, remove comprehensive (which protects you from such mishaps as theft, natural disasters and vandalism) or collision to reduce premiums.

Do you qualify for more life insurance through work? Consider getting as much coverage from your employer as you can, including other available types of policies such as disability (in case you become unable to work). It’s cheap and generally requires no underwriting.

GET A FINANCIAL CHECKUP
Talk with a professional regarding your finances and see if he or she recommends ideas.

INVEST IN YOURSELF
Read at least one personal finance book every few months, and build from there. Keep yourself informed and prepared to ask your advisor _ not to mention yourself — about your financial situation.

About the Writer
Sterling Raskie is an independent, fee-only financial planner at Blankenship Financial Planning in New Berlin, Ill.
Raskie writes for AdviceIQ, which delivers quality personal finance articles by both financial advisors and AdviceIQ editors.

(c) 2015 AdviceIQ, Distributed by Tribune Content Agency, LLC

Image: Nick Ares, Flickr

Private Equity’s Private Math

Private Equity’s Private Math

To the casual observer, the investment returns recently announced by the California pension system might seem like cause for celebration. The state’s investments in firms that buy private companies generated a 20 percent return in 2014.

California’s $30 billion worth of private equity investments did not come cheap, incurring almost $440 million worth of annual management fees paid to financial firms. But the double-digit gains helped the system generate some of the best overall pension returns in the nation — positive news for taxpayers and for state workers who rely on the system in retirement.

Across the United States, similarly robust returns have proven key elements in the Wall Street sales pitch that has persuaded state and city pension overseers to entrust vast sums of money to private equity managers. The private equity industry has successfully portrayed itself as no less than a savior for underfunded pension systems. By one estimate, $260 billion of public money is now under the management of these firms.

But as Congress now considers reducing regulatory scrutiny of private equity firms, one problem complicates the narrative: A lot of the gains the private equity industry purports to have achieved are of the on-paper-only variety. Far from cash in the bank, they are instead estimates of the value of assets that have yet to be sold. Not only that, the estimates are largely self-reported by the private equity firms themselves — and new research suggests that the firms may be embellishing those estimates.

That is the conclusion of a paper by investment banker Jeffrey Hooke and George Washington University researchers. They essentially created a portfolio of publicly traded companies that they say closely resembles the kinds of privately owned companies that private equity investors buy. They then weighted their portfolio’s returns to reflect the same level of debt that private equity firms typically impose on their portfolio companies.

The researchers argue that their portfolio should show roughly the same returns as the private equity industry. Yet the private equity industry’s stated returns were noticeably less volatile than the publicly traded companies’ returns. The researchers assert that this suggests the private equity industry uses its latitude to self-value its own portfolios in order to make its returns look “smoother” than they actually are.

“Investors may have been unfairly induced into placing monies into these investment vehicles,” they conclude.

None of this should be particularly surprising. After all, allowing Wall Street firms to self-value their investments is akin to a homeowner being invited to make up her home value estimate when applying for credit. And unlike a professional home appraisal, private equity firms’ estimates are difficult to verify — as the California Public Employees Retirement System notes on its website: “There are no generally accepted standards, practices or policies for reporting private equity valuations.”

Considering the new research, the situation would seem to warrant more objective scrutiny of the investment industry. Yet, that’s not the direction of today’s legislative debate. House Republicans have criticized increased government oversight of private equity firms and lately have been pushing legislation to exempt those firms from SEC oversight that could more seriously scrutinize self-reported valuations.

Of course, if this were just an issue affecting rich investors, then perhaps it would be an example of the wealthy bilking the wealthy. But this is about billions of dollars’ worth of public money. If the books are indeed being cooked, then untold numbers of public employees could see their retirement savings evaporate, and taxpayers could be on the hook for some of the losses.

As the Enron debacle and the 2008 financial crisis proved, failing to strengthen oversight in the present could set the stage for a disaster in the not-so-distant future.

David Sirota is a senior writer at the International Business Times and the best-selling author of the books Hostile Takeover, The Uprising, and Back to Our Future. Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

Photo: Sebastian Alvarez via Flickr