Angel investors, or people who use their own money to finance fledgling companies, are pretty important in helping startups get off the ground. Like venture capital, the sector has long been dominated by men. But that may be changing. According to a report from the Center for Venture Research at the University of New Hampshire, in 2022 nearly 40% of angel investors were women, up from only 22% a decade earlier.

So what’s behind the change? According to journalist Liza Boyd, who wrote about the growing number of women angels for Fast Company, there may be a number of factors. “There’s so many more people in Silicon Valley who have money,” said Boyd. “And the amount of money you need in order to make these investments has shrunk enormously.”

“Marketplace” host Kai Ryssdal spoke with Boyd about how the trend is changing the way angel networks work and affecting who gets funded. The following is an edited transcript of their conversation.

Kai Ryssdal: So people have heard, I’m sure, the phrase “venture capital.” They might be vaguely familiar with seed rounds and how that works. This thing called angel investing, though, what is it? And where does it fit in that sort of pantheon of venture capital?

Liza Boyd: So it’s evolved a little bit. Back in the ’70s and ’80s, when there was this transition from mainframe to personal computing, that was the money that came after friends and family, who threw a few dollars at you, and enabled you to get the traction so that venture capitalists who were looking for performance would start to invest in you. More recently, venture capitalists have started investing earlier, but angels still play a huge role in helping small companies get off the ground and start producing results.

Ryssdal: I do not overstate things, I think, when I say that venture capital writ large and angel investing, to some degree, has been mostly white, mostly guys, and mostly not young white guys.

Boyd: That’s true.

Ryssdal: And now, as your article points out, that is changing a lot.

Boyd: Yeah, so the main barriers to entry historically were networks. This was hugely network-driven, it was based on who you knew. And also money. And so you know, in the ’70s, ’80s, ’90s and even the early 2000s, the people who had the money were the people who had been involved in exits, and those were overwhelmingly men.

Ryssdal: We should say “exits” are, for those who aren’t familiar?

Boyd: If your company [has an initial public stock offering] or if you have an acquisition. And those result in the founders, as well as top executives, earning lots and lots of money. And those people were overwhelmingly men, so they were the ones who then could turn around and start investing in smaller startups. But there’s been a range of changes in the last 10 to 15 years. First, there’s so many more people in Silicon Valley who have money because the salaries are inflated. There’s so many people who have been in companies that IPOed, so they have the ability to participate. And then the last thing is that the amount of money you need in order to make these investments has shrunk enormously. I mean, it used to be you had to be willing to write a check for $100,000 or $250,000, and importantly be willing to lose that money. And now, oftentimes, you can get in just for 10,000 or $5,000.

Ryssdal: And also, you know, to the point of these millennial women, they are more connected without the traditional networks, right? I mean, there’s social media, there’s all kinds of other ways for them to form their own communities.

Boyd: In the last 20 years, you’ve seen an explosion of women participating in high ranks at various startups. They have money, they have their own professional networks and they just don’t need to go through the traditional gatekeepers. And candidly, many of them don’t want to go through the traditional gatekeepers for a whole bunch of reasons which we could talk about.

Ryssdal: Well, let’s just briefly talk about why they want to do it sort of on their own.

Boyd: Yeah. And just to be clear, it’s taking all kinds of forms. I mean, there’s coed groups that are emerging on their own. There’s women-only groups. So you have this progression of this group of men in the ’70s and ’80s, and then in the ’90s, you had more formal angel syndicates, but the tone in the culture in those syndicates was very sharp-elbowed. It was very much, if you come in here, you better know what you’re doing. The thing that’s changed in a lot of the groups that are emerging today is they’re much more human, they’re more vulnerable, they’re more accepting of people who don’t know what they’re doing. And it just feels more welcoming and accessible to a lot of people who don’t know this in and out already.

Ryssdal: And that has to change what and who gets funded, right?

Boyd: Absolutely. I mean, a lot of investing in early-stage startups, it’s really much more gut than it is science. And you know, it’s just human that you’re going to be drawn to things that look like you or stuff that you’re familiar with. And what you’re seeing increasingly as all sorts of people get involved in this is a whole bunch of founders and a whole bunch of products and services are being backed in ways they simply weren’t before.

Ryssdal: Right, and then they get their exits, just to get back to where we started. And they then can go on and invest in other things that are more diverse, both in kinds and types, and other founders, and it sort of becomes a virtuous cycle.

Boyd: Angel investments take a while to pan out. You know, 10 years is usually the framework, we say, but I think in the next 10 years, people are going to be really surprised by the number of companies, the types of companies, that emerge and also what founders look like. I think we’re going to begin to see a much broader range of people becoming really prominent founders.