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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | OCTOBER 4, 2000 FINANCE The Surge in Women VCs Many more get into the funding game, and that could help women entrepreneurs
Many women in the VC world are reluctant to blame blatant discrimination. Instead, they say, what those numbers reflect is that businesswomen were not in the right fields for venture funding. Many in those fields weren't asking for the money. Those who did ask weren't asking effectively. Most important, women were not in the loop, which is largely male. BIG LEAP. Now, all that is changing -- though so far, the shift isn't well reflected in the statistics. In the past year, more women have started to enter the VC field on many fronts. They are building a network that's expanding geometrically, portending a big leap in those funding figures before long. "All of the components are in place for this to be a nonissue by the end of the decade," says Peg Wyant, co-founder of the year-old, $10 million Isabella Fund in Cincinnati, named for the Queen who served as Christopher Columbus' venture capitalist. Those components include the growing number of women graduating from engineering schools (one-fifth of those getting master's of engineering degrees) and business schools (one-third of the class at top schools), the number entering investment banking, embracing Internet technology, and becoming venture capitalists themselves. Other important factors are the huge amount of venture cash looking for a good home and the competitive market for executive talent. Wyant's own firm is an example of what's ahead. Half the investors in Isabella Capital are women, and she gets at least one call a month from a woman interested in starting a venture-capital firm. "Only two years ago, if I called a woman to see if she wanted to invest in a venture-capital fund, it would have been harder," Wyant said. Now that women are taking economic risks, she sees the inequities fading quickly. "If you want to have a powerful effect," she says, "you have to do that through economics. More women are starting to take their place at that table." "WHOLE NEW NICHE." Isabella is one of at least eight venture-capital funds established in the past two years with the mission of mainly financing companies owned or run by women or minorities, two niches often targeted together. Before that, there were no such funds. In the past year, many of the established venture-equity firms have added women, and women are moving into corporate investment ranks. And angel clubs designed specifically to give women investment opportunities are starting to form at the community level. Getting more women on the capital side of the table is key to getting more capital to women business owners, says Willa Seldon, a co-founder of Viridian Capital, a two-year-old, $30 million fund that invests mainly in woman-owned or woman-run companies. In a report to the Small Business Administration's Office of Advocacy, the three women who founded the $30 million Women's Growth Capital Fund two years ago said, "the investors who created this fund are laying the foundation for a whole new niche in the venture-capital market." Just how many women are joining the capital side at all levels is something no one seems to know. But they have started counting them. The Kauffman Center for Entrepreneurial Leadership has financed such a study, which is under way now. In the San Francisco Bay area alone, fewer than 10 women were corporate venture capitalists in 1993. Today, there are 85, according to Denise Brousseau, CEO of the Forum for Women Entrepreneurs. Viridian, in San Francisco, is just one example. "NOT A SOCIAL MISSION." Among other services, Brousseau's forum teaches women how to polish their business plans and their presentation skills. It also helped establish a venue, called Springboard 2000, in which the best prepared could make their pitches to the venture community. All 26 of those at the Springboard conference on the West Coast this year were funded, at an average of $9 million each. "What we were hearing from both men and women investors is that they weren't hearing from women entrepreneurs," Brousseau said. Among the pointers Brousseau coached her entrepreneurs on, in response to complaints from venture capitalists, was the need for them to emphasize how much money they expected the company to make. The Forum for Women Entrepreneurs is opening more chapters, and the regional Springboard conferences will be repeated next year. "We are about picking amazing companies, getting them ready, and putting them in front of investors," says Brousseau, whose ultimate goal is to put herself out of business. "The first ones were the hardest to get funded," Brousseau says. "Statistics show that after an investor invests in one woman, they are 40% more likely to invest in another woman." The people doling out the capital are there to make money, not to perform affirmative action. "This is not a social mission. This is an underserved niche," says Marshall, whose Axxon fund has $45 million. COMMON BONDS. Women investors aren't the only ones who recognize the underserved segments. Triumph Capital Group in Boston, a $1.6 billion fund, is serving almost as an incubator for Axxon, providing some financing, office space, clerical support, and brainstorming, says Triumph CEO Fred McCarthy. Marshall was a business associate of McCarthy for many years, and Axxon co-founder Paula Groves was a partner at Triumph. "The growth rate in women and minority business startups is phenomenal," Groves says. "There's a huge opportunity to make a lot of money." Having gone to Harvard Business School and worked eight years in the investment community, she's a typical venture partner -- except for being an African-American female. "If the folks on both sides of the table can identify with each other -- could be because of hometown, gender, school, ethnicity -- it facilitates an ability to form a personal bond," McCarthy says. "If you're a woman or you're a minority, and you're coming in looking for venture capital, you might not be as comfortable coming in to see five white guys in blue suits." "CHICK COMPANIES." Most people in the venture world are reluctant to see discrimination in the funding inequities. That doesn't mean they're thoroughly blind to it. "I had an institutional money manager say to me, 'We don't invest in chick companies,'" said Lise Buyer, a former Internet analyst at Credit Suisse First Boston and T. Rowe Price who joined Technology Partners, a $400 million venture-capital firm based in Palo Alto, Calif., a year ago. "He was using the phrase glibly, but he also meant it." Like other equity investors, she thinks the solution is to keep expanding the network. "In all aspects of Corporate America, the people who rise to the top are the people who remind those at the top of themselves. Women will get more funding when more women are in the game." Now that they have their own coaches, maybe fewer women will be sitting on the sidelines and settling for such a lopsided score.  By Theresa Forsman in New York  | | |
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