Cash for Women's Start-Ups Scarce, but Not Gone

In the best of times, women entrepreneurs are hard-pressed to find start-up capital. The number of venture-backed, women-led companies stands at only 6 percent, and in the third quarter venture capital funding to all start-ups fell by 23 percent.

Sandy Serkes

(WOMENSENEWS)-Sandy Serkes has an undergraduate degree from Massachusetts Institute of Technology and a graduate business degree from Harvard University.

Serkes formed Valora Technologies Inc., in Waltham, Mass., a year ago, and she is chief executive officer and her husband is chief technology officer. Yet Serkes finds herself overlooked often in meetings with potential investors as they look toward her husband for answers.

“I can wave my Harvard MBA around all I want and still they look to my husband,” says Serkes. “One day, I had three meetings with potential investors. I got so mad at the first two. At the third I said, ‘This is a husband and wife team. I'm the CEO and if you're not prepared to deal with me, I'm walking out right now.'”

Serkes got their attention. Her experience is unsettling but common. Just how much gender discrimination women entrepreneurs face can't be quantified, but by and large, women say they are forced to deal with it as they work to get their ventures funded.

Some $4 billion was invested in companies led by a woman chief executive officer last year, and in the last three years the percentage of venture-backed, women-led companies has increased from 2 percent to 6 percent, according to VentureOne, a research firm specializing in venture capital research.

The outlook this year is uncertain, given the struggling economy. During the year's third quarter, venture capital investing in all start-up businesses fell 23 percent, according to an October PricewaterhouseCoopers MoneyTree Survey with VentureOne.

Slowly, Venture Capitalists Talking With Women Entrepreneurs

Still, a national nonprofit group dedicated to hooking up women entrepreneurs with potential investors says venture capital firms continue to look for early-stage companies in which to invest. And slowly but surely, they are sitting down with women entrepreneurs.

“What we kept hearing from the venture capitalists was they were happy to fund women but they can't find any of them. And what we heard from women was they couldn't get in the door,” says Andrea Silbert, chief executive officer of the Center for Women and Enterprise in Boston and a founding board member of Springboard Enterprises in Washington, D.C.

Amy MillmanSince its inception in November 2000, the nonprofit Springboard has sponsored seven major forums on both coasts and in the Midwest. At each, as many as 25 women pitched their business plans to investors; the presenters were culled from up to 200 applications per event. As a result of the sessions, presenters raised almost $600 million in equity financing for their ventures.

At the most recent event, at Harvard Business School in November, most of the interest was in technology, health and information services firms. But even the sole consumer products company, Zoe Foods, left with half a dozen good leads.

The economy “separates the women from the girls,” says Amy Millman, president of Springboard. “Those people who really weren't sure this was the way to go or who really didn't have an invest-able business aren't getting into this. But there is plenty of money out there. People look at this as a really great opportunity to come into companies that don't really have a valuation right now.”

Advice: Women Should Overcome Modesty, Think Bigger

Springboard's next forum is March 21 in Dallas. Also next year, the group plans to host educational events in smaller cities, using secondary markets as a feeding ground for big-city investment groups looking for opportunities. For instance, in April Springboard will sponsor an introduction to the equity markets in Kansas City, Mo.

For some entrepreneurs, forums such as Springboard offer not only a networking opportunity with venture capital funds and other women entrepreneurs, but also a bit of introspection. If there is one criticism of women entrepreneurs, it is than they are too modest, that is, realistic, when talking about their business projections, almost to a fault, and need to think bigger.

“I think women don't naturally play the game, really making the force of their personality the currency of what they're trading on. A lot of the women I talked to were naturally modest,” says A.G. Breitenstein, founder of PrivaSource Inc., a Somerville, Mass.-based information services company. “You need chutzpah. If women entrepreneurs have one thing to overcome, it's to put themselves out there like guys have always done.”

A.G. BreitensteinYet Breitenstein, seeking $4 million in venture capital funding, admits that there have been times when, despite her best efforts, it is the male chief executive officer she hired who has gotten the attention and done much of the networking. “There's a razor's edge we walk,” she says.

And therein lies the other problem for women entrepreneurs. Pressed with trying to get their businesses off the ground, they admit that what often falls by the wayside is networking, a critical component for establishing relationships that can lead to funding.

“I don't think anybody necessarily sees a difference between a woman and a man walking through the door with a great idea,” says Margo Doyle, an associate at Kodiak Venture Partners.

She added that historically women haven't had the network within the venture capital community. The partners at the firms were typically men, so women had a harder time getting the first introduction.

“I think every entrepreneur has to find the balance between building the company,” Doyle says, “and having to make the introductions so they meet the right audience.”

Mary Ellen Podmolik, a free-lance writer based in Chicago, has been covering business issues and the economy for 14 years. She is a regular contributor to Crain's Chicago Business and has written for and Advertising Age. She previously was a business reporter for the Chicago Sun-Times.

For more information:

Center for Women and Enterprise:

Springboard Enterprises: