Girls Just Wanna Have Funds

Changing the way venture capital firms look at women

Can women get venture capital funding? The arguments on both sides are equally persuasive.

Venture capitalists say they consider profit potential, not gender, when looking for deals. But despite this apparent neutrality, women only got an estimated 4 to 5 percent of the $38 billion invested in the United States in 1999.

"More women are being funded today, and there are a number of highly qualified women seeking funding, but relative to the total market, the numbers are small," says Willa Seldon, general partner with San Francisco-based Viridian Capital, the newest SBA-backed small-business investment company (SBIC) targeting women entrepreneurs.

But, Seldon adds, the numbers are improving. She attributes the change to several factors: women entrepreneurs being better-prepared to seek capital, more venture capitalists looking to fund women and more women working at established venture funds.

Sharon Hadary, executive director of the National Foundation for Women Business Owners, views the discussion as a sign of how far women have come. "When we first started, we worried about issues like banking relationships, access to credit and [convincing] banks that a woman-owned business is viable," she points out.

Acknowledging that the market is still clearly under-served, Hadary speculates that preparation is part of the problem. She believes that while some women have the management teams and skills financiers like to see, most don't.

Another obstacle is that most venture capitalists only look at proposals recommended by people they know, and "a lot of venture capitalists don't have women entrepreneurs in their circles of friends," says Kay Koplovitz, CEO of New York City's Koplovitz & Co., a media investment firm. She says the percentage of women getting equity capital is anemic.

To ameliorate the negative fall-out from fighting the good-old-boys network, Seldon says Viridian reviews every business plan that comes its way, but only invests in less than 1 percent of the proposals.

Another development that may help circumvent women's lack of access to venture capital is the growing number of women angel networks. There's no definitive list of these organizations, but Koplovitz has found networks in cities like Seattle; Boston; Washington, DC; and Cincinnati.

As more women entrepreneurs move into the ranks of investors, the amount of venture funding available to women, as well as women's overall chances of obtaining equity financing, should increase.

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This article was originally published in the March 2000 print edition of Entrepreneur with the headline: Girls Just Wanna Have Funds.

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