Just 4% of Venture Capital To Women

By Amanda Steinberg on Monday November 02, 2009
This post is about entrepreneurship, investing, work


dw_phoneWhile the number of women-owned businesses has increased exponentially over the past decade, we're not raising venture capital to grow our businesses.

What is venture capital, and why should it be on your radar?
Venture capital (VC) is a type of funding designed to help small companies become big companies; it's usually hitched to some form of "exit strategy," such as sale to a larger company. A business owner seeking traditional venture capital has to show the potential for rapid growth and extraordinary returns.

Consider this: “In 2006, only 4% of venture capital-backed companies had female chief executives, and those companies with women as leaders received just 3% of the total dollars raised from VC.” (source)



Just 4%? Why?
  1. Women aren't starting “VC-worthy” companies projecting rapid growth
    and exit strategies. We want to run small
    companies, and avoid the headaches
    of leading large ones.

  2. We're so resourceful and skilled when it comes to
    bootstrapping that we think we don't need VC.

  3. We struggle, more than men, when it comes
    to asking for money.
Is this yet another glaring example of under-earning, or merely a reality in the innate difference between men and women?

We need to build networks
According to Amanda Clayman, a psychotherapist specializing in financial wellness, women are still limited by "trying to do it ourselves" and lack networks needed to grow our businesses. "Women, for the most part, still operate outside of the traditional power structure. It's time we direct more energy toward establishing our own power networks. In order to grow, we need to learn how to ask for resources, support — and investment — when we need it."

Please share your opinion below.
Comments (7)add
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written by Laura , November 02, 2009
I think women learn at a young age to be more resourceful in a society which still favors men. We do have our own networks, but as stated above, outside the traditional male-run power structure, and perhaps not financial in nature. We should make our own financial networks to help each other.

Laura
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written by Joni , November 02, 2009
I have a small company that has been in business for the past 10 years without resorting to borrowing any capital from anyone. I also didn't have any 'back'up cash" to start..I guess I didn't think about borrowing any money. So I guess you could say that I have been ignorant of my options. Everything that I have made I have put back into the business.. I finally started taking a salary a few years ago after I incorporated but due what I was seeing in the economy and my area (interior/landscape design and construction)I have cut way back on taking that. I feel right now that I am working for pennies and not sure if it is worth it. However, I also can look at it as giving me the freedom to control my schedule. and delegate when I really need to. I would have liked to had help but didn't know where to go for it....and somewhat concerned with paying back any kind of loans. I have used a credit card for necessary purchases and that has been paid in full every month.
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written by Jenny N. , November 02, 2009
I've gone full-time with my little handmade handbag business for 2 months now but I was doing this on the side while I was in college. After I graduated and decided to move into fashion full-time rather than engineering, I was asked about my plans for expansion (hiring someone to help with sewing and things). For some reason, the idea doesn't strike me as the best decision now because although I am getting regular business to support my life, I don't want my "brand" to be anything but a one-woman show. Like Joni, I can control my own schedule, take off when I need time off, and work from home. And in the handmade industry, I feel like getting help would be like "selling out". Maybe it is just the mentality of women, but I'm not sure I would move to big business. I make enough money to pay my bills and have free spending money. I'm very happy where I am financially and I'm not sure the extra headache of adding more employees would sacrifice the love of the job.
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written by samsstuff , November 02, 2009
Interesting thought & I think you bring up some good questions. I don't think rapid expansion is my personal goal. I create & sell one of a kind pieces & wouldn't want to become more of a production line type of company. This also means that I don't necessarily need to find loans for expansion. Would it be nice to rely only on my business for income, yes! For me though, the rapid growth & lack of creative control needed for venture capital wouldn't be right, not at least until I changed where I wanted to go with my business. I don't know if it's a men vs women thing, but you raise some interesting questions. Thanks for posting!
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written by dana joy , November 02, 2009
To respond respectfully to what Jenny N. said, I, too want to be the one-woman-show behind my brand but that doesn't mean you can't have silent partners.

I know so many women, myself included, who do everything by and for themselves and aren't comfortable asking for help. Yet, we often give way more than we allow ourselves to receive - to our detriment.

Me, personally, I love the idea of tapping into venture capital with a group of like-minded people. There are venture capitalist groups who support sustainable ventures and I can envision my brand splitting into different divisions like TV and publishing and products - I actually have all of that laid out in my business plan, but how to do it? Venture capital seems like a great way. I just want the courage to do it; the belief that anything I dare dream is possible.

It actually pisses me off that only 4% of women have access to it. It's our fault. We don't ask, we don't get.


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written by Goldie Shulman , November 03, 2009
You write: "trying to do it ourselves" and lack networks needed to grow our businesses. .... It's time we direct more energy toward establishing our own power networks". ...I have been trying desperately to network, (for information-not venture capital) but maybe I am looking in all the wrong places. Specifically, looking for small run textile printer in india/china/etc that has an excellent track record for quality control. mfg.com, and the like will offer many leads, but it is the word of mouth/voice of experience that I need to allow me to place orders overseas with confidence.
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written by Jaclyn Foutz , February 02, 2010
In another 6 months or so, I'm going to be looking for VC funding for my "woman-owned business." If anyone knows of resources or funding sources to increase those statistics, I'd love to hear about them!
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