The Face of Venture Capitalism is Changing – You Might Just Recognize It
We know the number of woman owned businesses is growing by leaps and bounds, but did you know that the way that these businesses are being funded is changing too? Statistics show that while only five percent (5%) of the estimated $36 billion invested by venture capitalists goes to women, this is still more than twice the amount of money awarded to women just 4 years ago.
Women are finally being noticed for the success they are achieving. In the past, female entrepreneurs were seen as “financial risks” because did not conform to the male definition of success (since men were the ones holding the purse strings). But now, more women are becoming investors — starting venture capital initiatives and angel groups across the country. Coincidentally (or maybe not) 41% of venture-backed businesses now have women in senior management positions, up from 21% in 1998 (this information comes from the research company Venture One and published in the September 2000 Inc. Magazine article: A Network of Her Own).
The National Foundation for Women Business Owners (NFWBO) have completed a major study entitled “Women Entrepreneurs in the Equity Capital Markets: The New Frontier” which yields similar findings. Here, equity capital opportunities for women entrepreneurs were evaluated as well as strategies suggested for tapping into this revenue source. They found that while women are applying for venture capital in increasing numbers, the potential for more VC money going to women owned businesses is great! One of their most interesting findings (and there are many) is that: “the presence of women in decision-making roles in investor firms is making a difference for women business owners…[with] two-thirds of the women investors (67%) investing in women-owned firms in the past three years, compared wit only 40% of men investors.” The face on both sides of the equation is changing, and she looks very much like us. (For more information on this study and its results, go to the National Foundation for Women Business Owners web site at http://www.nfwbo.org).
From the NFWBO study, we are again reminded of the importance of personal and professional networks! While women in the past have often lacked the networks to make venture capital a reality for their businesses, this cannot be said anymore. As women-owned businesses are flourishing, their owners are coming into regular contact with bankers, lawyers, accountants and others with the clout that can put them in front of key investors. Without these relationships, however, women will remain at a disadvantage in the equity capital market. (Click here for more information on “how to” network effectively).
So where can you go to find women venture capitalists? You would be surprised to see how many female owned and operated firms are popping up. Check out the Top 5 largest women-oriented funds:
- Inroads Capital (Chicago) (no web link)
- Targets companies which have established their business model and require equity capital to fund their next phase of growth.
- Size of Typical Investment: $1 million to $4 million
- Maturity of Company Desired: Second stage; cash flow breakeven
- Technology Sectors: Software, Electronics, Internet
- Recent Technology Investments: High Tower Software, Inc.; ProLinx Labs, Inc.; Virtual Vineyards
- Source of Funding: Pension funds/financial institutions/individual investors.
- Contact Information: Internet: n/a
- Tel: 847-864-2000
- Fax: 847-864-9692
- Contact: Sona Wang
- E-mail: cmoore@inroadsvc.com
Fund Isabella (Cincinnati) – a venture capital firm based in Cincinnati, Ohio, is inspired by Queen Isabella of Castile, Spain, whose investment in Christopher Columbus’ Sailing Venture led to the discovery of the Americas. Her investment is commonly regarded as the most successful one in history. The Fund focuses on early stage, women-led businesses that operate at the cutting edge of a market driven, technology based society.
Axxon Capital (Boston) – Axxon Capital is a venture firm that targets women and minority businesses. We seek enterprising entrepreneurs with big ideas and commitment to growth. The businesses we work with are more than our investments; they are our partners. We fund a range of companies, but typically we seek to build alliances with emerging and established businesses operating in the New Economy. We give these young companies capital. But equally as important, we provide them with the support and expertise necessary to build upon their entrepreneurial visions and take them through their next stages of growth.
Other links to check out for information and leads on investors (some angels) interested in smaller women-owned businesses:
