Venturing for Capital in a Man’s World

{Small Business Trends}

Data from The Center for Women’s Business Research shows that while 41 percent of private companies in the US are owned by women entrepreneurs, only 3 to 5 percent of them receive venture capital. Those numbers are disproportionate to say the least. In a recent article published on entitled, Why Women Don’t get Venture Capital: The Bruised Nose Theory, business owner Eileen P. Gunn laments the distinctive challenges women entrepreneurs are faced with when they take the risk of starting a new business. Needless to say, many of the hurdles business owners experience are limited to women, and this, I think, finds basis because women are still thought of, or pardon me, women are still EXPECTED TO (saying they are thought of that way makes it seem like it’s not a reality when we all know it is) be the primary caregivers to children.

Gunn asserts that due to the rigid framework that defines corporations, women are more and more taking the initiative by launching their own businesses because it allows them more flexibility in attending to their families’ needs while also allowing them to enjoy greater executive freedoms in their careers. The problem: Money is needed to start these businesses, and venture capitalists are not so readily willing, the author claims, to hand capital over to women on the same silver platter they bestow to men. The author may be onto something viable, but here’s the ticker which she did not mention: Most venture capitalists are men, and it goes without saying that people tend to favor those that are like them. What we need is more women venture capitalists on the scene backing the ventures of women business owners. A recent article in Businessweek claims that venture firms with at least one woman aboard their team are 70 percent more likely to invest in a woman-owned firm than a venture team comprised of all men. This seems like a no brainer, but women venture capitalists are not going to sprout out of the soil overnight. What we need is a foundational change from the roots of the whole system.

That brings me to the obvious limitations of Eileen P. Gunn’s article. While I certainly agree that women face higher and wider barriers than businessmen, I think Gunn’s article would hold much more credibility were it about the barriers this businesswoman actually faced rather than the imaginative ones she was assuming she’d face. Instead of saying, “I did not even bother to ask for venture capital because I knew I would not get it,” Gunn’s claim would hold more weight had she written, “I asked for venture capital, and just as I’d predicted, I didn’t get it”. This is certainly not to say that the drawbacks for women in acquiring capital are not real (please refer to the disproportionate data from the Center of Women’s Business Research as aforementioned).

I believe that a writer who takes a critical approach has a responsibility to his or her readers to foster awareness and provide options for change, rather than telling them they are optionless. Gunn is absolutely right that women need to be granted more funding by venture capitalists. Indeed, there is an exigent urge for women to be granted this capital because it benefits everyone to invest in women. It is a known fact that the way women dispose of their income is fundamentally different than the way men spend their cash. The Foundation for Research on Economics and the Environment (FREE) states that educated women who enter the workforce contribute dramatically to their countries’ economic progress. This happens because instead of spending their money to advance their own personal growth, women disperse their income into their communities and advance social progress by investing in health, families, and education.

Considering alternative options, women Angel investors may be a good source for women entrepreneurs to seek when venturing for capital. Also, there are some women-owned venture capitalist firms such as Fund Isabella and Women’s Venture Capital Fund (WVCF) who focus their investments on the growth of women-owned businesses.  These options are not an exhaustive list, rather a catalogue which is still a work in progress.  Despite the limitations, approbation must be delivered to Eileen P. Gunn and other women like her for engaging in a dialogue about this important issue.  Bringing to light the real experiences of women entrepreneurs is a discussion we’ve held off on for much too long.  Now that the ball is rolling, it’s in the venture capitalist’s court to provide a more sympathetic exchange of interaction when it comes to dealing with women entrepreneurs.  It is for their own benefit and for the benefit of their own communities after all, to invest in women.

This entry was posted in impeccableWOMEN and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s