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Still A Glass Ceiling For Women Seeking Equity Capital

Last week I had the pleasure of teaching a seminar for the top Entrepreneurial Winning Women who have been recognized by Ernst and Young.  These women are successful in every way, at the top of their game, and have sales of a million to tens of millions.  They have businesses in every sector- software, fitness, security, digital products, communications, environmental services and a variety of other industries. Any way you slice it they are successful.   But despite their proven success and accomplishments, I was surprised to hear that several still report they are left out of financial networks.

It is pretty widely known that the percentage of women led ventures receiving venture capital is tiny- our research in the Diana Project in early 2000 showed that less than 5% of all US ventures funded by VC have women on the management team (http://www.dianaproject.org). While recent numbers are hard to come by, we do know that the percent of women led ventures receiving angel financing is in the neighborhood of 10-15%.  But compared to the numbers of women-led ventures in the US  which in  2012 is estimated  to be approximately 8.3 million women-owned businesses in the United States, generating nearly $1.3 trillion in revenue and employing nearly 7.7 million people(State of Women-Owned Businesses Report, commissioned by American Express OPEN) the percentage of VC funded ventures appears to be disproportionate.

Why is it that highly successful women entrepreneurs report challenges in cracking the equity capital ceiling?  Some feel it is a clash of perceptions– the image of entrepreneurs (often perpetuated by the media) is that they are “heroic” figures, risk takers, innovators, and “born that way”.  In contrast, the image of women is often at odd of this- they are nurturing, collaborative, and less likely to be brash risk takers.  The upshot is a clash of perceptions.  And, that is the point- they are perceptions.  Women entrepreneurs who are aspiring, have significant capabilities, business success and desire to grow their ventures often bump up against these perceptions which may inhibit their chances of being taken seriously.

The prescription is often for the women to change their behavior to prove they are worthy.  But, it may be that the private equity network and VC community  may also need to consider whether the image they have of successful entrepreneurs is realistic.  The best investment in a successful business may just be run by a woman.

Professor Candida Brush

Director, Arthur M. Blank Center for Entrepreneurship and Franklin W. Olin Distinguished Professor in Entrepreneurship

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