Are more VCs betting on women to make a buck?
The woman@work column appears weekly in The Globe and Mail.
I felt no “Dragon’s Den” vibe when I met Vincent Gasparro for coffee at the Four Seasons Hotel in Toronto recently.
The very approachable managing director of , an independent private equity fund that invests in sustainable business, clean energy projects, and businesses that support the green economy graciously gave his time to offer me advice on raising capital for my new venture. Yet, the conversation quickly turned to the issue of gender and investing.
In his current role, roughly 60 percent of businesses Mr. Gasparro invested in or conducts due diligence on, are either 100 percent female owned and operated or some part of the capital structure is controlled by women.
“If I am looking at two businesses with comparable rates of return and all other factors are equal, the female or minority-owned businesses will get the investment,” stated Mr. Gasparro, who invested in two designated WeConnect businesses and so far remains pleased with the growth and results of each one.
Admittedly, Mr. Gasparro is a rarity. The data surrounding the number of female entrepreneurs who secure venture capital can be depressing. , conducted by the Center for Venture Research at the University of New Hampshire, shows that only 12 percent of startups that pitched to U.S. angel investors during the first two quarters of 2011 were women-led and of those 12 percent, only 26 percent secured funding.
But if you count the number of old and new firms, both for and not-for profit that support female-owned enterprises, it tells a different story.
Golden Seeds and , have been around for awhile but new groups such as the Women’s Venture Capital Fund and The Pipeline Foundation, show the appetite for diversity at the start-up level is catching on.
“I think the glass ceiling for women receiving venture capital funding is slowly beginning to shatter and will continue to improve at a faster rate moving forward,” observed Mr. Gasparro. “Ultimately, the trend for female entrepreneurs is moving in the right direction.”
Venture Capital should not be confused with philanthropy and Mr. Gasparro insists that capital will always move toward the greatest rate of return. Monica Dodi, the managing director and co-founder of The Women’s Venture Capital Fund, a new fund, which focuses on early-stage female entrepreneurs in digital media and sustainability, shares that sentiment.
“As with any private equity firm or venture capital fund, it’s our fiduciary duty to look out for our investors and get a return. It’s all about the exit,” insisted Ms. Dodi. Yet she and her partners lamented that less than 5 percent of venture capital goes to teams that have one woman. Combine that with statistics about gender diversity improving the valuation of a company and that spells lost opportunity.
The team presented their thesis of investing in gender diverse firms at their 20th Harvard Business school reunion and although only 17 percent of their graduating class consisted of women, many of them, from across the U.S. and Canada, cut cheques. The group decided to start with a “modest” fund of $25 million and they closed their first deal in August.
Although Ms. Dodi and her partners represent a new trend, of U.S. angel investors were women in the first two quarters of 2011.
Natalia Oberti Noguera plans to change that ratio. She founded the , which trains women philanthropists to become angel investors. The Pipeline Fellowship graduated its first NYC class in October 2011 and have since launched in Boston with plans to expand in the Bay Area this fall.
“I believe that more diversity on the investor side will ultimately unleash more capital directed toward women and people of color on the entrepreneur side,” explained Ms. Oberti Noguera.
Despite the rash of success stories, much work remains to be done in order to truly turn this into a golden era for female entrepreneurs seeking venture capital.
Dr. Barbara Orser, the Deloitte Chair in the Management of Growth Enterprises at the University of Ottawa’s Telfer School of Management chairs the Taskforce for Women’s Business Growth with the goal of growing women’s enterprises through advocacy.
“The Taskforce is challenging some dated assumptions about women and entrepreneurship,” said Dr. Orser, including the misconception that women don’t want to grow. Dr. Orser explained that the stereotype persists despite the explosion of female entrepreneurs not only in Canada and the U.S. but globally, and attributes to problem to the media’s lack of attention on successful, female business leaders.
Between the two of us, we had a hard time naming a business celebrity other than Arlene Dickenson. “If you are going after revenue as your criteria, you won’t see them (successful female business owners), explained Dr. Orser. “If you are going after employment, community development and innovation you can find them,” she added.
Category: Women@Work
At LFE Capital, we have been successfully investing in women owned and led businesses for over a decade. Glad to see the opportunity being highlighted.
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