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by Amber Taufen

Private companies run by women are faring better than in the past, but they still have some ground to cover if they hope to catch up with those headed up by men – this according to a new 400-page report from Growthink Research and re:invention Inc.

Although it’s been a long-held and anecdotally-backed belief by many that woman don’t attract venture capital as successfully as their male counterparts, Growthink and re:invention claim to be the first to analyze the venture capital gender gap in detail.

The figures
The report “Venture Funding for Women Entrepreneurs” looks at information from 1,860 companies that raised more than $19 billion in VC during 2003. Nearly 670 of those companies employ at least one female executive, 84 of them chief executives. Approximately 1,150 of the remaining companies, headed by a male CEO, do not employ any female executives.

The 84 women-led companies raised $783.8 million of the total $19 billion
There are some exceptions to the “women receive less” rule: women-run businesses in the healthcare industry, for example, received more than their share of VC; these businesses made up 44 percent of all women-led firms receiving funding, and they received 55 percent of the VC raised by women-led businesses.

Growthink and re:invention also found that, out of 217 investors in the report, eight VC firms invested in three or more women-led companies. This might indicate that a large portion of the capital female executives raise comes from a small pool of VC firms.

Uneven playing field
Lucia Marshall, president of St. Louis-based Trans America Product Technology, Inc., said she has no trouble believing that women-led firms receive less than their share of VC.Marshall’s company is in the pharmaceutical and plant science industry, and Trans America Product Technology set up BioSorb Inc., an agricultural biotech company with five current investors.

“We’ve got patents. We’ve got the technology, which is outperforming other technology that’s out there,” says Marshall. “We’re having trouble getting the capital.”

Marshall said that BioSorb has not raised any VC; it’s entirely privately funded. She said that a lack of networking connections has hindered her from obtaining the capital she needs.

Not all women feel that their gender prevents them from obtaining their share of VC. Victoria Gonzalez is the chief operating officer for Graphic Surgery LLC, a healthcare information firm. She raised $725,000 in angel VC for Graphic Surgery, and she has also worked for iControl Diabetes, a healthcare services firm, and APT Therapeutics Inc., a biotech firm.

Gonzalez said that there are many issues shaping whether a venture capitalist will invest in a company, and part of the problem might be whether a womenled company really wants VC investment.

“When (VCs) come in, whether you’re a man or a woman, they’re very controlling,” Gonzalez says. “So if you are a company that thinks about the longer-term implications of that, and know what you want to do, there may be many decisions by companies not to pursue VC.”

Furthermore, Gonzalez says, some women might lack the background that venture capitalists seek.

“They’re looking for people who have started a company, grown it, sold it and been successful, and who are looking to start another company,” she says. “I don’t know that that necessarily has anything to do with gender.”

Erika Rich is the chief administration officer for Sceptor Industries Inc., in Kansas City, a biosafety firm that created and sells SpinCon, an air sampler currently being used by the U.S. Postal service to test the air for anthrax. Sceptor Industries was one of the five Missouri firms profiled in the report, and Rich was named as one of the female executives. Rich said she doesn’t think gender was a factor when Sceptor Industries sought VC. The CEO of Sceptor Industries, Richard S. Jarman, is a man — as are three more members of the upper management team. Rich said that Jarman was the primary liaison between Sceptor Industries, a biosafety firm, and Shalom Equity Fund, the VC firm that pumped $2 million into the company.

Everyone had a hard time
The Center for Emerging Technologies in St. Louis is a tech incubator, helping small companies in the biotech, medical and engineering fields raise VC. Marcia Mellitz, the president of CET, says raising VC is a multifaceted issue.

“We see everybody struggle to raise VC,” Mellitz says. “It’s not easy from any standpoint. There is some bias in the industry because there aren’t a lot of women in the venture funds, either. So you have men in the venture funds who maybe can communicate better with men.” But, Mellitz adds, “When we see a woman who is involved with a really, really strong technology and a good business approach, we’ve seen them able to raise venture capital.” The CET has worked with two startup companies that were owned by a woman.

Re:invention, one of the two research companies involved with the report, is specifically geared toward researching women-led businesses. The company’s CEO, Kirsten Osolind, says, “Instead of bemoaning findings in this new report as yet another blow to women, we should be asking what can we do and where do we go from here?”

“We need to cultivate programs that help venture capitalists scale their business models and identify new high potential women entrepreneurs,” says Osolind. “We also need to encourage, support, and promote visibility of women entrepreneurs in their attempts to stand out when raising startup capital.”

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