IN DEPTH: WOMEN- & MINORITY-OWNED BUSINESSES
From the July 2, 2004 print edition
A woman's worth: Female entrepreneurs say they still face gender-specific challenges when it comes to the search for growth capital
Mary K. Pratt

Special to the Boston Business Journal
Kirsten Osolind has this advice for female entrepreneurs: Finance for the company you want to become.
It sounds simple, but Osolind said most women business owners don't think that big. She cited studies that show female owners are less likely to take on corporate credit lines or seed funding, and many won't pursue financing because they fear they won't qualify for credit.
"Without debt or equity, you will not be able to grow in scale," said Osolind, founder and CEO of re:invention inc., a Chicago-based company offering marketing services to women-led businesses.
Researchers are creating a buzz about recent findings that show women still face gender-specific challenges when seeking growth capital. Some reasons have to do with perceptions (women aren't starting high-growth businesses), and others appear more grounded in reality (women don't have the same access to networks as men).
Experts acknowledge that raising capital -- whether from angel investors, venture firms or other sources -- is a difficult prospect for men as well as women. And they say that women today face fewer barriers than they once did.
Still, they maintain, inequities exist.
"We realize anyone trying to grow a business is going to face challenges and hurdles ... but the hurdles are higher for women," said Candida G. Brush, an associate professor of strategy and policy and director of the Council for Women's Entrepreneurship and Leadership at Boston University's school of management.
Men and women seeking growth capital must show that they have the right capabilities, access to the right network and the right human capital. They must possess strong management and financial skills.
"If not, then chances are that you're not going to grow, whether you're a man or woman," said Brush, who is also a member of the Diana Project, an initiative that seeks to support the growth and development of women-owned businesses, and co-author of the recently released "Clearing the Hurdles: Women Building High Growth Businesses."
But women don't always think as big as their male counterparts; something that limits their appeal to venture capitalists, Brush said. In "Clearing the Hurdles," Brush writes that investors point to continuing concerns about women's commitment to their businesses and their leadership qualifications as reasons for limited investment in women entrepreneurs.
"Women just don't fit that stereotype for what we think entrepreneurs should be," Brush said, even though their actions demonstrate they're capable of growing companies.
Statistics seem to back up the notion that gender-based inequities exist. The Diana Project found that in 2003, women were majority shareholders in 28 percent of all privately owned businesses in the United States and claimed a 50 percent share in another 18 percent, but received only 5 percent of all VC investments.
Amy Millman, president of Springboard Enterprises Inc., a national nonprofit that works to accelerate women's access to equity markets, said she sees women's limited access to the right networks as the reason for such a large gender gap.
"There are a lot of investors who have not had professional experience working with women and don't feel comfortable," Millman said. And that situation, while maybe not even consciously recognized by VCs and other investors, is one roadblock women face.
Women are also less likely than men to have the same connections -- through personal, professional and alumni organizations -- to the people who make decisions on financial investments. And the reasons for such situations stem from a variety of societal situations; women, for example, weren't as prevalent in MBA programs 10 or 20 years ago, which means that females of that generation are less likely to achieve the same level of executive authority or be able to tap into alumni groups.
"All things being equal -- brains, drive, ability to run a business -- between a man and a woman, it's the one with the contacts who are going to get there," Millman said. "It's still pretty much an old-boys network."
Anyone who doubts that just has to take a look at the numbers: The Diana Project found that only one-quarter of VC partnerships had females in management in 2000.
Joanna Lau, founder and CEO of Lau Technologies, a Littleton-based executive consulting and investment company with expertise in the defense and security industries, puts the blame on lingering cultural perceptions about women leading businesses.
Lau, who worked with and even invested in new companies, also said the fact that so few women are VCs, angel investors and even bank executives keeps women from getting the same access and amounts of growth capital as men.
On the other hand, Lau, who serves on the board of BostonFed Bancorp Inc., said she has seen improvements in recent years. As more women take executive jobs in VC firms and banks, and as more women start businesses, the gender gap will continue to narrow, Lau said.
Mary Pat Hinckley already sees improvements.
Hinckley, herself a former entrepreneur, is director of fast-growth programs at the Center for Women & Enterprise, a resource organization for woman-owned businesses. More women are graduating with MBAs as well as the technical degrees that lend themselves to starting high-growth business ventures. More are gaining high-level executive experience before becoming entrepreneurs. And that means they're making better presentations, better pitches and better financing deals.
"I'm very positive. I think things are changing in the right direction," Hinckley said.

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