Women starved of VC funding

2005

Venture capitalists in Europe are shunning investments in companies run by women, as a new report finds that there are no more venture capital-backed female businesses in 2004 than there were in 2000.

The annual Women in Management Survey compiled by VentureOne for the Paris-based Forum for Women Entrepreneurs & Executives (FWE) found that the proportion of female chief executive officers at venture-backed companies in Europe was a mere 3.3 per cent in 2004, the same as in 2000 and 2001.

What's more, these firms received less than 2.5 per cent of the total venture-capital investment in Europe — which was €3.5 billion in 2004.

"Relationships are critical in raising capital for start-up firms, and it's well known that women traditionally have less access to the financial networks, making this bridge more important than ever to create," said Susan Lucas-Conwell, co-founder and president of FWE Europe.

"This survey has underscored that women need to build better bridges to the investment community to obtain the critically needed rounds of financing that all firms need to grow and expand, and bring their goods and services to market."

But she added that the situation may improve gradually over time as investors realise that they are missing out on a significant portion of the market by not investing in women-founded enterprises.

The survey also contained some encouraging news. The number of venture-backed companies in Europe with female senior managers rose from 11.6 per cent in 2003 to 13.1 per cent in 2004, while companies with women occupying senior posts received 18.2 per cent of all venture-capital investment in 2004, the highest proportion of investment for female-managed companies since 2000.

It also appears that women are founding slightly more venture-backed start-ups than has been the case over the past three years. Some 6 per cent of the companies surveyed had female founders, an increase on 2002 and 2003 levels, although this was a fall on the 7.4 per cent in 2000.

By industry, 9.4 per cent of health-care companies, 8.3 per cent of products and services companies, and 4 per cent of IT companies were founded by women in this year's survey.

And while only 2.8 per cent of venture-backed IT companies had female CEOs in 2004, this is an increase when compared to 2000, when the figure was less than two per cent.

Ms. Lucas-Conwell continued, "As more women in positions of power, wealth and influence participate in the growth of their compatriots' undertakings, we will see an increased number of independent women investors and venture funds, as well as other forms of private equity specifically devoted to investing in women-founded and women-run enterprises."

Chris Shipley, an FWE board member, agreed: "Women perform on par with, and many times better than, their male counterparts as leaders in venture-backed businesses — and as executives in enterprises of all sizes," he said.

"Women are creative problem-solvers and those solutions have led to many strong and viable businesses that are missed on the typical venture radar, often because the male-dominated venture-capital business doesn't understand the marketplaces women often serve."

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