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Venture Capitalists: Fund More Women Entrepreneurs

A meager 7 percent of VC funding goes to women-run businesses

By Richard Harris

Divorced, depressed and more than a million dollars in debt in 1997 due to a troubled real estate development, Carol Gardner's world was falling apart. She was 52. "My cupboard was bare with no money coming in, I was living on four credit cards," Gardner says. "My divorce attorney's advice was: 'Sweetheart, get a therapist or a dog.'"

Gardner opted for an English bulldog, named her Zelda and hoped she’d double as a therapist and help relaunch her life. A friend, knowing Gardner's background was advertising, suggested entering Zelda in the local pet store's annual Christmas greeting card contest. So Gardner borrowed a Santa hat from a neighbor, filled the tub with bubble bath, lowered Zelda in the water, snapped the photo and sent it in with this caption: For Christmas, I got a dog for my husband...good trade, huh?

Weeks later, Gardner won the contest, got a year's supply of dog food and had a life-changing brainstorm in the process: a greeting card company centered around Zelda sporting different outfits.

(MORE: Paradox of Women Business Owners)

OWL's Hall of Notables

Though Gardner was warned that 97 percent of greeting card startups fail, she was determined. "I had no choice. It was about survival." Nearly 18 years and three Zeldas later, Zelda Wisdom today generates more than $50 million annually from cards, calendars, posters, books and gifts featuring the iconic bulldog.

This week, Gardner was named one of 10 women in the first Hall of Notables — remarkable encore entrepreneurs honored by OWL (Outstanding Women Leaders), the advocacy organization for women over 40. There isn't a shrinking violet in the Hall, which includes Vernice “FlyGirl” Armour, the first African-American female combat pilot who's now a leadership coach; Patricia Lizarraga, Managing Partner of Hypatia Capital Group; journalist and author Gail Sheehy and Teresa Younger, CEO of Ms. Foundation.

Wakeup Call for Venture Capitalists

And now the less-joyful news: Despite growing numbers of U.S. women turning to entrepreneurship, female entrepreneurs here get little love from venture capital (VC) firms.

Just 7 percent of all VC funding goes to businesses led by women, according to OWL’s new report timed to Mother’s Day, Our Women Mean Business: Encore Careers After 40.

(MORE: 7 Tips for Women Who Want to Start Businesses)

"We are launching a campaign to increase that number to 20 percent by 2020," says Lida Rodriguez-Taseff, vice president of OWL's Board of Directors and a partner in a Miami law firm. "When you realize $48 billion was invested by venture capitalists in 2014, 20 percent of that would be a sizeable improvement."

OWL plans a three-pronged effort to get more investment money in the hands of female entrepreneurs.

First, the 35-year-old organization will ask its Hall of Notables women "to speak to the VC community so we can put a real face to the statistics,” Rodriguez-Taseff says. She adds: “Nothing speaks success to VCs like a successful entrepreneur."

Second, OWL will reach out to institutional investors — nonprofits, universities and funds that invest in socially-responsible projects — to ensure they factor gender into their investment strategy.

(MORE: 11 Places to Find Money to Start a Business)


And there’ll be a grassroots effort around the country. "When owls flock together, it's called a parliament, so OWL will also be convening parliaments around the country to make sure venture capitalists more evenly distribute their funds," Rodriguez-Taseff says.

OWL reports that women make up only 4.2 percent of the 542 partner-level positions at the 92 largest VC firms. "People give money to people who look like them. It's not an intentional slight, but what a Harvard study called 'unconscious bias,'" says Rodriguez-Taseff.

'He Looks Like Zuckerberg!'

The OWL report cites this quote of venture capitalist Paul Graham from a 2013 New York Times article: “I can be tricked by anyone who looks like Mark Zuckerberg. There was a guy once who we funded who was terrible. I said: ‘How could he be bad? He looks like Zuckerberg!’”

Bridgette Farrer Muir, who graduates this month from the Yale School of Management, spent time at an early-stage fund that invests in companies with gender-diverse teams. She worries there may be another factor at play: a confidence gap. She concedes: "Men are better BS'ers. The hardest part about pitching a VC is convincing yourself so that you can go convince other people. I do think men are better at that. I don't know if it's socialized or innate."

John Burns, chief investment officer of Breakaway, a Boston venture capital firm, has been mightily impressed by many female entrepreneurs. "I've seen plenty of women come in and be as aggressive, confident and authoritative as any of the men who pitch me," he says.

The Babson Breakaway Challenge

Last fall, Burns had an epiphany when he sat on a panel at Babson College, which had just released a damning report showing that 85 percent of venture capital-funded businesses have no women on the executive team, only 2.7 percent of venture capital-funded companies had a women CEO and there was a declining number of women decision-makers in the VC community.

Burns saw an untapped economic opportunity to be seized and pitched an idea to Babson: the Babson Breakaway Challenge, a mashup of NBC’s The Voice singing competition and ABC’s Shark Tank. Female entrepreneurs would pitch a team of venture capitalists for a $250,000 investment and another $250,000 worth of services from Breakaway. Babson bit; applications will be accepted in September and the winners will be announced next March.

"If we can springboard a couple of women to success, it will draw attention to the issue and encourage other VCs to get behind more women entrepreneurs," Burns says. "VCs can be a bit like lemmings. But if we can drive success, dollars and venture capital will follow. "

Back in 1997, venture capital wasn't an option for Carol Gardner. She had no business plan or credit, just debt and the drive to get out of it. At the OWL event this week, Gardner urged women entrepreneurs not to let a lack of money stop them and, in Zelda-speak, "to think outside your cage." That kind of dogged persistence pays off.

Richard Harris is a freelance writer, consultant to the nonprofit iCivics, former producer of NPR's "All Things Considered" and former senior producer of "ABC News Nightline with Ted Koppel." Follow him on Twitter @redsox54.  Read More
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