Investors Short Change Women’s New Media Venture

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Anne Gordon, CEO

Ann Gordon, chief executive of an Internet company in Seattle, eSociety, belongs to a local CEO club, a group of 20 people that meets once a month. Just two of the members are women.

Likewise in New York. New media schmoozer and journalist Jason McCabe Calacannis last year hosted an exclusive dinner for 12 of Manhattan Silicon Alley’s top chief executive officers. Only one attendee was a woman.

Despite rivers of venture capital pouring into technology and a drastic lowering of barriers to entry, a relative handful of the country’s thousands of new media companies are actually run by women.

Most women in the exploding Internet industry are still taking a back seat to men, hampered by their lack of access to venture capital and, according to some, their own attitudes toward risk.

“People always say if {an idea for a business} is good, it will get done,” says California-based consultant Karen Bixby who four years ago tried unsuccessfully to raise a fund that would back women-led companies. “Then you show them the statistics and they’re amazed.”

The status quo, however, is changing rapidly. College classes in entrepreneurship, for example, now tend to be evenly divided between men and women. More women are becoming venture capitalists themselves and self-help networks for women are multiplying. Such initiatives as the Women’s Tech Cluster in San Francisco and Springboard 2000, which brings women-led companies to venture capitalists, are popping up around the country.

The portion of venture capital that goes to women is still meager, given that women start 40 percent of the new businesses in the U.S. In 1999, 6 percent of the venture money that poured into Internet companies went to companies with women chief executives, according to San Francisco research firm VentureOne. That represents a 50 percent increase since 1998 when only 4 percent of new media venture capital went to women-led businesses.

And the pipeline is swelling with women occupying roles in the top management teams of nearly half of the Internet start-ups that got venture money last year. Many of them will be in the next wave of Internet entrepreneurs.

Still, until recently, bankrolling a fast growing new media company has been an uphill battle for most women. Landing venture capital is an exercise in high stakes networking. It is dominated by men who tap college roommates, investment banking colleagues, and golf buddies for recommendations and referrals. It’s a network that has de facto excluded women. “Getting venture capital is a huge networking enterprise,” says eSociety’s Gordon, speaking as one who recently landed $3.5 million from Technology Crossover Partners of Palo Alto, Calif. “You do not even get an appointment unless someone has helped you set one up.”

Some venture capitalists blame women themselves, saying that less than 10 percent of the deals that hit their desks come from women-led companies.

“It’s very rare to see a woman with ten years of technical experience,” saysone male venture capitalist and former entrepreneur. “Those are the types offolks I invest in, the ones that were born with a keyboard in their mouths.”

Others say women are less likely to make the kind of bold claims that getinvestors’ attention or to want give up control of their companies to aventure capitalist.

Di-Ann Eisnor, founder and chief executive of Eisnor Interactive in New York’s Silicon Alley, only recently raised outside money after four profitable years in business.

“I needed to raise money from people who wanted to invest in a business, not in the hottest new thing,” says Eisnor. “I sell myself differently, with none of that unnecessary grandstanding.”

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