Nataly Kogan

(WOMENSENEWS)–Nataly Kogan is aware that her effort to raise $1 million for her one-year-old social networking site for working mothers has been hurt by this week’s news of Wall Street investment companies foundering and trillions of dollars evaporating from world stock markets.

“The general mood is stressful and many angel investors are seeing their public stock portfolios decrease in value and feel nervous about the future,” Kogan said.

Nonetheless, Kogan is persisting and even keeping her eye on further money she’ll need for expansion plans. She hopes to launch two more online communities, one aimed at female entrepreneurs and another targeted at recent female college graduates.

To prepare for that Kogan’s Work It, Mom! site will be one of 24 companies participating in an Oct. 30 venture-capital forum hosted by the She Made It initiative from the Paley Center for Media in New York City and Springboard Enterprises, a nonprofit business women’s advocacy group in Washington, D.C.

Amy Millman, co-founder and president of Springboard Enterprises, expects the forum next month to draw venture capital investors, who could view the forum as an inexpensive “good place to park their money.”

“We don’t attract the Morgan Stanleys and the Goldman Sachs,” Millman said, referring to the two major investment banks left standing after the collapse of Lehman Brothers and the distressed-sale of Merrill Lynch this week. On Wednesday both of the two remaining major banks’ shares were hit by news of the government’s bailout of investment-insurance giant American International Group.

“We attract people at different points in the funding continuum. They’re talking about billions, we’re talking about millions,” Millman said. “Volatility is not in the early-stage investments, it’s in the big investments.”

Weathering the Market Storm

If Kogan and others can attract venture funding they will be reaching a new goalpost for female entrepreneurs at a time of otherwise rapid retreat in credit markets.

Between 1997 and 2006, the number of companies majority-owned by women climbed 42 percent, nearly twice the rate of growth of all U.S. firms, according to the Center for Women’s Business Research.

But women’s access to venture capital has lagged far behind, a recent Dow Jones Venture One study found. Companies founded by a woman received 8 percent of venture capital in 2007, up from 6.5 percent in 2006.

The study found that 3 percent of venture capital went to female CEOs in 2007, down from 4.3 percent in 2006.

Springboard Enterprises has conducted 17 similar forums for female entrepreneurs and amassed an impressive track record, with 42 percent of its presenters raising money as a direct result of the forums and 80 percent eventually raising money. Kay Koplovitz, founder of USA Network, and co-founder and current chair of Springboard Enterprises, estimates that directly and indirectly, the forums have helped raise more than $4 billion.

The October forum will be the first dedicated to female-led ventures in emerging media and entertainment, encompassing television, radio, mobile, print and digital media.

Widening the Pool

It is part of an effort to “widen the pool” of successful venture-backed high-growth media companies led by women, as well as “introduce new digital media participants–venture capitalist, lawyers, accountants and entrepreneurs–to the Paley Center for Media,” said Koplovitz.

Even though the Internet lowers the barrier of entry to what Koplovitz called an affordable price “based on a small sum, often under $10,000, and a whole lot of sweat equity,” venture capital is still key for getting a digital media company off to a strong business start.

The uneven distribution of equity funding for female-led start-ups can be attributed in part to the dearth of female venture capitalists, who represent only 7 percent of venture capitalists in the United States, said Sharon Vosmek, CEO of Astia, a San Francisco-based nonprofit that works to connect women to investors. “Venture capitalists indicate that they prefer to invest in people that they know,” said Vosmek. “Today in the U.S. it is still largely the case that men and women have different business networks.”

Despite knowing about the investment world through her previous job, Kogan found it was still daunting to raise the initial money for Work It, Mom!, particularly in a tight credit market. She ran the company for 16 months on $300,000, which was raised from the first angel round.

More ‘No’ Than ‘Yes’

“Raising money is hearing ‘no’ nine times and hearing a ‘yes’ once,” she said, advising others to “bootstrap it as long as you can” and build the initial product, even if this means funding the company from savings.

Patricia G. Greene, a professor at Babson College in Babson Park, Mass., is a founding member of the Diana Project, which investigates the disparity between the number of female-owned businesses and the small share of equity capital that they receive.

She said not all female-led businesses are ready for an infusion of venture capital.

“One of the most important things for women is to understand finance, to understand when it’s the right kind of money for who they are and what they want to get done,” said Greene. “Most people start businesses in the service or retail industries. These businesses tend to stay smaller, most often not having the type of growth and return potential in which a venture capital fund would be interested.”

Venture capitalists often take an active role in the companies in which they invest, especially in areas like management, strategic marketing and planning.

Greene said that independence is the No. 1 reason people decide to launch their own businesses, and that some female entrepreneurs may not be willing to give that up. “Accepting venture capital is like a professional marriage. You are working to build a shared enterprise and in order for it to be successful you must understand each other’s goals and approaches to life.”

Millman recommends female entrepreneurs build connections with investors through venture-capital forums.

Springboard offers a coaching program in doing so. Last July, for instance, it conducted a one-day session at Google’s offices in New York for participants who were then matched with coaches who have since been helping them prepare presentations for the October forum.

Irene Lew is a freelance writer living in New York.

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