April 10, 2004
Women Entrepreneurs
Posted by Gordon Smith

This weekend and last, I had discussions with a single mother who has for years supported her family working 9-5 as an accountant. She put herself through college when her children were young, and she has had steady employment ever since. Until the end of 2003, when she was downsized. Now she is wondering whether she should start/buy her own business or look for another accounting job. Although I like the idea of entrepreneurship, I worry about her.

She came to me with an idea: how about buying a Curves franchise? I teach a segment of my Law & Entrepreneurship course on franchising. They make for fascinating study, but I would not encourage someone I care about to become a franchisee. When she told me that several Curves franchises near her home city are currently up for sale, the radar starting beeping madly. Why were they selling? In one instance, because the franchisee was moving to a bigger market. In two other cities, the franchises were losing money, and the franchisees wanted out. Scratch Curves.

Today I noticed that re:invention had noted a study on the dearth of women in the venture capital industry. This is not exactly news to anyone who has operated in that space. Several years ago, I did a survey of venture-backed entrepreneurs. Although I was hoping to examine whether women and men answered the survey differently, I could not get enough responses from women. Women are not less responsive; the problem was that so few women were in the sample.

The root causes of this disparity are not hard to imagine. Certainly the historically lower number of women who are attracted to engineering and science has something to do with it. Many VCs are former entrepreneurs, and they tend to specialize in technology-based industries. Underrepresentation of women in that context is predictable. Also, part of the problem probably is attributable to the fact that venture capitalists rely heavily on intuition rather than objective analysis when evaluating entrepreneurial talent. The methods employed by most venture capitalists border on superstition. Again, the predictable result is that venture capitalists will attempt to replicate themselves. I do not mean to suggest that the small number of women is acceptable, only that it is predictable.

Kirsten offers still another explanation:

My friend, Mark, whose business is capital restructuring, has offered me amazing insight into the network players and the rationale behind the financing and growth process. I've learned that some investment VCs believe that women business owners deliberately keep their companies small or don't know how to grow their business. Although the reality may be a woman-business owner doesn't know how to connect with venture capitalists or that they prefer to avoid taking partners in their growth process...the fact is, perception IS reality. And women are the only ones who can actively change that perception. The [onus] is on us, not them.

Of course, my friend is not looking to become a high-tech entrepreneur, but the dearth of women in the venture industry reminds me that her choices and challenges are different than mine. Being a woman who aspires to become an entrepreneur brings with it not only the usual business concerns, but a whole raft of cultural concerns that men largely overlook. In the end, I suspect my friend will find the prospect of starting a new business too daunting and too risky, and she will end up working as an accountant for someone else. Not a bad life, but I wish she could come to it wholly on her own terms.

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» Venturpreneur: Women Entrepreneurs from Daily Links ...
"Interesting Post, however I feel that there is opportunity for women entreprenuers solely becuase of ..." [more] (Tracked on April 10, 2004 @ 6:02)
» New Demographic Trends from BusinessPundit ...
"This piece from Fortune has some interesting facts about future demographic trends.When asked how lo ..." [more] (Tracked on April 13, 2004 @ 10:21)
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