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Alicia Morga

Alicia Morga

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Where Are the Women Entrepreneurs?

Posted: 01/25/11 05:04 PM ET

Silicon Valley has been batting around the question, where are the women entrepreneurs? There are women entrepreneurs. In fact, women-owned businesses contribute close to $3 trillion to the U.S. GDP, according to the Small Business Association. But these ladies aren't on the radar of Silicon Valley because they don't have venture funding.

It's easy to see why many women don't have venture funding. You only have to understand what it takes to obtain it.

Most women owners of small-to-medium sized businesses don't go after venture capital because they don't know anybody employed by a venture capital firm -- part of what is required to gain entry. The venture capital community, for all the power it yields, is small and insular. That's not to say it can't be cracked, but if you don't live in Silicon Valley, New York, Boston, Colorado, Austin or Los Angeles, you're going to have a hard time building the relationships it takes to get a meeting.

There is, however, another way. You have a big idea with a large potential return on investment.

The critique of women is often that they don't think big enough, but the critics forget the practical realities of aiming for the fences. It's risky. Many of the women who start businesses often get their companies to a place where they are making more money than perhaps they thought they'd ever see -- probably right around $250,000 a year in take home pay. At that income level, they can put their kids through college, buy a home and manage their lives. For all the risk inherent in entrepreneurship, it's a comfortable outcome and doesn't make the owner any less of an entrepreneur. It is not a number, however, that excites venture capitalists.

Many of these businesses actually could be bigger and more interesting to VCs, but at least three things would have to happen -- and they're not unique to women owned businesses. First, the owners would have to have access to capital to expand. It's nearly impossible these days to get a small business loan and you can see here the classic chicken versus the egg conundrum.

Second, the businesses would have to be centered on technology. Venture capitalists, in general, are uncomfortable with non-technology focused businesses, even though non-technology focused businesses make up greater than 50% of the stock market.

Third, the owners would have to acquire new skills. It's one thing when you're the plumber. You can generate a certain amount of revenue doing most of the plumbing yourself. But in order to expand, the plumber has to become a manager, has to build systems, an organization and these are difficult things to do when you're trying to actually get work done at the same time.

Even if all these criteria are met venture capital investment may still not make sense for the business. And there are plenty of women who are smart enough to know that and therefore do not seek it. Yet, Silicon Valley doesn't recognize these ladies as entrepreneurs.

To fit Silicon Valley's myopic view of an entrepreneur women business owners would have to raise venture capital which a certain percentage don't need, some don't qualify for, and others don't even know is possible.

Still, if we want more venture-backed women led businesses, we can start by inspiring women to first become entrepreneurs. We can do this by touting all women entrepreneurs, regardless of their type of business or financing.

Further, we can educate young women about the venture capital industry. It's easy to forget when you're in Silicon Valley, but many young people, future business leaders, have never even heard of venture capital. Exposure can help shape the form of dreams.

Finally, the venture community itself could benefit from meeting women entrepreneurs where they find them. Innovative financing models, such as extracting a return through dividends and smaller, paced investments alongside a broadening of the types of businesses funded, might not only support a more balanced landscape but also restore venture capital as a viable asset class.

The reality is there are a number of women entrepreneurs out there who have built successful businesses -- often, one dollar at a time. These ladies are my heroes and from my vantage point, I see them everywhere.

 
 
 

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