SiliconBeat: Venture capital is gushing in. Question: Will it help women?

Jennifer McFarlane, WTC

We beat the dead horse Monday, and we're going to do it again today, but with a twist.

By dead horse, we mean the observation that there's a tremendous amount of venture capital flowing into the market right now. And by twist, we ask what this could mean for women.

First, today comes news from VentureOne (downloads press release) that venture capital firms raised 16 percent more in the third quarter than they did in the same quarter last year. Notable is that fund sizes are getting bigger. The number of funds isn't...

growing (only one more fund was raised this past quarter, compared to the same quarter a year ago). Moreover, as VCs compete with each other, they are offering entrepreneurs more money in return for the ownership stake they get. Thus, they are bidding up the value of those companies: Valuations rose to $15.6 million from $13.5 million in the same quarter a year ago. There is pressure building up for VCs to find good companies.

Which brings us to the conference hosted by the Women's Technology Cluster yesterday, where sentiment was a bit depressing: Women, the panelists said, haven't made much progress in the world of venture capital. Here is our story about it.

As usual, space in paper edition was limited, so here are other comments: David Ellington, commissioner of the San Francisco Employees Retirement System, which has $13.2 billion invested, a good portion of it into venture capital and buyouts, said: "It's been very disconcerting. I really don't understand it."

Cindy Padnos, partner at Outlook Ventures, a San Francisco venture capital firm, spoke on a panel with two male venture capitalists about investment decisions. She told us later that women are having a tougher time because they don't know who to ask for mentoring advice. There are fewer female mentors. Like males, they tend to rely on people who they are more comfortable with -- but by default, these people are less likely to know how to pitch to investors.

But Jennifer McFarlane, chief executive of WTC, left us with this comment: She said the torrent of money that continues to flow into venture capital will put pressure on male-led firms to think more broadly on how they invest that money, and hopes that will include more women-led companies. And, as CalPERS' Panda Hershey explained, those female entrepreneurs will gain the experience needed to become a venture capitalists -- and things will begin to change, which is what she says she is seeing. So there is hope.

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From: Venture Capitol
Venture Capitol
Excerpt: "We are working with Capitol Hill police to fully understand and appreciate theShe said venture capital firms in the US.Please call...
Tracked: July 27, 2006 7:01 PM

Whenever there is one of these "women don't get any funding" stories, there are a few token investments by a few large firms, everyone is happy, and the journalists go back to their boilermakers. But nothing really changes.

Why don't women get a foot in the door? Well, instead of blaming the women for insufficient operations experience or lousy mentors ("hey, she's the victim so she must be the problem"), why don't we look at the *partners* doing the investment. Let's see - do they have extensive operations skills? Not usually - in fact, most of the time it's hard to figure out if any of these guys has ever held a real job. Do they have great business / investment relationships? Well, yes - if you think being the college roommate of a guy who somehow got into an investment firm job because he can drink boilermakers like nobody else. Of course, we really mean relationships that shape business success, but well, for most of these guys their personal success is enough...

Here's where a lot of women-run firms make a key mistake - assuming they have a real play here, they have a better chance getting funding from a top-tier VC than the rest of the pack. Why? Because a lot of top tier VC firms actually have partners with real operations experience, industry heft, and relationships. So if a woman has to be better than the men, at least she's talking to men that can actually judge that from personal experience.

As to the B and C teams - leave them to the web 2.0 spinners and liars. Unless, of course, you are also a spinner and a liar. Then, maybe, it will all work out.

Anonymous on November 2, 2005 1:00 PM
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Doesn't have to be JUST a woman leading the VC firm. Lots of VC firms have women on-board. Heidi Roizen is a good example of one of Silicon Valley's leading venture capitalists. Here's a quote from the Mobius website:
"Heidi is one of the best entrepreneurs I know. Unlike a lot of other venture folks you'll meet, she's actually been in the battle and right on the front lines. This makes her an awesome teammate."
"Heidi's rolodex is more than a bunch of names and email addresses... it contains a few decades worth of close friends going all the way up to the likes of Gates and McNealy. From a business perspective, it's amazingly valuable to know there's not an executive, analyst, or press person in the industry that wouldn't return Heidi's call asap."
Royal P. Farros
CEO, MessageCast, now a part of Microsoft

A. Nonymoos on November 3, 2005 4:22 AM
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