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How Women Are Disrupting Venture Capital

May 7, 2019

According to a recent report published by American Express, women presently own 40% of all U.S. businesses – 12.3 million companies. These firms employ 8% of the workforce and generate $1.8 trillion in revenues. Yet despite the meteoric increase in the number of successful women-led businesses, female entrepreneurs receive less than 3% of venture capital.

The disproportionate amount of venture capital allocated to female entrepreneurs was addressed at a session titled, “Disrupting Venture Capital: Funding Women Entrepreneurs” at eMerge Americas, a premier technology event connecting the Americas.

The session featured a panel of successful female entrepreneurs and investors including:

  • Susan Duffy, Executive Director, Babson's Center for Women's Entrepreneurial Leadership
  • Kathy Korman Frey, Founder, CEO, The Hot Mommas Project; , Instructor of Women's Entrepreneurial Leadership, GWU, School of Business
  • Kimberly Strong, Investor, Pipeline Angels
  • Debbie Swartzberg, Founder & Executive Chairman, DialogEdu

And, they were all eager to share their experiences, triumphs and advice.

According to the panelists, “women entrepreneurs who were backed by women investment funds have experienced more successful exits.”

The panelists explored reasons behind this phenomenon. Primarily, they focused on two fundamental ingredients that women financiers tend to bring to the investing table that increases these success rates: camaraderie and counseling.

According to the panelists, female financiers have an easier time bonding with women entrepreneurs and frequently relate more to the female founder’s personal entrepreneurial journey.

Female financiers are also more inclined to allocate time to mentoring.

Kimberly Strong, an angel investor, shared a heartening story about a female entrepreneur whose investor deck needed some work, and without hesitation, a prospective angel investor – who the entrepreneur only just met - offered to assist without seeking anything in return.

Because the venture capital world has been primarily male-dominated, it has historically been much more challenging for women founders. Debbie Swartzberg (whose investors ultimately received five times their money), relayed a pitch experience where she was once told to “get her ‘Y’ on” by accentuating aggressive attributes over warmer ones when delivering her investor presentation.

But, the times they are a changing and a new paradigm is unfolding – one where more women entrepreneurs with successful exits now find themselves in the investing seat.

It will certainly be interesting to see how the proliferation of female financiers will transform the venture capital landscape – not to mention the IPO market.

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