Survey: Women Slow to Get Venture Capital

S A N   F R A N C I S C O,  July 19 -- Although she had been steadily building herbusiness since 1994, Nell Cote didn’t really feel like afull-fledged entrepreneur until just a few months ago.

In April, her New York-based company, Hudson Williams, receivedthe venture capital industry’s seal of approval with its firstround of funding — a $3 million investment by Wheatley Partnersthat had almost as much psychic as fiscal impact.

“It’s given me a lot of confidence and has validated mycompany,” said Cote, whose 34-employee firm helps businessesimprove their Web sites. “People may meet me and think, ‘She’s awoman,’ but now they know I have venture capital behind me. Itmakes me more credible.”

Cote’s experience remains a rare phenomenon for womenentrepreneurs.

2% Into 38% = Woe

Even as venture capitalists shower billions of dollars onstart-up companies, only a trickle of the money is being investedin the estimated 9.1 million businesses owned by women.

About 38 percent of U.S. businesses are owned by women, yet just2 percent of the money invested by venture capital firms goes towomen-owned firms, according to a survey released today by theNational Foundation for Women Business Owners and Wells Fargo & Co.

“Women business owners still tend to be invisible to venturecapitalists,” said Sharon Hadary, executive director for theNational Foundation for Women Business Owners, a nonprofit researchfirm in Washington, D.C.

The survey indicates most women entrepreneurs are relying ontheir own savings and loans to finance their firms’ growth insteadof tapping into a rich vein of venture capital for cash infusions.Venture capitalists invested $70 billion in U.S. companies in the15-month period ending March 31, according to Venture Economics, aresearch firm.

The trend uncovered by the survey means many women-ownedbusinesses are being saddled with cumbersome debt that restrictstheir ability to grow. Meanwhile, venture capitalists may bemissing out on golden opportunities being developed by womenentrepreneurs who are unsure how to pitch their business ideas.