Women Entrepreneurs Face Venture Capital Gender Gap

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June 17, 2004 -- A new study shows that when it comes to starting a business, your chances of raising venture capital are a lot better if you're a man. A whole lot better.

According to a study from Growthink Research of Los Angeles and re:invention, inc., in 2003, women founded only 84 out of 1,860 companies profiled and received $783.8 million worth of venture capital. That amount was just 4.2 percent of the total $19 billion doled out to all companies in the study.

"The disparity in funding between ventures led by males and females continues, but there are several areas of note in which women-led companies are performing better than others," said Corey Lavinsky, CEO of Growthink Researchl, in a statement.

The bulk of female respondents were concentrated in particular areas. Almost 75 percent of the women entrepreneurs in the study founded healthcare or business software and service companies. In several sectors, women-led companies excelled by raising more than 10 percent of the total dollars invested in agricultural biotechnology, human resource software, imaging technologies and email/messaging software. Overall, women-led biotechnology and pharmaceutical companies raised over $289 million in 2003.

Re:invention hopes to use the findings to promote further development of female-owned businesses. "Instead of bemoaning findings in this new report as yet another blow to women, we should be asking what can we do and where do we go from here?" said Kirsten Osolind, CEO of re:invention, in a statement. "We need to cultivate programs that help venture capitalists scale their business models and identify new high potential women entrepreneurs, as well as encourage, support, and promote visibility of women entrepreneurs in their attempts to stand out when raising start-up capital."