What's the best U.S. city for women entrepreneurs? Of the 692 women-led companies in the Inc. 5000, the Washington, D.C., metro area boasts 74 of them. That's 23 percent of the total, higher than that of any other metro area with at least 10 women-led companies on the list. Second place goes to New York, with 20 percent. Overall, 13 percent of Inc. 5000 entrepreneurs are women.
"Entrepreneurship has a very positive connotation here in D.C.," says Carla Valdes, a venture capitalist who is now the founder of keepsakes company Handpressions. Of women's role in the entrepreneurial ecosystem, she says, "if you asked me two years ago, I would have said the perception of women was very negative. But it has changed quite a bit... Men are used to seeing us run companies and seeing us on stage."
Perhaps nowhere is the environment for women more positive than in government contracting, due largely to the existence of various certifications for small businesses, women-owned businesses, and historically disadvantaged, or so-called 8(a), businesses. Of the 74 Inc. 5000 women-run businesses located in the D.C. area, 32 are involved with government contracting. An additional 12 say they are information technology companies, also contracting with governments. Four women-led companies in other industries list government agencies among their largest clients. "I think a lot of women go into government contracting thinking it will be to their benefit that they're women," says Mary Beth Long, a former CIA operative and founder and CEO of Metis Solutions, which provides overseas intelligence analysts to government agencies.
Rachel Everett, the founder and CEO of Viderity, is among them. "If I didn't have 8(a) and women-owned certification I would not have been able to jump-start my business like I did," she says. Viderity does web programming, support, and development and expects about $24 million in revenues for 2014. "The certifications allow you to go up to a program manager you have already met, and already proven yourself to, and say, 'Why compete on this contract? You know me, you know my team, so let's do business.' You can literally sell to the program manager."
Long says things haven't worked quite that smoothly for her. Long is a former assistant secretary of defense, and her U.S. Small Business Administration representative told her that as such, she was very unlikely to qualify as disadvantaged under 8(a). "I appreciated the candor," says Long. In addition, there are supposedly so few women in her particular part of the industry that the defense and national security organizations that buy her services have obtained waivers from their requirements to contract out to women-owned companies. Long's reaction when she discovered this: "I was appalled and pissed and insulted.
"The contracts that come out for women in government are for lawn mowing," Long says. "Buying computers and desks. Answering the phone, finance. We keep seeing them for base maintenance. They're administrative contracts. God bless those women, but that's not my business."
Long's company does get work designated for small businesses, as does Everett's. That's great for Everett, who wants to run her company for a long time, but creates unique problems for Long, who wants to sell someday. If Metis were to be sold, it couldn't transfer the contracts it won as a small- or women-owned business to the new, larger owner. "It keeps the small and women-owned companies from having an equity event," says Long. For women-owned companies, even an equity investment, as opposed to a sale, is fraught, because the women-owned share of the company must be at least 51 percent. In other words, a woman must maintain a controlling interest in the company at all times to qualify for contracts.
"Some of these women want to start another business but they can't, because they can't get money out of the original business," says Long.
Money and Networking
There are other reasons D.C. has been such fertile ground to entrepreneurs. First is the fact that the housing bust didn't devastate D.C. the way it did other parts of the country. There's a constant transient population of people moving to and from the area for government jobs, which means people are always buying, selling, and remodeling, says Mina Fies, president of the D.C. chapter of the National Association of Women Business Owners and founder of design/build firm Synergy Design and Construction. Four of the five wealthiest counties in the nation are part of the larger D.C. region.
Entrepreneurs also say that although the U.S. Small Business Administration provides mentoring and counseling nationwide through its Score offices, it's especially active in and around the national headquarters. Everett raves about her counselor's expertise in--you guessed it--government contracting. "My mentor would spend an hour walking me through the major contract vehicles," she says. "They would say, 'This is how it's defined by the government, and here's how it really works.' They wanted me to avoid the pain they had experienced."
These women entrepreneurs say that D.C. is also brimming with networking groups for entrepreneurs and for women entrepreneurs, but finding the right one takes some persistence. "Just handing out a bunch of business cards is not how you network," says Fies. "Pick two groups, or three at the most, and get really involved. Show up, get on a committee, go all-out so people will get to know and trust you."
Women in government contracting also speak approvingly of Fed Talks, an annual conference for the tech and government IT communities. Pre-proposal conferences are another good opportunity to meet companies and founders in similar fields. Tech entrepreneurs can also look to groups such as the Lean Startup meetup, Fosterly, Her Corner, and Sterling Women.
Long says she didn't get much out of groups for women business owners, but she did join the Potomac Officers Club. The club is not exclusively for entrepreneurs, or for military personnel, but Long says a lot of people in the defense and security industries are members. She offered to speak to the group for free, and the other members helped her avoid some of the pitfalls of entrepreneurship, such as the ever-present cash-flow woes. The most important things Long says she's learned, though, could apply equally well to any industry or city: "Beware the tyranny of cash flow. And follow your gut."