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Ladies, bring us your business plans

Bruce Macfarlane

Wednesday, 11th June 2008

Venture capitalist Bruce Macfarlane says women are a better risk than men, yet they rarely ask him to back them

In eight years in venture capital, my partners and I have met only a handful of female applicants for capital. Yet we receive 500 to 600 business plans every year. It seems remarkable when you consider that women figure prominently in almost all walks of life — over 50 per cent of medical-school graduates, for example. Indeed, there have been so few that each encounter stands out.

Our firm had been going for about a year when we were approached by a very imposing lady with plans for a software company. She was introduced by our accountant, but a little background digging revealed a history of bad debts — including a debt to our accountant, who clearly saw a venture-capital refinancing as the solution — and an insolvency. When we summoned the courage to tell her we were not going to back her, she rose to her full height, blocking the only exit from our modestly proportioned meeting room and even physically threatening our marathon-running, mountain-climbing six-footer of a junior associate.

Not long after that, we were approached by another woman looking for funding. This time the entrepreneur was a pint-sized pop star who had enjoyed several hits in the 1970s. We were keen to learn about her business, and not just because we might have been a little star-struck. In fact, she had an interesting concept for a website that would showcase bands, known and unknown, and allow consumers to sample their product and buy their music or book them for weddings and parties. Venture capitalists are cautious optimists, a bit like serial husbands (we’re a male-dominated profession): we learn enough from experience to require pre-nuptial agreements, but not so much as to lose our enthusiasm. So we are always curious to know how much cash the entrepreneur has personally at risk in the business. None is not a satisfactory answer, particularly from a successful singer. We also like to know how much their friends and family believe in them — and an endorsement of just £2,000 from a Rich-Listed showbiz colleague is worse than no endorsement at all.

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Sharon Vosmek, CEO, Astia

June 16th, 2008 9:54am

This is a well thought out piece that clearly reflects upon the core issue entrepreneur programs should be prepared to address if they would like to see more women participate. Risk for women is best mitigated by information and understanding. If VCs and Business Angels spend time exposing the opportunity and process of raising capital in a clear and thoughtful way, they will see more women participate. Women like to know how things work and can potentially play-out before opting in themselves. I work for a Silicon Valley-based, entrepreneur-focused organization that just does this for women-led, high-growth start-ups - quite successfully with a greater than 60% funding success rate for the companies we serve. We are just launching our UK program this fall. I do hope the UK investment community will be ready to participate in the process of pulling back the curtain and showing how things work here.

To read more and to find out how to contact us: http://www.astia.org/

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