Editor’s note: Venture Watch is a regular feature on Tuesdays.

RESEARCH TRIANGLE … An analysis of 1,860 companies that raised $19 billion nationally in 2003 reported that women-led businesses raised less than 5 percent of the total.

The study, conducted by California-based Growthink Research and Chicago’s re-invention inc. says that women-led businesses nevertheless scored more than 10 percent of sector funding in several areas.

“Leading the pack,” says Corey Lavinsky, chief executive officer of Growthink, “are women-led biotechnology and pharmaceutical companies which collectively raised $289 million.”

He adds that, “Women-led companies in HR software, e-mail-messaging software, and imaging technologies all raised more than 10 percent of the total dollars invested in those particular fields.”

Lavinsky tells LTW, “We see covers on Time magazine and all the business magazines focused on how women are progressing, but the bottom line when you look at the raw numbers is that less 5 percent of the companies we surveyed have women CEOs. That’s outrageously low.”

Checking the facts

Even on a broader measure also included in the report, the number of women executives in the 1,860 companies only totaled about 10 percent.

Lavinsky says his small Los Angeles-based company undertook preparing reports about venture capital nationally to rectify disparities he saw in similar reports by large national companies such as PriceWaterhouse.

He explained that while those large firms rely on surveys filled out by entrepreneurs and venture capitalists, thus missing or miss-interpreting financing information, he began compiling reports based on Growthink’s own databases culled from a variety of sources. Growthink’s methodology resembles that of the NC Council for Entrepreneurial Development’s annual venture investment report, which checks news releases and other information against calls to companies and VCs to verify data.

Although Growthink’s database cites a number of NC women executives in its hundreds of pages, public firms were not surveyed by Growthink and it was a sampling, so some prominent area women leading companies were not in the report.

Christy Shaffer, chief executive of Inspire Pharmaceuticals (Nasdaq::INSP) and new chairman of the CED, Rita Geiger of Infostrengh, and Deanna Nelson of Biolink are not mentioned for instance.

The report doesn’t cover women in executive roles at key organizations, where women are particularly strong in North Carolina.. That list would include Monica Doss, who heads the CED, Terry Thorson, who leads Charlotte’s Business, Innovation and Growth Council (BIG), Deborah Clayton, director of The Charlotte Research Institute at UNC-Charlotte, and Leslie Alexandre, CEO and President of the NC Biotechnology Center, movers and shakers all.

Kauffman Study

This past March a Kauffman Foundation funded study found the venture capital industry was dominated by males and attributed the lack of women decision-makers and limited network connections to fueling the female entrepreneur funding gap. The Kauffman-funded research was based on data from1995 to 2000.

“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?” suggests Kirsten Osolind, CEO of re:invention, a marketing consulting company dedicated to women-led businesses and a study sponsor.

“We need to cultivate programs that help venture capitalists scale their business models and identify new high potential women entrepreneurs,” she says.

Deanna Nelson, president of Cary-based Biolink, tells LTW, “I’m not surprised by any of those findings.”

Nelson says that although Small Business Innovative Research grants are supposed to earmark a small percentage to women-owned businesses, “It doesn’t happen. It’s one of those things that can be ignored with no political risk.” She says Biolink, which is working on a novel drug delivery system with development of a drug for irritable bowel syndrome (IBD) first in line, has not had any success with its SBIR applications.

NASA Engineers

Although Lavinsky attributes some of the uneven funding of women-owned health care related companies (44 percent of the total women-owned firms received) to a traditional lack of women’s interest in engineering, Nelson challenges that idea.

“I know a whole lot of women engineers who entered the field successfully,” she says. “NASA has a number who made it right to the top.”

But she, adds, “Women like myself frequently see two sides — the business side and the people side and it’s that people side that draws them into healthcare, where they can provide goods and services that have a positive benefit to those they serve.”

Nelson says that if the proverbial “glass ceiling” women need to break through to rise in the executive ranks is real, one thing will open it. “The more women enter this stream, the more that fragile barrier, if it exists, will disappear. There’s nothing like success to open doors.”

Nelson says her company is still seeking investments whether from a potential licensing partner or the investment community. “Our IBD drug has the potential in the hundreds of millions and a short pathway to approval,” she says.

Oslind, who says she doesn’t see the reports findings as negative, says one way women entrepreneurs might use it is to “See who’s funding women-led businesses.” Her own company, re-invention inc., specializes in helping women-led firms achieve greater visibility.

Key Findings

The Growthink report found that:

  • Women headed 4.5% of all funded firms and received less than their fair share of capital (4.2%). This amounts to 84 women-led companies that raised $783.8 million.

  • Over 200 investors provided venture capital to privately-held women-led companies in 2003, led by eight that funded three or more ventures.

  • Women-led companies in the healthcare sector dominated all women-led firms receiving funding, receiving nearly 55% of funds.

  • Women-led firms raised more than 10% of the total dollars invested in the following subsectors: Agricultural Biotechnology (17.5 percent), HR software (14.2 percent), imaging technologies (14.1 percent), and email/ messaging software (11.5 percent).
  • Gathering Angels

    Four companies gave presentations to ten angel investors and five non-investor observers at the June 16 Gathering of Angels event, reports Tom Vass, who coordinated the event.

    Vass says that a group of private investors in Moore County, where Pinehurst is located may form but is interested in investing only in companies that will locate in the County.

    “We’ve met with them, but they’re not cooperating with us, and that’s a real problem,” he says.

    Vass says another Gathering of Angels is planned for September, and he is still working on developing similar meeting though Capitol City clubs throughout North Carolina.

    Growthink Research: www.growthinkresearch.com

    Re-invention inc.: www.reinventioninc.