Women Business Owners: Part One ... Clout
Women Business Owners: Part Two ... Credit
Women Business Owners: Part Three ... Technology
Women Business Owners: Part Four ... The Internet
Women Business Owners: Part Five ... Capital
Women Incorporated, the Center for Entrepreneurial Leadership and Capital for Entrepreneurs are laudable demonstrations of private-sector equity resources for women entrepreneurs. Of course, the most notable public-sector resource for all smaller businesses and entrepreneurs is the US Small Business Administration (SBA).
From the recommendations of the 1995 White House Conference on Small Business to improve the capital formation and regulatory climate for emerging businesses, the SBA's Office of Advocacy has spearheaded the introduction of the The Angel Capital Electronic Network (ACE-Net) -- an Internet-based investment resource for smaller businesses and entrepreneurs. Maintained by The Whittemore School of Business and Economics at the University of New Hampshire, ACE-Net offers a resource for emerging companies seeking to raise equity capital in the range of $250,000 to $5.0 million. ACE-Net is a listing service for small corporate equity offerings; it prefers not to be perceived as a matching service. The inaugural university- or state-based non-profit network operators are:
- Technology Capital Network at MIT
- The Capital Network at Austin, TX
- ACCELERATE Technology, Small Business Development Center, UC-Irvine
- UCSD-CONNECT at San Diego, CA
- The Ben Franklin Partnership, PA
- Kansas Technology Enterprise Corporation at Topeka, KS
- Biotech Center at Research Triangle Park, NC
- Advanced Technology Center at Georgia Institute of Technology, Atlanta, GA
Of course, the SBA champions the needs of women business owners through its 54 women’s business centers in 28 states and Washington, DC. The mission of these women’s business centers is to offer a single point of access to all of the SBA’s regular and preferential services for women business owners. Many women business owners also find SCORE® -- Service Corps of Retired Executives to be an excellent point of counsel about equity funding sources as well as assistance with other startup and managerial services.
The quest for equity funding can frequently be facilitated by incorporating both regular and preferential programs into the business plan for the woman-owned enterprise. For example, the Women’s Prequalification Pilot Loan, Low Documentation Loan (LowDoc), CAPLines, Defense Loan and Technical Assistance (DELTA), Export Working Capital Program (EWCP) and International Trade Loan (ITL) programs are all variants of the SBA’s basic 7(a) Loan Guaranty Program. The SBA has licensed and supplemented the funding of private venture capital firms -- small business investment companies (SBICs) -- to make equity investments and long-term loans to smaller businesses and entrepreneurs. And a number of special services are offered under the Federal Procurement program including the Women-Owned Business Procurement program to facilitate marketing to the Federal government.
A creative source of equity funding is the Washington, DC-based Women’s Growth Capital Fund I,1 a $5.0 million venture capital fund to finance established women-owned businesses seeking expansion capital. "Women entrepreneurs in the mid-Atlantic region now have greater access to expansion capital to grow their businesses," explains Patty Abramson, co-founder and Managing Director of the Fund, "and the Fund will give investors access to a financing niche that provides a substantial opportunity for attractive financial returns, while reducing risks associated with earlier stage investing."
The Fund had 30 initial investors acquiring units between $50,000 and $500,000. Seventy percent of the investors in the fund are women. "An important goal of the Fund is to attract investment by women in women-owned businesses," asserts Abramson, who emphasizes that 40 percent of the people in the US with assets in excess of $600,000 are women.
However, it is estimated that only one percent of the approximately $5 to $6 billion invested annually throughout the US by the institutional venture capital funds is invested in women-owned businesses, even though the financial strength of women-owned businesses is virtually identical with that of all US businesses. The Women’s Growth Capital Fund makes equity investments of $100,000 to $500,000; average investments are in the $400,000 range. Along with offering the capital required for expansion, the Fund provides financial, strategic and other managerial expertise to its portfolio companies.
While immediate help may not be found in The Yellow Pages, locating adequate startup equity capital for the woman-owned enterprise is becoming more visible, rational and user-friendly. The keys to locating these funding sources are always persistence and diligent networking -- aptitudes for which women usually display superior intuitive mastery.
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Revised: April 22, 1998 TAF
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