Women in Venture Capital

by Erin Abrams (New York City)

Conventional wisdom on the street is that most venture capital goes to a certain type of entrepreneur. Smart. Innovative. Tech savvy. Well-connected. White. Male.

At the National Venture Capital Association’s annual conference in May 2008, legendary VC financier John Doerr confirmed the stereotype, acknowledging that VCs still primarily invest in “white male nerds who’ve dropped out of Harvard or Stanford.”

Why is it that the stereotypical recipients of venture capital (VC) tend to conjure up images of the smiling young men of break-away successes like Google, Facebook, and Youtube, but very few finance types—let alone VC experts—can point to examples of women-led or ethnically diverse start-ups that have received VC and generated a big return on investment? This image is backed up by the data. In 2006, only 4% of VC-backed companies had female chief executives, and those companies with women as leaders received just 3% of the total dollars raised from VC.

In 2007, Forbes magazine listed the top women in venture capital. However, the article that accompanied the list, entitled “Where are the Women Venture Capitalists?,” noted that they were few and far between. In 2001, when Forbes began the Midas list, which ranks the top venture capitalists, there were no women on the list. In 2007, there were five:

Annette Campbell-White formed her own VC firm, MedVenture Associates, in 1986. The firm broke onto the scene in 2004, when her company provided funding for the deal in which Abbott Labs acquired TheraSense, a company that makes blood glucose meters, for $1.2 billion. A breast cancer survivor herself, Ms. Campbell-White is excited about companies like Intact Medical, which developed a new type of technology for breast tumor removal.

Patricia Cloherty of Delta Private Equity Partners chairs a Moscow- and New York-based VC firm that provides funding to Russian entrepreneurs. The Tessera Technologies deal in the semiconductor industry put Ms. Cloherty’s company on the VC map. She has moved between the private and public sectors, having served in the Small Business Administration under President Carter and on the Investment Advisory Council under President Bush.

Sigrid Van Bladel of New Enterprise Associates also made the list. The Belgian-born financial wizard is known for her acumen in the biopharmaceutical and medical device fields In 2006, she was involved in Alexza Pharmaceuticals’ IPO. She serves on the Board of Directors for Acorn Cardiovascular (heart devices), Kanisa Pharmaceuticals (cancer treatments) and SurgRx (tissue sealing).

Elizabeth Weatherman of VC giant Warburg Pincus also made the list, along with some of her colleagues. Ms. Weatherman manages Warburg’s health care team. She is primarily interested in companies that produce medical devices for less invasive procedures. Her most successful IPO to date involved Kyphon, a maker of spinal surgery devices. She also took public companies like ev3 (devices to treat vascular disorders) and DexCom (glucose monitoring systems).

Finally, Kathleen LaPorte of New Leaf Venture Partners rounds out the top 5 women in venture capital. This pharmaceutical sector investor struck gold with two recent IPOs: the online health insurance provider EHealth and peptide-based drug company Affymax, which was spun off of GlaxoSmithKline. Ms. LaPorte built up the life sciences practice at Sprout Group, the VC arm of Credit Suisse. She is now the managing director at New Leaf, which has taken over Sprout’s health care portfolio.

On the entrepreneurial side, some VC funds seek to invest primarily in women-owned or run businesses. For example, Isabella Capital runs Fund Isabella, which focuses on early stage, fast growth women-led companies or those operating in the women’s market. Isabella’s founders—whose company is named for Queen Isabella of Spain, who funded Columbus’s exploration of the New World—recognize that women lead over 30% of all U.S. enterprises while receiving less than 5% of venture capital. Focusing on women provides this VC fund with a high potential market niche.

Isabella’s top leadership team is all women. Managing Director Peg Wyant has over 30 years of experience in venture capital. Before founding Isabella Capital, she managed $500 million of branded business and founded Procter & Gamble’s Strategic Planning and New Ventures Group. She also helped lead more than $10 billion in acquisitions and divestitures for several Fortune 500 companies.

Isabella’s CFO Susan Schieman is a CPA with over 20 years of experience in accounting, including 10 years spent working at Deloitte and Touche and 5 years at her own CPA firm.

Do you have a story about your personal experience trying to get VC for your venture? Or do you know an up and coming female star of a VC fund? Keep us posted in the comments section, so that we can start a dialogue about women in VC.