- The Washington Times - Monday, July 10, 2000

The dash for cash by private companies pitching ideas to venture capitalists is nothing new.This week's venture capital fair at America Online Inc. will put a new spin on the practice.

The heads of about 41 East Coast companies from Florida to New York will make a bid for money at a two-day event beginning tomorrow that puts cash-hungry companies in front of willing investors.

But all the corporate officials will be women.

"How do you sell a product? You market it. We're serving as the marketing agent for a new product, and the product is women," said Amy Millman, executive director of the National Women's Business Council and one of the hosts of the venture capital forum.

The technology industry has long been dominated by men, and the growing number of women-led firms have had difficulty gaining the attention of venture capitalists investors who provide financing in return for an equity stake in a company. Such investments have helped fuel the growth in technology companies.

Fewer companies owned and led by women receive private equity than firms headed by men, according to California-based VentureOne Corp., which gathers information about venture capital investment.

About 5 percent of the 3,083 companies that venture capitalists invested in during 1999 had a woman chief executive, according to VentureOne.

But 38 percent of all business in 1999 were owned by women, according to the D.C.-based National Foundation of Women Business Owners.

"The figures indicate women-owned firms aren't getting venture capital at a comparative rate," said Anne Armstrong, president of the Virginia Center for Innovative Technology.

There's no clear explanation why.

Ms. Millman said the National Women's Business Council began asking venture capitalists in 1997 why they didn't invest in women-led firms.

"They said they never saw them," Ms. Millman recalled.

That may be because "women are the newest entrants" in the tech industry, she said.

Mrs. Armstrong said women entrepreneurs have to tap into the network of business contacts that men already have.

"We're trying to make sure women are aware of and have the same opportunities that everyone else does," she said.

No one claims venture capitalists are discriminating against women entrepreneurs, and the venture capital firms also dominated by men are viewed as motivated largely by profits.

Investing is absent of race, religion and creed, said Gene Riechers, managing director of FBR Technology Venture Partners, part of Friedman, Billings, Ramsey and Co. in Arlington.

"Our approach is to look for good deals. We don't care about race, religion or gender. One of the wonderful things about the technology industry is that it's unbiased. If you have a company that can do well, you will be rewarded," Mr. Riechers said.

FBR Technology Venture Partners has invested $110 million in 29 companies, and two of those companies were started or co-founded by women. FBR's venture capital fund invested a combined $13 million in Herndon-based EqualFooting.com, whose president is Angie Kim, and in Electronic Commerce Industries, started by Paula Jagemann.

The 41 companies seeking investment from venture capitalists this week at Springboard 2000 at AOL have a wish list of a combined $450 million in funding.

Louise Sengupta's Paratek Microwave Inc., a Columbia, Md., wireless technology company, will make a pitch for $50 million, the largest funding request among Springboard 2000 participants.

The money is there. Venture capitalists invested $37.4 billion last year, according to VentureOne.

"If we can anticipate the types of businesses that investors are interested in investing in, whether or not the company in question is headed by a woman or not is immaterial," said Ms. Millman, who helped trim the list of companies appearing at Springboard 2000 after organizers received 300 applications from businesses seeking a spot at the event.

Organizers of Springboard 2000 brought women-led companies and venture capitalists together in January in California, and those companies walked away with $165 million.

With so much attention being given to women-led companies, the balance has shifted.

Through March 2000, 12 percent of the companies receiving venture capital were headed by women, according to VentureOne. Whether venture capitalists sustain their interest in women-led firms throughout the rest of the year remains to be seen.

"But the trend obviously is very positive," said Mary MacPherson, executive director of the Morino Institute's Netpreneur.org on-line newsletter and a host of Springboard 2000.

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