The amount of venture capital investments that go to women-owned businesses is 2.5%. Take a moment to let that sink in. In an industry that raised $107 billion, women-owned businesses receive $2.7 billion.
That is an outrageous number. To learn more about why this number is so outrageous, mark Oct. 16 from 5:30 to 8:30 p.m. in your calendar. There is a screening of a documentary film titled “Show Her The Money,” at the University of Arizona’s McClelland Hall, 1130 E. Helen Street.
The film explores why the women-owned entrepreneurial community is so under-represented in the venture capital world. After the screening, there will be a panel discussion with women entrepreneurs, investors and educators diving deep on the issue. Wells Fargo is underwriting a 50-city tour of screenings of the film around the country.
I wanted to know more from the investors’ perspective, especially what women investors have to say. I spoke with Mara Aspinall, former founder of BlueStone Ventures, and now a partner with Illumina Ventures; Marie Wesselhoft, CEO of Zelos DX; and Nannon Roosa, CEO of Crescent Edge. Both Wesselhoft and Roosa are investors with Desert Angels, the largest angel investment fund in Southern Arizona ($12.8 million invested from 2020 to 2022).
Aspinall acknowledged the problem, and suggested both a top-down and bottom-up approach to rectify the imbalance. She knows that most venture capitalists are men. It is in many ways a boys club. Out of 3,417 venture capital firms in the U.S., 160 are run by women. Approximately 7% of the angel investors in the U.S. are women.
Both Wesselhoft and Roosa acknowledge the institutional imbalance, and recognize the sometimes subtle and sometimes blatant biases that exist. The types of questions asked of women owners versus men owners demonstrates the biases. Women are often asked “prevention” questions, where men are often asked “promotion” questions.
For example, women are frequently asked what their plans are regarding children, and if they will quit if they have kids. A not-so-subtle “prevention” question — I don’t want to lose my investment if you become pregnant. Men are never asked “father-to-be” questions.
Men owners are queried on plans and future possibilities. Where are you going with the business? What markets will you go after? Promotion questions.
Girl Scouts of Southern Arizona’s CEO Kristen Garcia-Hernandez and scout Summer Jacobs take the last steps before free descent from 5151 E. Broadway for the eighth Over The Edge event in 2023. Garcia-Hernandez is among the local sponsors of the UA screening, along with Kandy Hirsch, Chair of the Women’s Presidents Organization, and Rebecca Block, CEO of Buffalo Exchange.
So from the top down, in a male-dominated industry, change will be slow in coming. Estimates shared with me were 20 years or more before any sense of equality prevails.
There are many more immediate changes and gains occurring from the bottom up. Much as there is a culture and education system that grooms boys and men to be entrepreneurs, there is a blossoming ecosystem doing the same for girls and women.
The local sponsors for the UA screening for the movie are Kristen Garcia-Hernandez, CEO of Girl Scouts of Southern Arizona, Kandy Hirsch, Chair of the Women’s Presidents Organization, and Rebecca Block, CEO of Buffalo Exchange.
All three of these women are role models for young girls. Hirsch’s Women’s Presidents Organization has more than 40 women CEOs and entrepreneurs as participants. The Girls Scouts of Southern Arizona offers an entrepreneur program for middle schoolers that includes business ideation, design, prototypes and pitches for capital.
Garcia-Hernandez shared that middle school girls learn the process. They engage with mentors, learn how to build a plan and how to take away the stigma of failing. They “fail forward,” which in the world of startup businesses is a huge success.
Keneisha Raymond, the director of programs and access to capital at StartUp Tucson, helped me understand what all of this means for the Tucson and Southern Arizona economy. For fiscal year 2023-2024, there were 396 entrepreneurs who were mentored and participated in StartUp Tucson programs. Of those, 234, or 59%, were owned by women.
StartUp Tucson entrepreneurs contributed $36 million in revenue and 172 new jobs to the Tucson economy last year. More than half of that came from women-owned businesses.
In the entrepreneurial investment world, there are multiple types of investors and levels of investment. Only a small minority of entrepreneurs advance to the point that they need significant level venture capital investments.
Most entrepreneurs need some early-stage capital, with most of that money coming from friends and family. Beyond friends and family, there is seed capital investing, usually in the form of angel investors. To this point, the size of investments are relatively small. The investors either know the entrepreneur, or meet them through an angel investment group.
From here forward, the male-led venture capital firms dominate the process. Next come the Series A investors, which is the first level of institutional investment (usually early-stage venture capital investment funds). It proceeds from there through successive rounds of investments and eventual sale of the company or going public.
The large majority of the 234 women-owned startups in Tucson last year will never proceed to advanced stages of venture financing. They need mentorship and access to early-stage financing to gain traction.
This makes me think of the Serenity Prayer — “Grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.”
A bottom-up approach will change the things that can be changed, specifically the continuing development of an eco-system to support girls and women entrepreneurs.
The Girl Scouts are doing this. StartUp Tucson is doing this. Desert Angels is doing this. UA Center for Innovation and Arizona State University’s SkySong program are doing this.
Women entrepreneurs are doing this every day. “Show Her The Money” tells the story. Sign up for the screening on Oct. 16 at showherthemoneymovie.com/screenings. Seating is limited.
