Venture capital – the final frontier

Kiran Mazumdar Shaw is one of India’s most inspiring entrepreneurs having built a global half billion-dollar biotech business – Biocon – that started life in a small garage. She had found an individual investor to help her bootstrap her business (with traveller cheques), but when it came to gaining funds to grow the company, no banker or fund would back her because she was a woman.

This story made me look at more recent figures for venture capital, and the truth is rather shocking. According to a recent Ernst & Young/VentureOne survey, less than 2.5 per cent of the €3.5bn ($5bn) invested annually by venture funds into Europe goes to start-ups led by a female chief executive.

In Paris, Dunya Bouhacene, chief executive of Women Equity for Growth, a non-profit organisation, has announced three funds each focusing on women-led businesses. Working with Bryan Garnier & Co, a European investment bank that specialises in growth companies – and already in advanced talks with potential investment partners – the funds will be raised through two campaigns each year.

“The first fund will be small – €5m-€15m – and look to invest about €1m in each opportunity. We are already targeting some companies with established revenues and in profit, and expect to make our first investment within a few months,” says Bouhacene.

Women Equity for Growth has also launched a research venture, because as Bouhacene explains, “there is not much analysis of women-led growth companies – there’s a lot on why we don’t grow successful companies, not on why we do”.

The WEG funds are not the first European venture funds focused on female entrepreneurs. London-based StarGate Capital established its first Trapezia fund in 2006 to provide a dedicated initiative that would tap in to “the greatest growth market there is: women”, says co-founder Gita Patel. She believes there is a need for focused funds like Trapezia: “The market is inefficient, because women are simply not on the radar.”

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About our bloggers

Liz Bolshaw

Liz Bolshaw is a business journalist and editor. She has been a successful book publisher, online editor, magazine editor and publisher.

She was launch editor of the Europe-wide online community Entrepreneur Country, has published magazines for PwC, 3i, dunhill and Bafta, and launched The Sharp Edge, a magazine for and about entrepreneurs, with Duncan Bannatyne. She is a regular contributor to Thomson Reuters’ Venture Capital Journal.

Her last project for the Financial Times was as editor of the paper’s Business Education magazine.

Rebecca Knight

Rebecca Knight is a freelance journalist based in Boston. She writes regularly for the FT on business education, entrepreneurship, and management.

Andrew Hill

Andrew Hill is an associate editor and the management editor of the FT. He was City editor of the FT and editor of the daily Lombard column on British business and finance from September 2006 to December 2010.

He was the FT’s financial editor from June 2005 to September 2006, with overall responsibility for coverage of companies and markets. Before becoming financial editor, he was the FT’s comment & analysis editor, in charge of the paper’s opinion and features pages.

From 1999 to 2003, he was the FT’s New York bureau chief. He joined the FT in 1988 and has also worked as foreign news editor, UK companies reporter and correspondent in Brussels and Milan.

Pino Bethencourt

Pino Bethencourt is a professor and leadership expert at IE Business School in Madrid. She is also an author and executive coach.

Lynda Gratton

Lynda Gratton is professor of management practice at London Business School.

Linda Tarr-Whelan

Linda Tarr-Whelan, former ambassador to the UN commission on the status of women, is a Demos distinguished senior fellow.