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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