Bethany Frankel was convinced of the opportunity:
I want this, and I know other women will want this, so I’m going to make it
But when she pitched her Skinnygirl margarita cocktail to an all male VC team, they didn’t get it. Even her ‘star power’ as a reality TV personality wasn’t enough to persuade the VC team of her idea’s potential success. In fact the male dominated liquor industry didn’t understand it either. However, Bethany … persevered … and eventually secured funding. The rest is history… skinny cocktails enjoyed phenomenal success. It was so successful in fact that they struggled with supplying the insatiable demand.
Eventually Tracy was able to secure 15 million VC funding.
But its not just catering to the female market, it’s also a different take on the market, a different perspective that unfortunately is not getting funded.
Data has been notoriously missing as to the percentages of women that actually are able to obtain VC funding.
The picture is bleak:
- Though VC funding for companies with a woman on the executive team has increased 85% of all venture capital funded businesses in the US have no women on the executive team;
- And only 2.7 % of VC funded companies have a female CEO.
This in spite of evidence that shows
- That VC funded businesses with women entrepreneurs perform as well or even better than those led by men.
The study explored why certain VC firms funded firms with women in the executive team vs. those that didn’t and found that
- VC firms with women partners are more than twice as likely to invest in companies with a woman in the executive team and more than three times as likely to invest in companies with women CEOs.
The Babson study findings provide further evidence that the male dominated VC industry tends to be less receptive to funding women. Though the study was US focused, there is ample evidence that a similar situation is occurring across the globe.
Pioneering research by Gaule & Piacentini (2012) presented in the OECD’s report: Closing the Gender Gap- Act Now compared the composition of VC senior management in seven countries worldwide. Though these countries vary in terms of a number of issues including level of economic development, it is striking that there is little variation in term of the male dominated nature of the VC firms.
Access to VC funding is a worldwide issue. As the Babson study suggests, it is critical to increase the number of female VC partners to address the current funding gaps. It is equally important to hire male VC partners who cultivate ‘acquired diversity’ who can understand and evaluate the lucrative opportunities when pitched by women.