Springboard Boot Camp Reveals Trends in VC FundingIt's a different VC world than it was a few years ago--but one that many women business owners find appealing.

Deborah Davis is representative of the majority of the women whoattended theSpringboard Enterprisesboot camp in LosAngeles last December. She had never received venture capital, butshe wanted to explore whether this type of money was what sheneeded to quickly grow Cleaner By Nature--her Los Angeles-basedenvironmentally friendly dry-cleaning stores--from two to sixlocations in Southern California and eventually into a nationalchain.

At Springboard, Davis found her answer. In addition to meetingwith investors and listening to their wants and needs, Davis wasone of five women entrepreneurs who got an opportunity to"sell" their companies to a panel of venture capitalistsin a two-minute fast-pitch session.

"I'm more confident now," says Davis, who hadnever done such a presentation before. "It was goodvalidation, and I was able to practice [pitching] in a way that wasso nonthreatening." Thanks to the boot camp, Davis, whostarted her company in 1996 with $150,000 and now boasts sales of$780,000 annually, connected with several potential investors whohave expressed interest in her concept.

The VC world that Davis and the other women at Springboard'sboot camp are trying to broach is startlingly different from whatit was two years ago, say investors at Springboard. The VCs aremore concerned about revenue, sound business models, and thestrength and experience of a company's management team. Theamount of money being invested in first rounds is significantlyhigher than in the past, but that money has to last longer.

According to Penny Pickett of theTelecommunicationsDevelopment Fundin Washington, DC, fewer VCs are looking toinvest in early-stage firms without revenues. You can also expectthe term sheets to be tougher, and for underperforming companies tobe "killed off" much more quickly, said VCs at theSpringboard boot camp. "The previous exit strategies--beingbought out by a big company--are not happening now," addsPickett.

But these changes don't mean it's tougher for women tosnag investors, says Marlene King of theCentral Coast VentureForumin Santa Barbara, California. On the contrary:"Women have more opportunity to get funding now that venturecapitalists have made the shift away from technologycompanies."

Statistics from VC research firmVentureOneseem tobear out King's belief. In 2001, 7.89 percent of women-ownedcompanies that got venture capital were in the products andservices sector, compared to just 3.24 percent in 1997. Bycontrast, IT companies comprised 3.71 percent of the women-ownedfirms that got VC funding in 2001, down from 4.14 percent in 1997.And based on VentureOne numbers for the first half of 2002, thetrend toward investing in products and services companies appearsto be continuing.

The advent of more women as investors is also beginning to makean impact, adds Pickett. "Some of the women [in VC] are formerentrepreneurs who cashed out of their companies, and they'reknowledgeable and sophisticated investors. Women also control a lotmore wealth in the country, and they're much better educatednow on finance and money management."

Pickett also believes that one of the biggest hurdles womenfaced in the past--not being part of the networks of potentialinvestors--is slowly being eliminated by organizations likeSpringboard Enterprises. Springboard president Amy Millman says theorganization's venture forums and boot camps have led to 250women-run businesses being funded in the past three years."Our companies have raised $1 billion after presenting atSpringboard, and these are connections they probably would not havemade or wouldn't have known they could go out and find,"says Millman.

While the picture is looking better in general, statistics fromVentureOne confirm that with only 5.08 percent of venture-backedcompanies in 2001 having women CEOs, there is still work to bedone.

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Cynthia E. Griffin is a freelance writer in LosAngeles.