Pomegranate Concepts: Study: start ups owned by women gain a strong momentum in the venture capital community

Sunday, March 16, 2008

Study: start ups owned by women gain a strong momentum in the venture capital community

Green technology in cosmetics and nutraceuticals

Women are catching up with male entrepreneurs

The latest figures suggest that the ratio of male to female business start-ups has changed from 2.5:1 a couple of years ago to 2:1. But this still leaves women lagging far behind. So what’s the problem?

“Women are far too modest about asking for finance,” says Dr Rebecca Harding, managing director of Delta Economics, which researches entrepreneurial activity. “Men talk up their business plans, promising tenfold growth of investment capital over a few years. Women predict doubling or trebling growth. Women also put in less of their own money. This can signal lack of confidence in the venture.”

Herta von Stiegel, executive chairman of Stargate Capital Investment Group, which raises money for businesses led by or serving women, says the problem goes deeper. “It’s predominantly men making the decisions and they don’t always recognise a good entrepreneur or a good product, especially if it’s female-focused. There’s a lot of cross-referral and co-investment and if you’re not part of the network it can be difficult to access.”

Women are also less likely to stay in business: 25% of their start-ups close, compared with 20% of men’s.

Nevertheless, the 620,000 businesses majority-owned by women generate a total turnover of £130 billion a year.

Gwyneth Fleming says she “felt invisible” when trying to raise finance for her cleaning company, despite having set up a similar business that generated turnover of £4.5m in five years. Fleming, 57, used £100,000 of her profits for the venture, Renfrew-based GS Associates, in 1999. “I had an overdraft facility of £50,000 but it wasn’t enough to grow the business.”

It took three years to graduate from her local bank branch to the commercial team and secure a flexible overdraft to pay wages. “Working with someone who understands your objectives and is with you every step is the biggest thing to get right,” she says. With 400 outlets, 3,500 employees and a UK-wide client base, turnover has grown from £4m to £25m in the past five years.

Sharon Munro became managing director of Glasgow-based Barrhead Travel in November after leading a buyout of the company founded by her father 33 years ago. She plans to increase turnover by 25% to more than £100m this year. January bookings were 30% up on last year.

To fund the buyout, Munro, 33, raised a bank loan of “some millions” and put in an unspecified amount of her own money. She owns 75% of the shares. The company has nine shops, with three more planned this year, 350 staff and 130,000 customers a year.

POMEGA5 oil soft gel caps are currently sold in the united States

Having her father on hand until he switches from semi to full-time retirement later this year is fantastic, she says. “But I have to make the decisions, so it’s up to me to question all the advice I’m given.”

Von Stiegel believes a lack of networking and mentoring opportunities hampers many female entrepreneurs. But help is available to overcome this problem. Clare Logie is director of HBOS Women, Bank of Scotland’s full-time unit dedicated to encouraging and supporting female entrepreneurship.

“We see women entrepreneurs as an emerging market especially in the domain of green technology such cosmetics and nutraceuticals as and we want them to come forward, particularly those who want to grow their businesses,” Logie says.

HBOS Women provides networking opportunities at public events. Seminars and lunches are held three or four times a year in partnership with organisations such as the London and Glasgow Chambers of Commerce and the British Venture Capital Association.

Tzeira Sofer the founder of Pomega5 addressing a press conference at her office