Phases

Phase 1: Background Research

a. Diana has produced an annotated bibliography that reviews more than 400 academic articles on women's entrepreneurship and venture capital, as well as related articles on women's self-employment, careers, motivations, networking and social structures.i) We found only one article in the academic press that concerned women and venture capital access.ii) The review provides an overview of theories and findings that we used to develop a theoretical model to formulate hypotheses for investigation.

b. Diana based-lined the status of equity investments in U.S. women-led companies using data from the National Venture Capital Association (NVCA) between 1957 and 1998. The NVCA data was collected by Venture Economics and includes information on companies funded by venture capital since 1957. Because the original data was not coded by gender, we re-coded each listing to designate which ventures involved women-led initiatives. The data set includes information on 20,000 portfolio companies, 34,000 executives and 120,000 company investments and is provided by 4,500 private equity firms having 7,000 private equity funds.

i) This review of more than 400 articles was compiled as an annotated bibliography.
ii) Venture Finance, 2001

Phase 2: Demand Side - Women Seeking Financing

To better understand the growth strategies, funding expectations and experiences, and the characteristics of women entrepreneurs and their teams, Diana has assembled and analyzed data sets that focus on this population of business owners. Previous studies have relied on data predominated by male-led businesses which may provide little insight into the experiences of women-led ventures.

a. Diana analyzed data from applications of women seeking participation in the Springboard 2000 Venture Forums. In January 2000, the National Women's Business Council and a consortium of partners launched these historical venture forums to enhance the proportion of investments in women-led businesses by putting the spotlight on worthy ventures. The catalyst for the initiative was the disparity between the number of women-owned businesses and the small share of equity capital they received. This is a disadvantage not only to women-owned businesses, but also to investors who may be unaware of attractive investment opportunities. In 2000, forums were held in Silicon Valley (San Francisco), the Mid-Atlantic (Washington, D.C.), and New England (Boston.). The 2001 forums to date are Silicon Valley (San Francisco), New York City, and Chicago and attracted 900 applications from companies seeking to present at the various Springboards. Only 84 companies were selected for coaching and presentation. A total of $1.02 billion was sought by the companies for an average of $10 million per firm. Since Jan. 2000, $600 million has been raised by companies participating in the forums, for an average of $4.5 million per firm.

b. With funding from the Kauffman Center for Entrepreneurial Leadership, Diana conducted a follow-up survey of the initial 2000 Springboard applicants to establish the first wave of a panel study of more than 150 high tech women entrepreneurs. The research will track the growth strategies and funding experiences of applicants, and explore particularly human capital (management team experience and composition) and social capital (contacts, network and advisors).

Phase 3: Supply Side - The Venture Capital Industry

The Venture Capital industry consists of both the venture capital firms and the investors who fund them. Venture capital firms are the dealmakers who bring together the capital suppliers and the capital users with an objective of achieving high returns on the funds invested through a liquidity event. Diana has focused upon the venture capital firms.

To fully understand the nature of the venture capital industry in the U.S., Diana analyzed the firms and career paths of women investors. Information was obtained from Pratts Guide, and recoded so that all women in the industry could be tracked by position, and compared to men in similar firms. Firm level data supplements this information, as do in- depth interviews with women investors.

Phase 4: Diana International

Entrepreneurship is central to economic growth around the world. Equity investments fuel the growth and development of new ventures, yielding innovative solutions for consumers and businesses. Diana has established that women-led ventures in the U.S. are underrepresented in the in the equity capital distribution. To what extent does the situation generalize to other parts of the world? Diana International seeks to answer this question. The Diana Project has documented that many of explanations for why women lack the capital required to grow their ventures in the U.S. are myths. Diana International expands the Diana Project to the international arena to put the spotlight on high growth women-led ventures around the world. Cross-country comparisons of women's experiences in attempting to access growth capital are examined and documented by research partners in host countries to explore whether the myths documented by Diana apply to women-led ventures globally. Researchers in other countries interested in partnering with Diana are encouraged to contact us.