Open Letter to President Obama

Dear Mr. President:

“It has been the risk-takers, the doers, the makers of things who have carried us up the long rugged path towards prosperity.” We agree and celebrate your support for the American entrepreneur – the backbone of the economy. We applaud the creation of the Economic Recovery Advisory Board, and we write to you today asking that the Board ensures that the policies and programs it implements include high-growth companies founded and led by women.

The economic challenges we face cannot be solved without the true participation of women in the very heart of innovation – leading start-ups with the potential for high-growth and requiring the backing of venture capital. Women are now, more than ever, poised to embrace economic opportunity. Their exceptional pedigrees represent the decades of educational and cultural changes that have encouraged women to pursue advanced studies, then careers in the sciences, engineering, medicine and business. As these women assume the risks and opportunity of entrepreneurship to build and lead high-growth companies in the very sectors that can accelerate our nation’s economic recovery, we must remove barriers to their success. These entrepreneurs are extraordinary innovators. They are prepared to create jobs that provide prosperity. They need access to the networks that provide capital, mentorship and a clear map to success.

We believe this is an opportunity for your administration to use the stimulus plan for economic and social progress by 2015.

Mr. President, consider this: the roughly 23,500 U.S. companies that received venture capital between 1970 and 2005 accounted for 10 million jobs and $2.1 trillion in revenues in 2005, according to a study conducted by Global Insight, a leading economic analysis and forecasting firm. These numbers represent 9 percent of the total American private sector workforce and 16.6 percent of total U.S. GDP, according to the study.

However, of the venture-backed companies in this same period, fewer than 5 percent had a woman CEO and only 7 percent had a woman in a founder role. By 2007, these numbers had dropped to 3 percent and 5 percent respectively.

These figures are particularly startling when contrasted with the Minority Business Development Agency research that shows that between 1997 and 2002, the number of women-owned businesses in this country grew at twice the rate of all firms. The research also found that women have been responsible for starting over 50% of all new businesses.

The percent of companies founded and led by women that receive venture capital must increase. Women are a resource, that if tapped for their existing educational, professional, and innovative backgrounds and capabilities, have the ability to dramatically improve the state of the American economy now and long into the future.

Now is the time to pay attention to the economic role of venture capital, and who has access to that capital. Despite bleak economic forecasts, the market for innovative start-ups remains viable, as venture capital funds by their very nature focus on a long-term horizon. Relatively unscathed by the current credit crisis, many venture capitalists still have access to capital that could fund and grow the next wave of start-ups. Yet research shows their investment strategies and networks fail to include women.

As investors, entrepreneurs, industry leaders, researchers, and scientists we have dedicated ourselves to investing in entrepreneurship and innovation in an inclusive manner. We welcome, with hope and anticipation, your shared commitment to this vision – that women can fully participate in high-growth markets and partake of American prosperity.

We look to the Economic Recovery Advisory Board to set clear policies that will encourage the inclusion of women in all aspects of the process of investing in innovation. Specific recommendations include:

- Direct government funding to research why women are not accessing venture capital to build high growth businesses at percentages consistent with their participation in entrepreneurship. And continue to fund innovative programs that address the root causes.

- Encourage Limited Partner investors such as government pension funds to advocate for including women – not only in the portfolio of companies of these investment firms, but also in the general partner teams they select to make those investments. The data shows that venture firms with a woman as a partner are 75 percent more likely to have a woman-led business in their portfolio. The lack of investment in women entrepreneurs parallels the declining numbers of women partners in venture capital firms – which rests at less than 7 percent today and is even lower in other areas of private equity.

- Require the Small Business Administration (SBA) and the Small Business Investment Company (SBIC) to revise the women owned business rules to include venture backed start-ups. Currently, the requirement is that a woman must own at least 51 percent of a company to participate in the SBA and SBIC programs. Because raising venture capital results in changes in ownership positions for the founders and executives, this requirement excludes from SBA and SBIC programs the companies with women founders or leaders who have raised venture capital and whose ownership stakes have moved below 51 percent.

- Reinstitute SBA programs offering matching funds for new or emerging manager venture capital firms focusing on underserved segments of the market, including women-led or founded start-ups. These programs allow new venture capital firms to be launched with more financial stability resulting in an increased likelihood of successful outcomes, both for the new venture capital firms and for the companies in which they invest.

We believe only bold, brave actions will make the high growth, venture capital model inclusive of women.

Mr. President, thank you for your dedication to change, for accepting responsibility in a very difficult time, and for considering this request.

Yours sincerely,
Sharon Vosmek, CEO
Astia

Take chances. When rowing forward, the boat may rock. (Chinese Proverb)

I am sure that readers will laugh when I say that publishing this blog feels a bit bold and daring. Those of you who have been doing this since 1999, I commend your courage. I, for one, have been reading the internet since 1995 and I look forward to finishing it soon.

Back to the point I intended when I chose the subject for today's Astia notes.

Astia's growth this past year has taken on a life of its own. This growth, while exciting, feels a bit like a rocking boat at times. The key to success for us has been to learn to lean at the right times and in the right direction to both capture the wind and keep the boat from capsizing - all at the same time. Here is just a quick wind-in-our-sails, rocking-of-our-boat list:

Astia Silicon Valley - still our flagship product, the Doing it Right Program and it Conference in November once again delivered real results for the clients we serve. As of this posting 29% of the 28 companies had already secured funding - and there are more well on their way. This puts that program on par with prior years. Astia clients continue to outpace the broader market where fundraising success hovers below 1%.

Astia NYC - in its second year, the Astia New York community has blossomed! This year's Doing it Right program is a part of the first annual NYC Entrepreneur Week and already 18 companies have been accepted. Want to find out if you have what it takes?

Last year's class had a greater than 40% success rate - proving that the Astia model for success can extend well beyond Silicon Valley.

In addition, the model continues to attract great interest with Astia Vice President, Jennifer Hill, featured a number of times on MSNBC and strategic partnerships emerging such as with 85 Broads. If you are thinking that you would like to be a part of this growing community, you can reach out directly to Jennifer (jhill@astia.org) or Raquel Episcopio (raquel@astia.org) in the New York Office (yes we have an office, thanks to the generosity of David S. Rose, Chairman of NY Angels). You can find team Astia at 30 E. 23rd Street, 6th Floor, NY, NY 10010.

Astia UK/EU - has managed to capture the interest of the media with features in the Financial Times and the Daily Telegraph as well as the bloggesphere with mentions in http://thenextwomen.com/, TechCrunch, Helen Keegan, and don't even get me started on all of the Tweets! In its first year, the programme features prominent investors, entrepreneurs and industry leaders all brought together by a local community of Advisors.

Astia continues to grow through collaboration, and in the UK, Astia will partner with thenextwomen.com for Female Friday at the Next Web Conference, April 17th.

Astia UK incorporation is also under way thanks to the legal support and leadership of Advisory Board members from Reed Smith. Astia UK is hoping to qualify for charitable status in the coming months, demonstrating our commitment to the community and the market.

Astia India - has a planning committee that has blossomed to 20 members. The first Astia India event is now being planned for early May - in spite of the fact that my travel budget is nil for the India market. This means that committee members Sajai Singh, J. Sagar Associates, Anurakt Jain, Draper Fisher Jurvetson, India, Anu Bhardwaj, and Nita Goyal will take the leadership to ensure a successful gathering. Watch the community grow!

And all of this GREAT STUFF is happening at Astia because of some trends in the broader market place (IMHO):

For the past 20-50 years women have been pursuing opportunities so that today they represent:
51% of businesses
35-40% of applicants to business schools
43% of environmental engineering degrees
40% of bioengineering degrees
12% of mechanical engineering and computer engineering degrees

What this tells me is that women are poised and ready to participate. Already they are strong entrepreneurs. Our work is to expose them to the business opportunities presented by raising outside capital to grow their businesses. Women still today under-utilize equity investment as a means of growing their businesses. However, that does not mean that they are somehow not able or not allowed to - it just means that they need exposure to it.

And that, my friends, is what we are all about. Men and women - working together to grow the next generation of innovative companies.

I will be back next month with more thoughts - or maybe next month I will have a guest. Either way, I hope you will return and provide your comments and thoughts about what we have to say. I very much look forward to the dialogue!

PS
The Center for Venture Research found that women receive angel investment on par with men. OF COURSE THEY DO!

Astia Launches a Blog

Welcome to Astia Notes. In the interest of continuing to grow the Astia community, we have established this blog. I will invite guest bloggers to join me in conversation and hopefully this will become a vibrant component of the already vibrant community.

Stay tuned. More to come soon... very soon.