The Next Wave
Financing Women's Growth-Oriented Firms
Susan Coleman and Alicia M. Robb


Preface and Acknowledgments

One of our greatest frustrations in writing our first book, A Rising Tide: Financing Strategies for Women-Owned Firms, was the limited amount of time and space that we could devote to growth-oriented firms. In light of that, we are delighted that Stanford University Press has given us the opportunity to expand upon our earlier work and devote an entire book to the topic of financing strategies for growth-oriented women entrepreneurs. In this book, The Next Wave: Financing Women’s Growth-Oriented Firms, we follow the journey of high-growth entrepreneurs from their firms’ earliest stages through to maturity, harvest, and even beyond.

The most recent U.S. Census data reveal that there are nearly ten million women-owned firms in the United States (2012 Survey of Business Owners). Although the majority of these firms are small, a growing cohort of women is launching firms with significant growth potential. Their motives for doing so are as diverse as the firms themselves. Some of these growth-oriented entrepreneurs are motivated by a desire to pursue an opportunity or an unmet need in the marketplace. Others are frustrated by the constraints imposed by a “glass ceiling” that prevents them from reaching the most senior ranks of corporations. Still others are drawn by the financial and economic rewards that can come from leading a firm that achieves scale. Whatever their motivations, data reveal that an increasing number of women are choosing entrepreneurship as a career path, and of those, a growing number of them share aspirations for growth.

In The Next Wave we focus on the financial strategies employed by growth-oriented women entrepreneurs. As we will show, these are more varied and complex than the strategies used by lifestyle entrepreneurs. Firms that grow typically require larger amounts of financial capital, and both prior research and anecdotal data reveal that women often encounter a variety of barriers in their attempts to secure financing at all stages of their firms’ development. Some of these barriers are structural in nature, while others are social and cultural. In light of that, our goal has been to recognize the barriers but also to highlight the financial strategies that have worked and can work for growth-oriented women entrepreneurs.

In addition to delivering a contemporary account of financing strategies from the growth-oriented entrepreneur’s perspective, The Next Wave also addresses investor perspectives on financing. To date, most books on growth-oriented entrepreneurship have focused on the entrepreneur’s challenges and strategies, but have ignored the investor side of the equation. This approach tells only half of the story. Since growth-oriented firms often require substantial amounts of both external debt and equity, the investor perspective is critical. We address this gap by detailing the development of a new generation of women investors—women who have risen through the corporate or professional ranks or have launched their own successful firms and have thus acquired significant funds to reinvest in the entrepreneurial firms of others. These women are in a unique position to serve as investors for a new generation of entrepreneurs. We envision this as a type of “virtuous circle” whereby women entrepreneurs make the transition from being recipients of human, social, and financial capital to being providers of those key resource inputs to the next generation of growth-oriented women entrepreneurs.

The Next Wave combines research findings from our own scholarly work using the Kauffman Firm Survey with that of other highly regarded researchers in the United States and abroad. In addition, we provide interviews with real-world growth-oriented women entrepreneurs in a broad range of industries to illustrate how our entrepreneurs actually apply the principles and practices of finance. Our interviews with these amazing entrepreneurs are what give The Next Wave its “spark,” because we had the opportunity to share in the passion, successes, frustrations, and failures of women who aspire to growth.

In addition, consistent with our desire to strengthen the link between women as entrepreneurs and women as investors, we provide insights from angel investors and venture capitalists, who are an important part of the next wave of growth-oriented women’s entrepreneurship.

Writing The Next Wave has been a labor of love for both of us, and we have many people to thank for the successful completion of this book. We would first like to thank the wonderful women entrepreneurs and investors who have taken the time to share their experience, insights, and wisdom with us. The Next Wave could not have been written without them. We would also like to thank the Ewing Marion Kauffman Foundation for providing access to the Kauffman Firm Survey, which provides data on a cohort of over four thousand U.S. firms launched in 2004 and tracked over an eight-year period. We have used these invaluable data as the basis for much of our analytical work. We wish to note, however, that although we have used the KFS data to produce research findings for this book, the opinions and recommendations expressed are our own and not necessarily those of the Kauffman Foundation.

We would like to thank the Kauffman Foundation yet again for the generous financial support that has allowed us to write The Next Wave and to attend key conferences where we developed and tested our ideas. We would also like to thank the University of Hartford’s Barney School of Business for a summer research grant to support the development of early drafts of The Next Wave. The Barney School also provided graduate assistant support that allowed us to gather prior research and data. In particular, graduate assistants Ece Karhan, Mert Karhan, and Isha Sen have played an invaluable role in the book’s development. We would like to thank the University of Hartford’s Women’s Education and Leadership Fund for a grant that helped support the development of case studies on our women entrepreneurs.

We have been doubly blessed in our publisher, Stanford University Press, which also published our first book, A Rising Tide: Financing Strategies for Women-Owned Firms. We are deeply appreciative for SUP’s recognition of the need for a second book to delve more deeply into the phenomenon of growth-oriented women’s entrepreneurship. Many thanks to our wonderful editor, Margo Beth Fleming, who has provided guidance and constant encouragement. Similarly, we are grateful for the work of our editorial assistant, James Holt, who so ably shepherded The Next Wave through the production process. We would like to take this opportunity to recognize and thank our two reviewers, Babson College’s Victoria Sassine and Julie Weeks, president and CEO of Womenable. Their thorough reviews and detailed comments were instrumental in helping us expand and improve upon earlier versions of this book.

Last but not least, we would like to thank our families and friends for their support, love, and patience through this process. In particular, Susan thanks her husband, Bill Coleman, for his enduring love, encouragement, and support, as well as her sister, Maureen Distasio, her brother, David Flint, and David’s partner, Becky Wilson, for being the best sisters and brother anyone could ever ask for. She would also like to thank her nephews, Mick and Lou Distasio, her grandson, Ben Coleman, and her University of Hartford students for their unfailing belief that she can do anything she puts her mind to. Alicia would like to thank all the amazing women in her life who continually support and inspire her, including her mother, Jackie, her aunts, Barbara and Brenda, her niece, Maria, her cousins, Samantha and Sabrina, her friends Jeanne Lavin, Erin Pinto, and Krista Katsantonis, as well as as the many women who agreed to share their stories, their expertise, and their advice that we highlight in this book. Alicia would also like to thank her colleagues and friends at the Kauffman Foundation, especially E. J. Reedy, Dane Stangler, Mette Kramer, Michelle St. Claire, Barbara Pruitt, Arnobio Morelix, Amisha Miller, Alex Krause, and Kauffman’s CEO, Wendy Guillies. She thanks her partner, Mark Patrick, for his love and support. Finally, in the last year of this project, Alicia lost a good friend, Paula Kantor, to whom she dedicated this book, who was killed in Kabul by the Taliban. Paula was a passionate advocate for women and dedicated her life to empowering women around the world. We hope that we can continue to do our small part in continuing Paula’s work. She will not be forgotten.