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99–716 2016

FIELD HEARING IN PASADENA, CA: BRIDGING 

THE GAP - INCREASING ACCESS TO VENTURE 

CAPITAL FOR SMALL BUSINESSES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ECONOMIC GROWTH, TAX AND 

CAPITAL ACCESS 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

APRIL 5, 2016 

Small Business Committee Document Number 114–052 

Available via the GPO Website: www.fdsys.gov 

SBREP-219A with DISTILLER


Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

CHRIS GIBSON, New York 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

CARLOS CURBELO, Florida 

CRESENT HARDY, Nevada 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

YVETTE CLARK, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRENDA LAWRENCE, Michigan 

ALMA ADAMS, North Carolina 

SETH MOULTON, Massachusetts 

MARK TAKAI, Hawaii 

KEVIN FITZPATRICK, Staff Director 

EMILY MURPHY, Deputy Staff Director for Policy 

JAN OLIVER, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Steve Knight ................................................................................................... 1 

Hon. Judy Chu ......................................................................................................... 2 

WITNESSES 

Ms. Jeri J. Harman, Managing Partner & CEO, Avante Mezzanine Partners, 

Los Angeles, CA, testifying on behalf of the Small Business Investor Alliance ....................................................................................................................... 4 

Ms. Rene ́e LaBran, General Partner, Rustic Canyon/Fontis Partners, Senior 

Advisor, Idealab, Pasadena, CA .......................................................................... 6 

Ms. Louise J. Wannier, Board Member/Advisory Services, True Roses, Inc., 

Pasadena, CA ....................................................................................................... 8 

Ms. Laura Yamanaka, President, teamCFO, Inc., Los Angeles, CA, testifying 

on behalf of the National Women’s Business Council ....................................... 10 

APPENDIX 

Prepared Statements: 

Ms. Jeri J. Harman, Managing Partner & CEO, Avante Mezzanine Partners, Los Angeles, CA, testifying on behalf of the Small Business Investor Alliance .................................................................................................... 30 

Ms. Rene ́e LaBran, General Partner, Rustic Canyon/Fontis Partners, Senior Advisor, Idealab, Pasadena, CA ............................................................. 37 

Ms. Louise J. Wannier, Board Member/Advisory Services, True Roses, 

Inc., Pasadena, CA ........................................................................................ 40 

Ms. Laura Yamanaka, President, teamCFO, Inc., Los Angeles, CA, testifying on behalf of the National Women’s Business Council ...................... 47 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

SBREP-219A with DISTILLER

SBREP-219A with DISTILLER

(1) 

BRIDGING THE GAP - INCREASING ACCESS 

TO VENTURE CAPITAL FOR SMALL BUSINESSES. 

TUESDAY, APRIL 5, 2016 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON ECONOMIC GROWTH, 

TAX AND CAPITAL ACCESS, 

Washington, DC. 

The Subcommittee met, pursuant to call, 10:03 a.m., at Pasadena 

City Hall, 100 Garfield Avenue, Pasadena, California, Hon. Steve 

Knight, presiding. 

Present: Representatives Knight and Chu. 

Mr. KNIGHT. Good morning. This hearing will come to order. 

Before we begin, I would like to sincerely thank our Ranking 

Member, Ms. Chu, for inviting me to be here with her today. She 

is an active participant in the Committee, she has been a staunch 

advocate for small business’ concerns at every turn, and she works 

together with all our members in a bipartisan fashion. Again, 

thank you, Ms. Chu, for inviting me here to your district today. 

I would also to thank each of our witnesses for taking time out 

of their busy schedules to be in our Subcommittee hearing this 

morning. I realize each of you are very busy and I appreciate your 

willingness to take time out of your schedules and appear before 

this Subcommittee to talk about increasing small companies’ access 

to venture capital. 

Small businesses are essential to America’s economic competitiveness. Not only do they employ half of the Nation’s private sector workforce, they also create two-thirds of new net jobs in our 

country. Yet in recent years, small businesses have been slower to 

recover from the recession and credit crisis, hitting them especially 

hard. 

Starting a business can present challenges for all entrepreneurs, 

and many cite a lack of funding as a primary obstacle they face 

throughout their business life cycle. Unlike large enterprises that 

can obtain funds from commercial debt and equity markets, small 

businesses must often rely on their own personal assets, retained 

earnings, community banks, and credit unions for needed capital. 

There is a clearer correlation to a small business owner’s ability 

to hire and his or her ability to get financing. When small businesses can access adequate financing, they create jobs and spur the 

economy. 

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2 

The financing needs of small businesses are as varied as the population itself. The life cycle of a small business can take many 

forms with very different implications for the types of risks and rewards that lenders and investors can expect. For new ventures that 

have high-risk profiles and high expected returns, the initial stages 

require commitments of equity capital sometimes from family and 

friends, and sometimes in the form of venture or private equity 

capital. 

Data from the National Venture Capital Association has shown 

that venture capital funding has been on the rise for the past 5 

years, but unfortunately has yet to reach pre-recession levels and 

continues to be difficult to obtain for small firms. Improvements 

are always welcome, and we can always do better. 

Today we have an excellent panel of experts to discuss options 

to increase access to venture capital for small firms, particularly at 

those small companies that have had lower levels of venture funding participation. I am looking forward to listening to the discussion, and, again, I want to thank each of our witnesses for taking 

time to be here today. 

I now yield to our ranking member, Ms. Chu, for her opening 

statement. 

Ms. CHU. I would like to thank Congress Member Knight for 

coming here and chairing this meeting. It is a special privilege for 

me to be able to have a field hearing, and especially on such an 

important topic. But it would not be possible unless Congressman 

Knight were here to chair this meeting. So I really appreciate the 

fact that you have taken time out of your schedule to be here. 

There is no doubt that women-owned small businesses are an undeniable force in today’s economy. Over 9.8 million women-owned 

businesses, employing 8.4 million people, generate $1.4 trillion in 

annual earnings. Here in California, over 37 percent of businesses 

are women owned, the most of any State in the country. These female entrepreneurs employ over 1 million Californians and generate $200 billion in receipts. 

Since the beginning of the recession, women have outpaced men 

in business creation. From 2007 to 2012, the number of womenowned businesses grew 28 percent versus just 8 percent for maleowned firms. However, many of these women-owned businesses 

still face one key obstacle to success: access to capital. 

A Kauffman Foundation study found that 72 percent of women 

entrepreneurs listed access to capital as their most critical challenge to launching a new business. The Federal Reserve found that 

compared to men, women-owned businesses rely more on personal 

credit cards, their own savings, and capital provided by friends and 

family to finance their businesses. Moreover, traditional debt financing, like bank loans, does not work for certain businesses like 

startups that typically lack revenue streams and credit history, 

making them too high risk for traditional bank lending. 

For these entrepreneurs, there are three forms of equity investment that typically target new and early stage firms: angel investing, venture capital, and regulated investment funds, like small 

business investment companies, or what we call SBICs. Angel investing generally refers to high net worth individuals who invest 

in and support startup companies in their early stages of growth. 

SBREP-219A with DISTILLER

3 

In addition to angel networks, women-led businesses can seek venture capital. Because it is equitable in nature, VC is most attractive for new companies with limited operating history that are too 

small to raise capital in the public markets, and too undeveloped 

to secure a bank loan. 

Beyond the purely private market, the Small Business Investment Company Program, SBIC, which is operated by the Small 

Business Administration, was created to inject government-backed 

capital into the market and spur additional investing. By the end 

of last year, the program had over $25 billion dedicated to small 

businesses. 

Unfortunately this need for early stage startup capital, especially 

for women-led small businesses, is going largely unmet by the private market and SBA’s existing investment programs. Babson College’s Diana Project found out while women entrepreneurs have 

made considerable progress in obtaining venture capital since 1999, 

a wide gender gap exists. 

They found that businesses that have all male teams are more 

than 4 times as likely as companies with even one woman on the 

team to receive funding from venture capital investors. More concerning was that companies that had a woman CEO only received 

a total of 3 percent of investments. This disparity exists despite the 

finding that businesses with a woman on the executive team are 

more likely to have higher valuations at both first and last stage 

of funding. 

Furthermore, Babson researchers found that women venture capitalists are more likely to invest in women-owned businesses. Unfortunately the total number of women partners in venture capital 

firms has declined significantly since 1999, dropping down 6 percent from a high of 10 percent. I hope today’s hearing will shed 

some light on the lack of women in venture capital. 

On a positive note, SBICs made 280 investments in womenowned firms totaling $394.6 million over the past 5 years. More importantly, there has been a significant increase in such investments 

over the past 2 years. The number of investments has doubled, and 

dollars increased fourfold. Unfortunately, these investments in 

women-owned firms still only represent approximately 3 percent of 

the overall activity of the SBIC industry. 

Today’s hearing will examine the challenges faced by female entrepreneurs looking to obtain venture capital. Although womanowned firms have made significant gains since the recession, these 

statistics show that they still lack comparable access to capital 

compared to their male-owned competitors. We will also explore 

ways to increase both access to investment style capital funding for 

women-led firms and the number of women investors. 

I want to thank the chairman for traveling here today and to 

conduct this important hearing, and I look forward to hearing from 

today’s witnesses. Thank you, and I yield back. 

Mr. KNIGHT. Thank you very much. We’ve got 5 minutes for 

each witness. We will not cut you off, but please be mindful of the 

5 minutes, and we will be as good as we can with you. But we want 

to hear from everyone and make sure that we get enough time for 

questions and answers. 

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I am going to have Congresswoman Chu introduce our witnesses, 

and we will get this hearing going. 

Ms. CHU. Okay. It is my pleasure to introduce four exceptional 

witnesses today. Jeri Harman is a managing partner and CEO of 

Avante Mezzanine Partners, one of the only majority women-led 

and owned private equity funds in the country. She has over 30 

years of financing experience, and is also the chair-elect of the 

Board of Governors of the Small Business Investor Alliance. 

Jeri was inducted into the National Association of Women Business Owners Hall of Fame in 2013, and Mergers and Acquisitions 

Magazine named Jeri one of the top 25 female professionals in 

2015. Jeri is testifying on behalf of SBIA. Ms. Harman, thank you 

so much for joining us today. 

Now if you can do your testimony. 

STATEMENTS OF JERI J. HARMAN, MANAGING PARTNER & 

CEO, AVANTE MEZZANINE PARTNERS, LOS ANGELES, CALIFORNIA, TESTIFYING ON BEHALF OF THE SMALL BUSINESS 

INVESTOR ALLIANCE; RENE ́ E LABRAN, GENERAL PARTNER, 

RUSTIC CANYON/FONTIS PARTNERS, AND SENIOR ADVISOR, 

IDEALAB, PASADENA, CALIFORNIA; LOUISE J. WANNIER, 

BOARD MEMBER/ADVISORY SERVICES, TRUE ROSES, INC., 

PASADENA, CALIFORNIA; AND LAURA YAMANAKA, PRESIDENT, TEAMCFO, INC., LOS ANGELES, CALIFORNIA, TESTIFYING ON BEHALF OF THE NATIONAL WOMEN’S BUSINESS 

COUNCIL 

STATEMENT OF JERI J. HARMAN 

Ms. HARMAN. All right. Good morning, Congressman Knight, 

Ranking Member Chu, and members of the Subcommittee. My 

name is Jeri Harman, and I am the managing partner & CEO of 

Avante Mezzanine Partners. As Congresswoman Chu mentioned, 

I’m also the chair-elect of the Board of Governors of the SBIA, 

Small Business Investor Alliance, and I’m here on their behalf. 

SBIA is the primary voice of the lower middle market private equity industry, including small business investment companies, or 

small business investment companies, or SBICs. But let me start 

by telling you a little bit about my firm, Avante Mezzanine Partners. Avante is an SBIC firm based right here in Los Angeles, and 

we invest between $5 million and $25 million of debt and equity 

in lower middle market companies. 

Avante has two SBIC funds. Our first SBIC we launched in 

2009—yes, 2009—and that was $218 million. We just raised our 

second fund last year—yay—of $250 million. We’re proud to have 

invested in 20 companies across the country to date and look forward to continuing those investments. 

Avante is somewhat unique in the private equity industry, as 

was just mentioned, given the diverse leadership and ownership of 

our fund. 3 of the 5 investment partners at Avante are women. 4 

of the 5 are women, minorities, or both. We’re one of the only majority women-led and owned private equity funds in the Nation. 

I also feel honored to have been recognized, as was just mentioned, as one of the top women in private equity industry by such 

organizations as NAWBO, Los Angeles Business Journal right 

SBREP-219A with DISTILLER

5 

here, and Mergers and Acquisition magazine. I was even on their 

cover, which thrilled my mother. 

[Laughter.] 

Let me tell you more about my views on women in private equity. According to the private equity research company, Preqin, 

senior women accounted for just 10.5 percent of all employees in 

private equity firms. We clearly need to improve diversity in the 

executive ranks of private equity funds. Many organizations, including SBIA, are bringing focus to this issue. 

This increased attention, along with more senior women as role 

models, continuing changes in firms’ cultures, and openness to 

flexible work arrangements, and increased access to capital, can 

make a difference. These steps can increase our pipeline and retention of talented women and minorities in private equity. 

I believe that with increases of senior representation of women 

and minorities in private equity, there will in turn be more access 

to capital for diverse entrepreneurs. This is important not just because it is the right thing to do. It has been shown that diversity 

generates better results, better returns to shareholders as well as 

supporting job growth. 

While there have been a number of studies that have been done 

over time and all consistent in their results, my written testimony 

mentions two recent studies that discuss gender diversity and corporate returns. For example, one study done recently by McKinsey 

& Company found that companies in the top quartile for gender diversity are 15 percent more likely to outperform their respective 

national industry medians. 

Now, with my remaining time I would like to talk a little bit 

more about the SBIC program. The SBIC program has facilitated 

record amounts of private equity into SBICs, and, in turn, into the 

small business economy. From 2012 to 2015, SBICs have deployed 

$18.4 billion to over 4,400 companies nationwide. These recent 

SBIC financings created or retained over 385,000 jobs. 

We’ve worked with this Committee and the SBA on many past 

initiatives, and we appreciate the Committee’s work to improve 

SBIC operations. Thank you in particular for your work last year 

to pass the SBIC Family of Funds Limit into law. We’re very grateful. 

As more thoroughly detailed in my written testimony, though, we 

have a few more new recommendations and appreciate your consideration. The first initiative would expand access to capital for 

SBICs, and if we have more capital we can put more capital into 

these needy small businesses. Banks are a major source of capital 

for SBICs, and many of these banks would like to increase their 

amount of investment in SBICs. Many are precluded from doing so, 

however, by the SBIC Act, even though otherwise permitted by 

their banking regulators. The SBIA is working on a legislative solution, and we ask you to consider supporting this initiative. 

We would also ask the Committee to consider technology updates 

at the SBA. The SBIC industry is interested in virtual data rooms 

which can be paid for by the private sector. This can help us better 

communicate and send reports to the SBA providing an efficiency 

not only to the SBA, but also to SBICs. 

SBREP-219A with DISTILLER

6 

Finally we have several suggestions, as further detailed in my 

written testimony, related to timely SBA data releases, which are 

helpful for both the industry and Congress and further needed improvements in SBIC licensing and operations. 

I am grateful to be a part of the SBIC program. I’m excited by 

the impact that it has had on capital access for small and middle 

market businesses, including women and minority entrepreneurs. 

The SBIA looks forward to working with this Committee. 

Thank you again for inviting me to testify, and I look forward to 

questions. 

[Applause.] 

Ms. CHU. Now I would like to introduce Rene ́e LaBran, who is 

general partner at Rustic Canyon/Fontis Partners, a growth stage 

investment fund based in my district. 

Renee has over 25 years of experience in corporate and small 

company settings, and is in a range of industries that include internet, digital media, and technology, and consumer products. She is 

a senior advisor at Idealab, a local incubator based in downtown 

Pasadena, where she advises entrepreneurs on how to achieve their 

objectives. 

Renee was appointed by Governor Jerry Brown to the Board of 

Trustees for the California State Bar in 2015. 

Welcome, Ms. LaBran. 

[Applause.] 

STATEMENT OF RENEE LABRAN 

Ms. LABRAN. Good morning, Chairman Knight and Ranking 

Member Chu. My name is Rene ́e LaBran. I’ve worked in venture 

capital since 2000 when I helped start a venture capital fund called 

Rustic Canyon Partners, which was funded by the controlling 

shareholders of the company that I worked for at the time. In 2006, 

I helped Rustic Canyon spin out another fund called Rustic Canyon/Fontis Partners, which focused on underserved markets. That 

fund is now in its final stage, and we’re harvesting those investments. 

In addition to winding up the portfolio of Rustic Canyon/Fontis, 

I currently serve as an advisor to Idealab, a tech incubator that 

just celebrated its 20th anniversary. I also co-founded a startup 

competition for female entrepreneurs that’s now entering its 4th 

year. I’m personally a small angel investor in several women-founded companies. All that said, I have a pretty good firsthand look at 

the challenges faced by women entrepreneurs as well as women in 

venture capital. 

When I started in venture, there were a handful of women. Industry social events typically involved golf and cigars. I can only 

think of a few women who came to pitch companies to us. I’m 

pleased to say that things have gotten a little better, and I’m 

amazed at the number of women-focused events that have sprung 

up in the last few years. 

But the statistics are still quite dismal. I’m sure many of you 

have read the Diana Project report that Congresswoman Chu also 

mentioned. It’s tracked the women in venture capital and both 

sides of the table since 1999. For those of you haven’t read it, 

here’s a few key statistics. In 2011 to 2013, 15 percent of compaSBREP-219A with DISTILLER

7 

nies that received venture capital had a woman on the executive 

team, up from 5 percent in 1999. Great news, but still very small. 

Not as small as the percentage of companies that receive venture 

capital with women CEO, which was the 2.7 percent that was mentioned earlier. 

Further, companies that had a woman on the executive team also 

tended to be at a later stage compared to the overall profile of companies receiving venture capital, leaving one to wonder where these 

companies found their capital in the first place. These are just the 

problems on the entrepreneur side. 

On the venture side, the problem is even more severe. The number of women partners in venture capital fell from 10 percent to 6 

percent between 1999 and 2013. This is particularly problematic 

because VC firms with women partner are 2 times as likely to invest in a company with a woman on the executive team, and three 

times as likely to invest in a company with a woman CEO. The 

reasons for this should be obvious, but just in case they’re not, let 

me elaborate. 

Entrepreneurs find venture capitals through their own networks; 

thus, venture capitalists invest in entrepreneurs who tend to run 

in their own circles and are much more like themselves. The proverbial old boy network prevails. When women do come to pitch, 

they find themselves facing a table of male partners who are more 

comfortable themselves meeting with other men who look like they 

look. There’s plenty of other evidence in the press today about how 

women are often judged in ways that men are not. 

It’s even more difficult for women entrepreneurs to find seed investment since the vast majority of seed investors are men, and 

successful angels tend to invest in entrepreneurs they already 

know. When women do break into the VC side, they also face challenges. Many firms who have a woman partner have just one or 

maybe two, which is often an uncomfortable position to be in. 

The shortfall on the VC side is the flip side of the entrepreneur 

coin. Men who have access to capital to start a fund often start 

them with close colleagues out of their own network. Successful entrepreneurs who have large exits often join VC funds, but there are 

fewer women at the top of firms to become successful or companies 

to become successful in the first place and achieve such exits. So 

breaking in is very difficult for women. 

Some women have chosen to start their own funds, but often 

struggle to raise capital since most funds have to be raised from 

individuals, and, once again, the network effect comes into play. 

What I’m describing here is a vicious circle rather than a virtuous 

cycle. 

The Diana Report urges VC firms to take corrective actions. 

However, despite the evidence that this might improve returns, I 

don’t think we’re likely to see those changes soon. If we’re truly an 

economy that relies on innovation and entrepreneurship as our 

growth engine, we need to find ways to include the half of the population that’s missing out. By the way, we’re talking about women 

here, but male entrepreneurs of color face these same barriers. 

Over the years there have been various programs for emerging 

managers that provided access to capital for first-time funds 

formed by women and minorities. However, these programs seem 

SBREP-219A with DISTILLER

8 

to be cyclical and have diminished rather than increased. Government is also in a position to provide incentives to potential limited 

partners to provide capital either directly or through funds that are 

more likely to deploy capital to those who currently lack access. 

Without incentives or nudges, I believe it will take far too long for 

these problems to self-correct, if ever. 

These are just some of the issues facing both women entrepreneurs seeking venture capital funding and women seeking a career in the industry. There’s so much more I could tell you, and I’m 

happy to answer any questions you may have today. 

I appreciate the opportunity to testify. Thank you. 

[Applause.] 

Ms. CHU. Well, thank you so much, Ms. LaBran. 

And now, I would like to introduce a constituent of mine, Louise 

Wannier. Louise is a serial entrepreneur that has chaired boards 

of directors and, as CEO, built companies in four different industries, including education technology, consumer electronics, information management software, and fashion e-commerce. 

Among her many endeavors, in 2006, Ms. Wannier founded 

MyShape, the first online personal shopping platform. MyShape 

grew to over 800,000 members and partnered with over 200 fashion 

brands. It was financed with $27 million from venture capital 

firms. 

Ms. Wannier, thank you for being here today. 

STATEMENT OF LOUISE J. WANNIER 

Ms. WANNIER. Thank you very much. Chairman Knight, and 

Ranking Member Chu, and members of the Subcommittee, and the 

public who’s here today, thank you very much for the opportunity. 

Thank you for the opportunity to share my thoughts with the 

House Small Business Committee today. I also would like to thank 

Andy Wilson, our local Pasadena City councilman, and Amy Millman, who’s president of Springboard Enterprises, who works and 

has devoted her career to helping women to receive venture financing. 

I’ve long pondered why it is so easy for my male CEO colleagues 

to, from my perspective, have a much easier time raising sufficient 

capital for their ventures. I’ve often felt that, and I suppose maybe 

every entrepreneur feels this way, but I had a disproportionately 

difficult time raising capital for the business plans I presented. I 

had to have more meetings with more venture firms, and in the 

past I have failed twice to raise sufficient capital for two ventures. 

Coincidentally, they were following the difficult economic 

downturns in 2000 and 2008. 

I’m summarizing part of my testimony because it’s slightly longer 

than the time allotted, but you can read the full details in the 

printed testimony. Each of those two companies have products that 

were already well received in the market. In MyShape’s case, the 

800,000 members already. In the prior case, they had thousands of 

different companies using the product. 

Of course there are many, many reasons why ventures are unable to raise capital, and it would take deeper study. But the facts 

are that at the same time that I was unable to raise follow-on capital for those two companies, even after meeting with many difSBREP-219A with DISTILLER

9 

ferent firms, ventures that, in my opinion, were comparable or less 

comparable, less deserving of capital, raised many millions of dollars of capital in the same timeframe. I’m sure this was not simply 

due to the difference between men and women. I’m sure it was also 

due to other differences. But I do feel it was a factor. 

So this request to testify today gave me a fresh opportunity to 

reflect on this question: why do women have a harder time raising 

venture capital? Is it simply the network effect as we’ve just heard, 

or, if not, why not? 

For my undergraduate studies, I went to Cal Tech here in Pasadena. I graduated in 1978 with a degree in astronomy, following 

that, an MBA at UCLA in 1980. For the first 6 years I worked in 

management consulting in the Los Angeles office of Ernst doing 

strategic M&A studies, doing financial feasibility studies, and 

working with corporations across diverse industries. 

Following those years, I temporarily relocated to Sweden, and 

what was interesting is that I accidentally became an entrepreneur 

because the men there gave a young woman from America, who 

was only 30 at the time, an opportunity to build and finance my 

building a new company working in a very interesting area. From 

that experience, I returned with my family to the United States, 

and fortunately became one of the six principle founders of 

Gemstar Development Corporation, and I personally was instrumental in developing and executing the go to market strategy that 

resulted in VCR Plus becomimg one of the most successful consumer electronic products worldwide. 

Congressman Chu, thank you. You’ve already summarized what 

I’ve done in my career. But I think that background and from my 

early background and training in the scientific method, I made a 

hypothesis. I reflected on what has happened and came to this conclusion. The data, as we’ve already heard, tells us that a higher 

proportion of women-founded businesses succeed than do those 

started by men. Yet women are underrepresented significantly in 

the proportion of venture capital financing. Only under 3 percent 

of women CEOs represent the VC funding. 

That’s not just the proportion of venture capital financings in 

number, but also in total dollars invested over the lifetime of a venture. A higher proportion of women-founded businesses succeed. 

They have tenacity. They persevere by bootstrapping using personal financing, friends and family, credit card debt, all other nonprofessional venture capital methods. Therefore, unfortunately, 

they result in lower growth companies, which in turn are less attractive to the larger venture capitalists over the longer term than 

do the businesses founded by male entrepreneurs who tend to raise 

and risk larger sums of capital on average per venture. 

Number three, there’s a venture capital seed and A-round gap 

between what can be raised through friends and families and what 

can be raised through professional venture capitalists. The trend 

affects both male and female entrepreneurs. The venture capitalists have been amassing larger and larger funds which has correspondingly resulted in a proportionately significant increase in 

the average amount that they need to invest, and that raised per 

series in any one venture round. 

SBREP-219A with DISTILLER

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I think it’s partly or simply because any one venture partner cannot sensibly, fiscally, responsibly manage simultaneously more 

than a certain number of investments. They have to put a larger 

portion of assets to work at any time. This pushes the professional 

VCs towards higher and higher risk, and this criteria does not tend 

to be the type of venture that women entrepreneurs more often 

gravitate towards. 

There is a venture capital gap for first-time entrepreneurs, because of the network effect. Entrepreneurs who do not have a prior 

successful exit as a track record—in my case I did with Gemstar— 

have an almost impossible time raising venture capital. Most venture capitalists and most venture capital is invested in entrepreneurs who already have had successful exits. 

I have some other remarks, which are stated here. I do see, however, one bit of positive news here. Women are natural collaborators and naturally social. Women have taken advantage of the recent trend in social media, and there is a recent article in Forbes 

and other places which has pointed to the fact that social media 

has now become a strong enabler of facilitating women’s ability to 

raise funds. We’re starting to see potentially some shifts in this 

trend. 

This is a brief summary. I recommend a further study be made. 

I thank you very much for the opportunity to be of service. 

[Applause.] 

Ms. CHU. Thank you, Ms. Wannier. Thank you for your testimony. 

Now I would like to introduce Laura Yamanaka, president of 

teamCFO, Inc. Since its inception, teamCFO has received several 

regional and national awards, including the Asian Business Leadership Award by Wells Fargo, and the U.S. Asian Pacific Chamber 

of Commerce, and the Women in Business and Accountant Advocate Award by the SBA. 

Laura has also been featured in news and radio sources on the 

subject of small business and finance, including the Los Angeles 

Business Journal and the Los Angeles Times. Laura is currently 

chair of NAWBO, the National Association of Women Business 

Owners, where she has also served as treasurer and is past president of the organization. She is here today on behalf of the National Women’s Business Council. 

Ms. Yamanaka, we are so happy to have you here today. 

STATEMENT OF LAURA YAMANAKA 

Ms. YAMANAKA. Thank you very much. Thank you very much, 

Congressman Knight, and Ranking Member Judy Chu, and distinguished members of the Subcommittee, for inviting me to speak on 

behalf of the National Women’s Business Council. 

I’m going to give you a brief background on myself. I think it’s 

wonderful that you’ve established this panel of witnesses because 

I think you’re getting a broad cross-section. In my business, we 

outsource CFOs, so we actually work with the businesses who are 

hopefully attempting to get funding and move through the next levels of funding. So it’s been very interesting for me to see actually 

half of my testimony here, which you will see. I’m not going to read 

through it because everybody has covered it quite admirably. Since 

SBREP-219A with DISTILLER

11 

I’m a numbers person, I have a lot more numbers behind it, so in 

case you need it, look at it here. 

I am speaking on behalf of the National Women’s Business Council, and it is a non-partisan Federal advisory council created to 

serve as an independent source of advice to the United States 

Small Business Administration, Congress, and the White House on 

issues of impact and importance to women business owners, leaders, and entrepreneurs. 

Interestingly enough, it was created by the Women’s Business 

Ownership Act of 1988, which for the first time allowed a woman 

to have a business loan without a male co-signer. 1988 isn’t that 

long ago frankly, and so, we don’t even think about it right now. 

But when you look and hear of all the stats that are presented, we 

have made a lot of progress on the positive side with a long way 

to go. 

Let me see. I’m going to pass through this. 

Women’s access to capital is a priority for all the reasons that 

we’ve indicated. I think what was interesting per Council research, 

we found out that men start their businesses with nearly twice the 

amount of capital as women, $135,000 versus $75,000. This disparity is slightly larger among firms with high growth potential, 

$320 to $150, and it’s huge among the top 25 firms, $1.3 million 

versus $210,000. 

At the lower levels we’re behind, but not so behind, and as we 

get larger and larger, the gap becomes larger or greater. We get 

about 40 percent of the funding that men do at the highest level 

or at the lowest level, and men get 400 percent at the highest level. 

If the idea is that as a small business you grow, and multiply, and 

develop your businesses, but when you are a larger company you 

can do it at a much higher rate, we are immediately behind the 

eight-ball. Much more relying on the credit cards that, thank goodness, the other legislation put forward. 

Thanks to great innovation in the capital space with 

crowdfunding, peer-to-peer lending, micro financing, and more, 

women have a greater opportunity to pursue and raise capital that 

they need. I think everybody has cited the Diana Research Project, 

I think it’s landmark research. It also says to me we need more research in this area. If this is the citing source for all of us, it’s good, 

don’t get me wrong. But there should be more. There should be better research, right? This can’t be really one of the singular studies 

in place, which is why it’s so important to fund organizations or entities like the National Women’s Business Council. 

It was very interesting in that study. I think we didn’t really specifically speak about it. But there was a question about whether 

women entrepreneurs were not being funded at that rate because 

they really didn’t have the experience that they needed to get 

there, and this was a study that was done in 1999. What’s really 

interesting is you would think because of the pipeline effect, and 

as there’s been more interest, more access, more availability, government resources, private resources, you would think that percentage would go up. But as my fellow witnesses have indicated, 

actually that percentage has been dropping. Stats are in here. 

One of the bright spots is that actually women-owned businesses 

or just women in general, own and control a huge amount of assets 

SBREP-219A with DISTILLER

12 

in the world and particularly in the United States. One of the proposals that we could put forward is a little bit of a focus on the 

fact that if we could direct, encourage, communicate, let people 

know, let women know the disparity in investing, if we could get 

some of the personal investments into this broader area, we could 

possibly even out or increase the funding of women in this area. 

Let me skip ahead to our recommendations. The Council is committed to broadening the dialogue through engagement of the full 

entrepreneurship ecosystem and the exploration of innovative ways 

to increase investment in women-owned and women-led businesses. 

In 2014, the Council conducted research on access to capital by 

high-growth women, and this research confirmed that men are 

starting businesses with significantly more capital. We already 

know that. Female ownership was negatively correlated to the proportion of capital coming in from external sources. That’s also been 

cited. That woman-owned businesses exceed their own expectations 

regarding growth. That’s huge. 

Basically what that’s saying is two businesses, male, female, the 

guy is going to shoot for the moon, and the woman is going to go, 

hey, if I just get to the coast, I’m fine. She’s not setting her expectation out there, which means she’s blowing past those expectations, and which is huge when you’re going up for external funding, 

right? 

We would like to suggest several remedies to this situation that 

we think that we could put forward. We would like to propose 

eliminating the carried interest loophole for venture capital firms. 

I’m not sure how we feel about this over here, but that is one area 

that we could explore so that funds who do not fund female-owned 

or female-led firms proportionately to male-owned or male-led 

firms, we could possibly use that as an inducement. We could introduce tax credits for investment income in women-owned and 

women-led businesses to provide incentive for investors to seek out 

woman-owned and women-led firms who are generally under capitalized 

We can increasingly improve the promotion of capital opportunities and sources to broaden and diversify the outreach for many 

women. We can strengthen the pipeline of women in careers in finance by specifically increasing the numbers on the financing and 

the investment side. That has been particularly of concern to us because that pipeline has gone down, even though you see more and 

more women going into the financing field. So that’s of interest to 

us. 

We would really like to see providing entrepreneurial support, 

particularly in the form of education and membership, early and 

consistently so those positions of possibly not shooting for the moon 

and just shooting for the coast, we can—we can stop that. If you 

don’t go for it, you’re never going to get there, right? 

In conclusion, as the government’s only independent voice for 

women entrepreneurs, the Council’s mission is twofold: to support 

and conduct groundbreaking research and provide insight into 

women-owned business enterprises from startup to success, and 

share the findings to ultimately incite constructive action and policies. The numbers confirm that the full economic participation of 

women and their success in business is critical to the continued 

SBREP-219A with DISTILLER

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economic recovery and job growth in this country. We are committed to sustaining the potential that women entrepreneurs represent. 

We know women have ideas. We know that they’re leaders. We 

know that they’re launching businesses at great lengths. We just 

have to give the opportunity for these women to scale at the comparable levels and remove those barriers to their opportunity. 

Thank you very much. 

[Applause.] 

Mr. KNIGHT. Thank you very much to our panel. I think we 

have got some good questions, and some exceptional information. 

I would like to start off quickly with an opening question, and 

all four of you can answer this. My wife is in, well, up to maybe 

20 years ago, a hundred percent women business or women industry. It was nursing, and over the last 15 or so years we have seen 

men go into nursing. 

We sat down one night and we talked about another business 

that was maybe a hundred percent men, and in my district it is 

aerospace engineering. We figured that about 20 years ago it was 

probably pretty close to 100 percent men. Today there are an awful 

lot of ladies that are in aerospace engineering, and I think part of 

that is because of some of the programs that have started out. 

This is where my question is going to come from. Because of that 

phenomenon in aerospace engineering, they started off with a VEX 

program with robotics, with Legos, with all of these different programs that got kids involved in STEM, but also got our young girls 

to be involved in engineering. We’ve seen some of the robotics programs go from a hundred percent boys to now about 50/50 in most 

of the programs that we see across this State. 

That is kind of a grassroots, maybe an out of the box thinking 

of how to get young ladies involved in something that they probably weren’t involved in or they weren’t thinking of. I have two 

boys, young girls are very adept at math, and we want to push 

them into this arena if they have that aptitude. 

So there is my question. I understand that we do not have as 

many women CEOs as we would like to have. Do we have as many 

women going into certain industries, and I will pick the finance industry, as we need so that we can cultivate some of these young 

ladies, so that in 20 years or 25 years they are CEOs of businesses 

and they are taking over? 

Ms. HARMAN. That is a very broad question. 

Mr. KNIGHT. That is what I am all about. 

Ms. HARMAN. It is a very important question, of course. I think 

we can learn a lot from what has already been successful, which 

is STEM is a great example. I mean, there has been a concerted 

effort to make sure that young women and girls continue to excel 

at math and sciences and so forth, and encourage them to pursue 

careers there. 

But, as you have noted and I mentioned in my testimony, we 

have not seen a lot of progress in the private equity finance industry, and that has been continual. I mentioned the 10.5 percent of 

senior women in private equity overall. You can subdivide that in 

venture capital buyouts, et cetera. It is the same, you know, and 

it has been flat and declining in general. 

SBREP-219A with DISTILLER

14 

I think there is no single answer on that. I think part of it, just 

like with STEM, is to reach into the educational system and make 

sure that women understand that there are great opportunities and 

power in going into financial careers, in particular private equity, 

but they have to see role models. They have to see women succeed, 

and that is why I mentioned, the more there are people like Renee, 

myself, and many others around us, organizations like PE WIN, 

Private Equity Women Investor Network, which I am on the steering committee, which is senior women in private equity, over 200 

members throughout the U.S., and it is going global. 

Creating these networking ecosystems shows that there are 

women who can and do have success in private equity, and there 

is a career path. But it also takes an ecosystem where we are, 

showing diversity in all firms, which is a firm culture issue. There 

are a lot of women opting out who are not even in the pipeline because they do not see this as a viable career path either because 

there is lack of role models or because they view that the lifestyle, 

typically going to investment banking first and then you go into 

private equity from there, well, that is a lifestyle that involves a 

lot of travel, et cetera. That is not always attractive to women, especially as they come in and they decide not to stay in and go up 

the ranks, so it is really a combination of things. 

The final point on that, and we all mentioned it, is access to capital. If there is more obvious accessibility, to women, both entrepreneurs as well as fund managers like myself, where there are 

capital pockets that we know are available to us that are outside 

of the old network, and in the new network, and that includes public pension funds have been putting emerging manager programs 

together, some of which focus on women and minority managers or 

investors. 

We have capital from some of those pockets, but there are not 

many of those pockets, and that has not been growing. That would 

be helpful to grow as well. 

I assume you heard me. 

[Laughter.] 

Ms. CHU. We heard you loud and clear. It was a wonderful answer. 

Ms. LABRAN. Thank you. To add onto Jeri’s comments, I think 

having more women going into STEM and some of the more scientific areas I think can benefit on the entrepreneurial side, that 

you have more women who are going to work for some of the tech 

companies and becoming entrepreneurs. 

However, a couple of other observations. One of the things that 

has been interesting to me about women entrepreneurs now, because of the ability it is much easier to start a company today. 

There are platform technologies that enable companies to get started from much less capital, and do not require as much technical 

expertise. You are seeing a lot of women at tech conferences starting businesses that are not necessarily software and deep technology, but are e-commerce, fashion, but are considered tech because of the platforms they operate on. So I do think those things 

will happen. 

I am not quite sure on the finance side, though, to be honest. I 

do not believe that the problem is that there are not enough women 

SBREP-219A with DISTILLER

15 

going into finance. I think if you look at accounting, accounting has 

worked very hard at getting women into their companies because 

they have a shortage of accountants. I think on the aerospace side, 

they knew they were growing. They needed more engineers. They 

had incentive which was if I cannot fill the jobs, I cannot grow, to 

hire more women and to increase their talent pool. 

I know the accounting firms are very focused on this right now 

because they cannot keep enough people, so they have to figure out 

how to get more people in the door and keep them. I do not think 

that is a problem in venture capital and private equity. There are 

way more people who want to get into that business than there are 

jobs. 

I get bombarded with women coming out of business school, and 

men, who want to get jobs in venture capital, but there are very 

few jobs. There are just not that many firms, and the people who 

get the jobs are people who have a connection, and you just get in 

this cycle. So if there was a shortage, then absolutely. 

I think this is a very efficient market. If there is a shortage, people will do what they are incented to do. If there are financial incentives, they will follow the money. But right now there are plenty 

of people applying for those jobs, plenty of access to very smart 

young people, and there are a few firms. I have some colleagues in 

venture capital here who are finally realizing that there are a 

whole bunch of companies out there being started by women, and 

that maybe if they had women in their own ranks that they would 

have broader access to a wider range of talent. But it requires an 

awakening on their part, which takes some time. 

So I think it can’t never hurt. Everything helps. But, you know, 

that seems to me to be the bigger barrier. 

Mr. KNIGHT. Thank you very much. I am going to have Ms. Chu 

ask questions. 

[Laughter.] 

Ms. WANNIER. Are we done with that question? I thought you 

said everyone would answer. 

Ms. CHU. I am sorry. I am sorry. 

[Laughter.] 

Ms. WANNIER. I would like to—— 

Mr. KNIGHT. I forgot because the microphone went over there. 

I am sorry. Yes, ma’am. 

Ms. WANNIER. No, no. Absolutely no problem, Chairman 

Knight. I probably feel quite differently to everyone else here. As 

a woman CEO for the last 30 years and as a woman entrepreneur, 

I have a slightly different perspective. I believe that the issue of 

women-run companies is the same as women-run businesses. It is 

a factor that there is not the society and cultural ability for women 

to have balance in their lives. For women in general, balance is 

more important often than men. Men have for many, many years 

been willing to sacrifice their families and other aspects of their 

lives. 

Now, what I observe, I have four grown children. I managed to 

have them at the same time, and I see it to be different in that 

generation. My kids in their relationships, the men are starting to 

take some of the balance. They are participating. My son-in-law is 

going to be on paternity leave as well as my daughter taking her 

SBREP-219A with DISTILLER

16 

leave when their child is born shortly. They seem to have a different attitude on diversity. They do not seem to see the differences 

as much as I think my generation sees the differences. 

The number of lawyers graduating who often become venture 

capital partners, you have to look at what makes a venture capital 

partner. They either tend to be attorneys or they tend to be successful business people. How do you get to be a venture capitalist? 

You do not get there from being a startup. I mean, yes, you could 

go from business school to becoming an associate at a venture capital firm, which is really a research position. But you cannot really 

go from there to becoming a lead partner without either putting in 

many, many years or going out and making a success of yourself 

some other way. At least I have not seen that. 

There is another factor. I really think that we need to move to 

a world where we are not distinguishing bias based on men or 

women, but we are actually putting in place some specific criteria 

on which investments should be made, and we are putting in place 

some independent panel review. I think venture capitalists would 

benefit from this, even though they might not like the idea. 

I think the venture capitalists would do better to adopt a system 

similar to what scientists use for peer review. I think that investments should be peer reviewed. I think that there are systems that 

could be put in place that would mean that our capital is more 

wisely deployed. 

Mr. KNIGHT. I agree. 

Ms. WANNIER. Okay. 

Mr. KNIGHT. I firmly agree that if I was putting out capital and 

it was my life savings to go into business with a friend, that I 

would have everything that you are saying in mind, that you better 

successful. You are taking everything that I have, and you better 

be successful. 

I think sometimes in venture capital, you have got a lot of people 

that have an awful lot of hold on money, and they can do a hundred issues as opposed to my life savings and one issue. 

Ms. WANNIER. Right. 

Mr. KNIGHT. I can take a lot of risks with friends because I 

have a relationship with them. And so, if I lose out on this and I 

lose out on this, well, hopefully, a couple of them will come 

through. I think that that is a problem. 

I firmly believe that if you are going to be involved in venture 

capital, it should be all about the risk reward factor. How much do 

they bring to the table, and what is the reward that might come 

from this? I do not care who owns it, and I do not care who started 

the business. What can I get out of this? But I agree that there is 

a lot of relationships, and a lot of good old boy thinking, and a lot 

of, well, yeah, absolutely, I can help you out because we have 

known each other for so long. 

That should not be the way it is. The way it is, is that I am going 

to be involved in this business, and I want this business to be successful. So what is your strategic plan? What are you going to do? 

Where are we going to be in 2 years? Where are we going to be 

in 5 years, and so on, and so forth? That should be it in my thinking. 

SBREP-219A with DISTILLER

17 

But it is not today, and that is part of what this panel is about 

is how do we get past some of those barriers, and how do we get 

to the best for the business owner, the best for the community, and 

the best for success because success brings opportunities. The opportunities are going to be more jobs, and more help for our economy, and all of those things. That is what we should be working 

toward. 

Yes, ma’am. 

Ms. YAMANAKA. So with that, I think that nobody at this table, 

these tables, would disagree with that fact that you need to be a 

solid business with a solid plan, with, you know, a niche market. 

You got to have all your marbles in order, absolutely. 

I think that the issue is that in this world where we live in right 

now, you are absolutely right. Am I going to invest my money with 

somebody I do not know off the street or one of my friends, you 

know, that I know I have done business with before? I know how 

hard they work. I know what kind of lifestyle they have, what kind 

of judgment they have. I do not care if you are a man, or a woman, 

or whatever, you are going to make that decision based on all the 

quantitative factors and the soft part of it. 

One of the pieces of research the National Women’s Business 

Council has indicated, and I think some of my fellow witnesses 

here have indicated, that your contacts are important. Part of that 

start is getting people started in the beginning, women, minorities, 

whomever, starting in the process of coming together, having the 

same types of experiences so they can progress on that journey together. 

I think what we are finding out, and it has only been recent, that 

there are other obstacles along the way. So trickle up is not exactly 

trickling, right in my field, finance CPA firms. If you look at accounting classes, accounting majors, more than 50 percent of people 

coming in are women. In CPA firms, a lot of times your entry class 

is more than 50 percent. However, we have been close enough to 

come to the cycle of partnership, and you see that women fall out 

at a much higher rate than men, perhaps, Louise, some of the reasons why you have indicated, perhaps other reasons. 

I think somebody had indicated it is not one facet. It is multiple. 

It is a complex problem. We need to have complex solutions that 

encourage people to start in the beginning, encourage that equal. 

It does not matter if you are male, female, whatever, you go for it 

and have those same common experiences. 

On the other hand, along the way, I think it is important to assist that leverage, okay, so that it evens it a little bit, not because 

it is, you know, the right thing to do or whatever, and it is the 

right thing to do, but because it is good business, as we have indicated. That diversity is so important. If we can get that faster 

through certain types of encouragement in the short run, we all 

benefit to that. I think it is just coming out to the exact specifics, 

you know, which is why we are all here. 

But, again, if we look at our eye on the ball and getting that diversity and always here, it is going to mean more money for everybody, more jobs for everybody. 

SBREP-219A with DISTILLER

18 

Mr. KNIGHT. Thank you very much. Now, I will go to Ms. Chu. 

I agree. This panel is hitting it right on the head, though. I have 

invested with three friends. I have made three tax write-offs. 

[Laughter.] 

So, you know, instead of using my head, I used my heart, and 

I think that a lot of venture capital goes to I have got a relationship here. And, yes, he did something good, he did something bad, 

but I have got a relationship with that person, so I am going to invest with that person, instead of looking into the numbers and saying this is a sound investment. So thank you. 

Ms. CHU. Thank you so much, and I am eager to ask questions 

to all of you. I am going to ask the first half of my questions, and 

then we will do a second round of questions. 

First, I would like to ask Jeri Harman specific questions related 

to SBIC. The reason I want to focus in on this with you since you 

are an expert in this is that the SBIC program, the Small Business 

Investment Company programs, are a direct result of the SBA’s attempt to have more investment going; thus, we, since the House 

Small Business Committee has oversight over the SBA, we could 

have some say-so in terms of what the future direction of SBIC is. 

What we see is that there are still too few SBIC investments in 

women-led firms and even fewer SBICs with women partners. 

While SBIC programs have a higher proportion of female managers 

than the broader VC community, more must be done to increase 

the numbers in both realms. 

So, Ms. Harman, in your opinion, what role does the SBA have 

in improving the SBIC program to better serve women? Is there a 

way to work within the SBIC program to ensure that more women 

are qualified to become fund managers when the opportunities become available? 

Ms. HARMAN. Yeah, I mean, clearly there is a lot more work to 

be done. There are not that many senior female women in the 

SBIC program, but I think it is changing. I think there is more of 

a focus. People are shining the light both at the SBA as well as 

the SBIA to educate people about the benefits of the SBIC program. 

But it still becomes an issue. In order for women to raise a fund 

like I did, you still have to get the private capital, the private equity capital. That is the foundation for the firm, and then we can 

use the SBA leverage for the rest of the capital. That is how, as 

you know, the SBICs are done. 

So we still have to have access to the capital to start our funds 

that is outside what the SBA provides. And that is where these 

emerging manager programs, whether they are coming from public 

pension funds, endowments, foundations, family offices, individual 

investors, et cetera, all of them are providers of that capital. But 

there has to be that network that we have all talked about, whether that network is women or a broader network, that provides the 

access to those types of LPs, limited partners, that support the 

total fundraising environment. 

We are trying in SBIA to create more of those opportunities. 

There have been women’s networking events at each of our regional and national events, women investors as well as women LPs. 

So both the GPs and the LPs, which is that the key ecosystem. If 

SBREP-219A with DISTILLER

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we can put those people together, then that creates access to capital, start the funds and then, of course, the SBA and the SBIC 

program provides the leverage to increase the access to capital. 

I think the more the SBA focuses on supporting the SBIC program honestly it has been very successful in getting money to 

small businesses. Whether that is women- and minority-owned 

businesses, or LMI urban, you know, located business, veteranowned businesses, et cetera. We have done women-owned businesses, we have done LMI, located companies, et cetera. 

We all have to deliver results to our shareholders, so we have to 

find the best opportunities out there. But still, it all starts back to 

access to capital. Again, the networking and the shining the light 

on this. 

I am chair-elect of the SBIA. The vice chair is another woman. 

We have two women prior to this as senior people on the SBIA executive committee. We are starting to represent, but there is more 

work to be done. 

Ms. CHU. In 2014, the SBIC program experienced an uptick in 

investment in women-led firms. The number of deals doubled, and 

the dollars invested grew nearly fivefold. What are the reasons for 

this positive trend, and what can Congress do to help continue this 

trend? 

Ms. HARMAN. It is hard to say the reasons. I think there has 

been an increasing pipeline—I think Renee talked about it and 

some of my fellow panelists here—on the increasing pipeline of 

qualified entrepreneurs so there is more opportunities to invest in 

many of these women diverse managed firms. There has been more 

exposure through studies that have shown that investing in diversely managed companies generates better results, which is, just 

better business. 

As I said, the increased attention that has happened at the SBA 

and the SBIA, if you will, has been helpful, but I do want to caution. I do not think what I would call subsidies or, in other words, 

lowering any standards for qualifying for capital, whether it is 

SBICs qualifying for capital, a company is qualifying for capital, is 

the answer. There are plenty of very talented women and minorities who are running businesses who are in the private equity field. 

When we raised our funds, we did not ask people to look at anything except our track record, our strategy, the experience of our 

team that we could benchmark against anybody, but we needed the 

open doors to be able to tell that story. That is the access. That is 

having those emerging manager programs, you know, encouraging. 

I think the government can do more to encourage public funds to 

go into the LP side of things outside of the SBIC program, provide 

more capital as a limited partner to qualify emerging managers. 

Ms. CHU. There were strategic plan initiatives, like the SBA’s 

Impact Investing Fund and Early Stage Initiative. The SBA tried 

to spur additional investment in underserved markets through this 

initiative. The goal was laudable, but the program was not particularly popular with the investor community. 

Ms. HARMAN. Right. 

Ms. CHU. How could we change these programs to make them 

more attractive to investors like yourself and better serve the intended beneficiaries? 

SBREP-219A with DISTILLER

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Ms. HARMAN. First, we have to recognize that all SBICs are 

doing impact investing. We have invested in women-owned companies. We have invested in LMI urban located, however you define 

‘‘impact.’’ So to me, the solution really is to support the general 

SBIC program and continuing to provide education and money to 

support that program. 

It is hard because venture capital and leverage do not go handin-hand. One of the big benefits of the SBIC program is the lowcost leverage that it provides at the fund level for us to in turn 

make these investments. But you do not really want to have a lot 

of leverage if you are doing venture investing, which is a little bit 

earlier stage investing, because your mistakes are magnified. 

If you have a couple of poor performers early in the fund, you are 

done because the leverage magnifies those problems. I think it can 

be potentially a mismatch between levered SBIC program type capital and true venture impact, you know, funds. That has been part 

of the program, and venture investors know that. They do not want 

to increase their leverage and increase that risk profile, so they do 

not see the other benefits then of partnering, if you will, with the 

government because that has been the major advantage. 

Ms. CHU. Ms. LaBran, although women control over half of all 

the wealth in this country, the Diana Project found that the number of women in venture capital actually decreased from 10 percent 

to just 6 percent as you pointed out. Are women leaving the venture capital industry, or does this statistic mask other factors that 

are in play? 

Ms. LABRAN. I do not think women are leaving. I actually tried 

in the report to find the actual numbers as opposed to just the percentages, and I could not find it because I do see more women now 

at the junior levels of venture capital firms, again, very small numbers. 

I speculate that what may have happened is that when we had 

the shake out in the market that the number of firms being 

formed, and I think you referred to the smaller amount of dollars 

being invested in venture, the number of firms contracted. Therefore, maybe the newer firms, which I would also speculate that 

probably more of the women were in newer, younger firms, those 

firms just did not get re-funded, so they just moved on to something else. 

I think, maybe, it was attrition of the venture capital firms that 

they were associated with, and you did not have many women coming in at the partner level because it does take a long time. Maybe 

they were junior at some other firms, and those firms, again, did 

not raise as much capital. Unfortunately, firms only hire generally 

when they raise a new fund. So people call you all the time and 

say, hey, I am looking for a job, and, it is great, we will be hiring 

in 5 years when we raise the next fund or 3 years. 

So it is very difficult just to increase the numbers because of the 

length of time unless you have new funds being formed. 

Ms. CHU. Well, I have more questions, but let us do another 

round. 

Mr. KNIGHT. I will go back to my broad question. We are in the 

age of the baby boomers. The baby boomers are retiring and/or preparing to retire. The 1946 to 1964 folks are in that period where 

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21 

a lot of them moving on and a lot of them going into social security, 

and Medicare, and things like that that we have to deal with I am 

sure in the next 10 or 12 years. 

Because of that, are we seeing possibly an opportunity because 

we are going from a very large workforce where an awful lot of 

men have maybe dominated in some of these areas or these arenas, 

and now giving a lot more opportunities for young ladies that are 

graduating from our great universities to get into some of these positions and work their way up, or are we not seeing that at all? 

Ms. WANNIER. Again, that is a good, broad question. Yes, as I 

said in my prior remarks, I believe that the generations of my children who are in their late 20s and early 30s, that I am seeing a 

very significant difference in their workplace to the workplace that 

I worked in. I was 1 of 10 women in my class at Cal Tech. I was 

1 in 5, I think, at UCLA for business school. In the work world I 

was often working with mostly male colleagues, but that has shifted dramatically. Now Cal Tech has over a third women. That is a 

change of a factor of 3. 

But what is required, and we have not yet spoken about, are 

mentoring programs. We need to get more women of experience 

who may not have chosen to go the path of CEO, but who have 

nevertheless significant corporate experience into corporate boards. 

We need to get diversity in our board room, which then in turn 

some of those board members will also become venture partners, 

because venture partners are grown from within as well as come 

from the outside. 

We need to establish, similar to STEM, kind of a long-term mentoring program I believe. There are several very good organizations, and just at this moment I am not remembering the name of 

the one. I can get it to you afterwards. There are several very good 

organizations that are trying to work on long-term mentoring of 

young women going through the corporate ranks and going through 

venture ranks as well. I know that each of you do a certain amount 

of mentoring as well. I know there are many opportunities for that. 

But, as Laura said, it is a very, very diverse problem, and it is 

going to attack from many directions. 

I do want to add one little point that I mentioned in my last remarks about a system. I had one example of implementing such a 

system, and actually, Renee, you were on that committee. We had 

an approach here in Pasadena, an organization called EntreTech, 

and we started something sponsored by PricewaterhouseCoopers at 

the time. 

We started an entrepreneur award, but we based our award on 

a very systematic approach. We opened up the applications to all 

kinds of companies at different levels of early-stage ventures, and 

we said that there were two criteria. We were going to evaluate 

them on both the potential size of the market that they had to potentially realize, as well as the specific activities and results that 

they had achieved, which demonstrated that they were likely to 

achieve the investment results. We had a diverse committee involved in making that decision. On the committee we had CEOs, 

we had venture partners, and, again, thank you, Renee, for your 

service. We had members of the advisory professional services 

firms. 

SBREP-219A with DISTILLER

22 

That diversity of thinking also brought good results. I believe one 

of the prior members of that committee came to see me recently 

and had coffee with me and said, Louise, do you realize that every 

single one, I do not even think there was an exception, he said, of 

the people we gave the award to had a successful exit. 

Ms. YAMANAKA. So you talked about the baby boomers exiting 

out, and I think one of the really interesting stats for women in 

general coming out of maybe a corporate workforce or having successfully raised their children is they are more likely to start businesses at an older age. I think that this is an opportunity point 

that we are going to see people are keeping themselves in better 

shape, we are living longer, we have more opportunities. The internet provides a lot more access to across the world and globally. I 

think we are going to see a significant increase in the number of 

people transitioning out into ‘‘early retirement’’ into becoming business owners for both men and women. 

Regarding the question about that pipeline and getting people in, 

hey, you know, capitalism works. Supply and demand works. If 

there is a need and somebody sees you can make money at it, even 

if perhaps they are not so inclined or their network does not allow 

for it, they are going to go after whatever they need to fulfill that 

product or that service. They are going to get who they need to fulfill that product and service. 

So I think it just takes perhaps a little bit longer as it is going 

up, filtering up. But over the long run, it makes economic sense. 

Mr. KNIGHT. I am going to keep the microphone with you and 

ask you one quick question. We have seen new mechanisms on the 

internet—crowdfunding, peer-to-peer, things of this nature—that 

might not bring in mammoth amounts of money, but can bring in 

pretty substantial amounts of money. Are they helping? Are they 

giving a new opportunity? 

Ms. YAMANAKA. The jury is still out because it is a very short 

period of time for data. But preliminary results have indicated 

that, yes, it is working. In fact, I have a site here that I will get 

you specifically. It says there an increased level of 21 percent of 

funding for woman-owned businesses as opposed to male-owned 

businesses. 

I think when you look at how it started out through social enterprise, Kickstarter and all those crowdfunding opportunities, that 

women, one of our things is we are more collaborative, you know. 

We have the relationships. Perhaps we have not focused it in a traditional business. 

Crowdfunding gives the opportunity in a small and greater scenario to provide access of funds that maybe they would not have 

in their local community, so I think it is huge. I think it is going 

to kick off a lot of business at the smaller levels, which is a good 

thing. Do not get me wrong. I love it. It is going to open up opportunities to people who would not have it otherwise. 

I think we also have to realize that we need to focus some attention on the larger numbers because that is where the real money 

is. As far as I am concerned, it is great for starting off small 

and—— 

Mr. KNIGHT. Right. 

SBREP-219A with DISTILLER

23 

Ms. YAMANAKA.—we are doing a great job. To have the parity 

of the impact in the financial return and reward on the economy, 

we really need to look at the spectrum of investment, which is 

what we are addressing here. 

Mr. KNIGHT. Thank you very much. Ms. Chu? 

Ms. CHU. Yes. Ms. Wannier, you said that there was a gap in 

funding for seed and A-round financing since professional VC firms 

have grown in size and do not have the capacity to handle many 

small investments. Do you think the private market will eventually 

fill that gap, or do we need the government to provide an incentive 

to invest in such firms? 

Ms. WANNIER. Well, I do not have all of the data necessary to 

completely determine that. But what I believe and what I observe 

in the marketplace is that it might be possible to raise $500,000 

or a million. Most VCs or many, many VCs of the large funds are 

investing $3 to $5 million less often than they are investing $10 

million, $15 million in a Series A round. 

To support an investment of $10 to $15 million without giving 

away all of your equity and you have no room then for the followon rounds, you have to be supporting valuations and sizes of markets, which are very significant, which means that the businesses 

that will consistently grow to the $20 to $50 million as opposed to 

the $100 to $500 million level are getting ignored and passed over. 

And there is a definite gap supporting that middle range of business. 

I believe that, as we said, women are, for various reasons, more 

drawn to that area than to the much larger ones statistically, and 

so that gap needs supporting. I am not quite sure what the best 

solution is. I have a feeling my colleagues to the left will have a 

better idea. 

Ms. LABRAN. A lot of these things tend to be quite cyclical. 

There are time periods where a lot of the firms want to invest earlier, and then they all shift later, and it just depends on what the 

market dynamics are at the time. There was a time period where 

funds were investing early, and then the valuations, because of 

changes in the economy, were not jumping up in the next rounds. 

So everybody said, why would I want to invest in an earlier stage. 

I might as well wait, have less risk, and invest later. 

Actually right now I think you do have this very bifurcated pattern that Louise is referring to, although I would make a slight distinction. What has happened is that seed investing, which used to 

be, maybe, a couple of hundred thousand people, are doing seed 

and super seed, and they just changed the names around. 

So you have these super seed rounds that are, you know, a million or $2 million that are being done under a different structure 

than what used to be called a Series A. This is problematic because 

there are a number of funds that do seed investment. Again, those 

tend very much to be entrepreneurs who have had successful exits. 

They have taken their own private money, personal money, and 

that of maybe some colleagues, and formed these small funds. So 

they can only afford to do very small investments. 

Then you have the big institutionals that are doing the $10 million kinds of rounds or even larger, the $50 million, $60 million 

into the snapshots of the world. But a lot of these angels, many of 

SBREP-219A with DISTILLER

24 

whom, by the way, are leveraging the crowdfunding platforms that 

Congressman Knight was referring to, they are men. There are just 

very few women on those platforms. And I will say—— 

Ms. HARMAN. Smarter. 

[Laughter.] 

Ms. LABRAN. Well, that is the thing. I mean, we can joke about 

that, but in the last few weeks or months, I am constantly invited 

to these events that are targeted at getting women to invest more 

in these very early stages. I have a little bit of mixed feelings about 

them because I do think that it is important to have more involved 

in this ecosystem. Many of these women do have the means, but 

I think we also have to make sure that we do not have people who 

really cannot afford to take that kind of risk making these investments. 

So crowdfunding does help because it allows more people to make 

small investments because many of these people should not be 

making, you know, $50,000, $100,000 bets that the angel networks 

have typically required, but they can do $5 or $10. That is hard for 

a company to handle, but if there was a crowdfunding platform 

that allows that to be aggregated, that actually is helpful. 

So of course the jury will be out, but I do see at least it is raising 

the interest in people investing, and that may just help more 

women and other first-time entrepreneurs get that little bit of seed 

capital that they need other than their credit cards and other 

things that are self-limiting. 

Ms. CHU. Well, talking about angel investors, Ms. Yamanaka, 

we have seen an increase. Historically females were 15 percent of 

the angel investors in the United States, but for 2014 it did increase to 20 percent. So that is a significant increase. In your opinion, what is driving that increase? 

Ms. YAMANAKA. Finally that trickle up is working. We are 

more successful in accumulating wealth and are able to invest back 

in the educational piece, the give-back piece that makes good economic sense, ultimately all of those reasons. It is a good investment. Somebody is willing to say, hey, I am going to take my 

money. I am going to put it here. I think I am going to get a better 

return than if I stuck it in the bank. No offense to the banks right 

now. 

That said, women are great at leveraging, so they are looking at, 

one, an economic return, but they are also looking at if their money 

will make a difference. This is purely speculative on my part that 

all things being equal, if I have an investment, both investments 

are the same, going to have the same return, same risk. But if I 

feel that I can make a difference with this investment by helping 

out a new entrepreneur or investing a business that is going to 

have more of a social impact or whatever those things, I am going 

to probably put my money into the second piece, all things being 

equal. 

I think that is really important. I cannot stress that enough because many times people go, oh, you know, they are going to just 

waste their money or put their money into something that really 

does not make as much economic sense, but, you know, they are 

going to change the world or it is a good moral thing to do. We are 

SBREP-219A with DISTILLER

25 

going to do that on top of the fact that all things being equal, it 

is a good economic investment. 

Women are not foolish. We make wise economic decisions. If you 

look at our commercial or our personal and consumer buying patterns, we do make a lot of those common everyday decisions, and 

I think that holds all the way through. 

Ms. WANNIER. Can I add—— 

Ms. CHU. Absolutely. 

Ms. WANNIER. It just also occurs to me that one of the things 

I have encountered in my career is that many women do not take 

the time to fully understand and appreciate and understand financial projections and financial statements. Now, women who go into 

banking or into accounting of course do. But I believe that we could 

also strengthen our education systems to add that earlier in the 

cycle of our education so that both men and women get exposed to 

these concepts from a practical sense earlier in life. 

Ms. YAMANAKA. But men do not either, right? I mean, I have 

to put it in there. 

[Laughter.] 

Ms. WANNIER. No, I mean—— 

Ms. YAMANAKA. I have clients that are men that are equally 

ignorant on projections. I do not want to look, hang a label. 

Ms. LABRAN. If I may just reinforce what Laura talked about, 

I mentioned I co-founded a startup competition for women entrepreneurs. Going into our 4th year last year, we received over 100 

applicants. What has been interesting is the number of women who 

have come to participate in the event just to see the pitch competition. We are also getting men. But some of those women have become interested in investing back to these small amounts. 

But she is absolutely right. These women, it is not like, oh, is 

that the coolest thing I have ever seen. No, it is something they 

want to feel good about, and they have to be able to relate to it. 

One of the businesses that was one of our winners, and a number 

of us invested in, was founded by a woman, let us say, a more mature woman, as opposed to some of the much younger millennial 

kinds of founders. A more mature woman. 

She started a company that has been largely targeted at the 

LGBT community, and it is a fabulous business. She has done a 

great job raising a million dollars from women who just really love 

her story. By the way, in 1 year she did over a million dollars’ 

worth of sales in her first year of business. She would have done 

more had she had more capital to buy inventory. 

But, to your question about the profile changing as a result of 

boomers retiring, I think it is, again, all those things and to the 

extent that women are exposed. They do think very differently 

than male angels, I deal with both groups, and it is a very different 

discussion. 

Ms. HARMAN. But I think that still relates back to your question about various demographics. It is not just women investing differently, which I completely agree with, and some of the importance of understanding that. It is actually millennials or next gen, 

or whatever the various demographic categories that are basically 

people younger than me. 

[Laughter.] 

SBREP-219A with DISTILLER

26 

Far younger than me. As an employer, as an investor, understanding the difference of some of these younger entrepreneurs or 

people I might hire is very important because they do not think the 

same way that we think in general. 

As we are trying to hire, this is the pipeline thing we talked 

about is as you are trying to increase the pipeline, understanding 

as I am hiring people, trying to bring women and minorities into 

private equity, but in general younger people, understanding that 

they care about lifestyle. They care about flexible work arrangements, men and women, perhaps women more. They care about 

what they are doing having some meaning. So we have to recognize 

that we have to offer all those things in a way that is compatible 

with, you know, their goals and aspirations, and that creates the 

pipeline and the retention in what we are doing. 

The other point I want to make is many companies do not qualify. We keep talking about venture capital and getting more venture capital to these startup businesses or smaller businesses. 

Many of them are classic economy boring businesses. They do not 

scale to be a billion dollars. Most of them are not dot.com successes, you know. There is a company that makes, is a distributor 

of medical devices, or a company that makes an aerospace component. 

Those are the kind of businesses we finance and many others, for 

example, in the SBIC program. They are the kind of business that 

bootstrap by bringing in personal capital, by going to banks just for 

asset-based financing. They get to the point where they are cash 

flow positive. Then they can start to come to people who lend them 

money or invest equity based on a proven business that now helps 

them scale to the next stage. But they are not going to scale and 

be that exciting crowdfunding type of business. 

Most of the businesses out there, small businesses, are those boring—I love boring—businesses—— 

[Laughter.] 

Ms. HARMAN.—you know, that we fund and are really necessary to continue to fund. 

Ms. WANNIER. I have a question. When I looked at SBIC funding for myself—I have a lifestyle business, which is a fashion design business, it is not a venture interesting business—funding was 

only available if you put your house on the line. That is not true 

anymore? 

Ms. HARMAN. No. 

Ms. WANNIER. That is an SBIC. These do not involve that, so 

it is possible to have a venture type risk. 

Ms. LABRAN. Totally different. 

Ms. WANNIER. Okay. That is interesting. Thank you. 

Ms. CHU. Good to know. 

Ms. YAMANAKA. Actually what you saw here was an opportunity for improvement, so it does not get any better than this 

table. I think the SBA has done an excellent job of improving the 

complexity of regulations and communicating their services and 

how they do it. But, as with anything complex, and as with a government organization, and with the budget limitations, there are 

things that could be done better, or we could do to improve the outreach and understanding out there. 

SBREP-219A with DISTILLER

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We are in an age of commercials, 15 seconds, get it through. And 

so, a lot of times people, and I am not just saying women—just 

men, millennials, everybody—do not take the time to go through 

the layers of the internet to try to figure out certain things. We do 

have a lot of great services and products out there that could help. 

We just need to get the consumer connected to the source in a better way. 

Ms. CHU. I have one final question for the whole panel, and that 

is if there was one thing you would like my colleagues back in 

Washington, D.C. to understand about women entrepreneurs and 

investors, and also one thing for us to do, what would that be? 

Ms. YAMANAKA. Just one? 

[Laughter.] 

Ms. CHU. Well, if you have two, that is fine. 

[Laughter.] 

Ms. LABRAN. I would start by saying that, again, that what 

makes the US economy different from most others, although other 

countries are trying to emulate us, is that we are based on entrepreneurship, and growth, and opportunity. If we are missing out on 

half the party, we are not going to realize the success that we 

could. So it is really important that people start to appreciate the 

opportunity that the missing half provides. 

I personally believe that all these educational and encouragement type things are great. They are important. But, when I read 

like the Diana Project report, the recommendations are to make 

venture capitalists understand that it is a good thing to invest in 

women. You can tell people things until they are blue in the face, 

and we know that people do not always do what should logically 

be in their best interests, right? But, again, they do tend to follow 

the money. 

I believe that if there were economic incentives in place to encourage more investment going into underserved markets that the 

money would follow quite quickly. 

Ms. HARMAN. I absolutely agree, as usual, with what Renee 

said. You said two things: one, the message to go back. To me, the 

message to go back, which I think resonates with many, but maybe 

not all, is diversity creates better outcomes. If you believe that, the 

rest of it can kind of follow from there. 

What is the one thing that you can do? Something maybe a little 

more specific would be to look at allocating public pension funds, 

government employees pension funds, to set aside more money for 

qualified, not subsidized, qualified emerging managers. So put it in 

the hands of good investors who have proven themselves, but who 

are going to be those smaller, diverse, emerging managers who are 

going to get that money out to qualified entrepreneurs. 

Ms. LABRAN. That would be an example of a kind of economic 

incentive. 

Ms. HARMAN. That is right. I was going down one level specific 

as far as economic incentive, but the returns would be there. This 

is not an economic incentive that says, well, we are going to take 

the government pension funds, employees should accept less return. I would argue they will get more return as we have proved. 

Ms. YAMANAKA. I agree with everything that is being said on 

the left side of the table. I am sure that comes as no surprise. I 

SBREP-219A with DISTILLER

28 

think on the precepts that there is opportunity. We can frame this 

positively or negatively, and I prefer to look at it positively, like all 

my fellow witnesses here. There is a terrific opportunity. 

50 percent of the population is not performing at the level that 

it could. Not even one for one. Even a 50 percent increase would 

change how the U.S. economy, our position in the world, and the 

lifestyle and how people live here. That is grounded in Laura’s 

plan. 

How do you do that? I totally agree you cannot make people do 

things. You can encourage them financially, and, again, we are 

looking at the economics of it. If it makes good economic sense, all 

things being equal, people will do it. One of the tactical ways that 

we could do it, as I had mentioned earlier, is introducing tax credits potentially, I would put on a phased-out basis. 

Anybody’s intention, I think anything should always be up there 

for a period of time and then reevaluation where you have to reup, and also the carried interest loophole for venture capital firms. 

Those are two tactical approaches that could create the incentives 

on a short-run basis. I think anything that we do has to have a 

sunset provision so that it has the opportunity to make sure that 

the context has changed or not changed. If it has not changed, let 

us say, then we have to go back and look and see what we are 

doing and what we could do differently, at least in the short run. 

VOICE. We do not understand what she means by the carried interest loophole. 

VOICE. Well, we know what it is. I am not clear how that is taking away—— 

Ms. YAMANAKA. No, no, no, not taking it away. 

VOICE. Right? 

Ms. YAMANAKA. Well, we could talk about that later. 

VOICE. Okay. 

Ms. WANNIER. I agree with everything that has been said so 

far. My comments relate to reaching out to the women and the diversity who will be the entrepreneurs or will be the venture capitalists. I believe that we need much more publicity, so I would like 

to see the government spend a little bit of the SBIC funding or the 

acronym funding to put together a database that is nationally accessible of all projects that have been funded, all companies that 

have been funded, so that we as women can understand and learn 

from others’ examples. 

We can understand the results that others have achieved on different implementations, put together a network of everything that 

works in this business, make it accessible so that someone who 

does not have a network can easily tap in and get access to that 

network. 

Ms. CHU. Thank you so much. I would like to submit for the 

record a wonderful op-ed that was done by Jeri Harman, our panelist here. It was published in the L.A. Daily News this week highlighting the importance of funding women and minority firms. It 

certainly underscored the importance of this hearing today. 

Mr. KNIGHT. Without objection. 

[The information follows:] 

Mr. KNIGHT. Okay. I would like to thank everyone as this hearing comes to a close. I would like to thank our stellar panel. I think 

SBREP-219A with DISTILLER

29 

that you have seen in the last hour and 40 minutes or so some of 

the minds of America coming together and working to make it better. And so, I thank you for coming here. 

Access to a robust capital market is critical for the health and 

wellbeing of our small business community, which in turn is critical for our Nation’s economy. Venture capital and does play an important role that traditional debt financing simply does not fill. 

Making it easier for small firms, particularly those that have had 

greater difficulty in accessing venture capital, and we have seen 

that with many woman-owned businesses, ought to be a priority. 

I look forward to working with the ranking member and all of my 

colleagues back in Washington on this important issue. 

And before I yield to Ms. Chu for her last word, I wanted to 

again thank you for allowing me to come to your beautiful city, 

your beautiful city hall. This is one of the great landmarks in California. I firmly believe that, and always coming here, it makes people’s jaw drop. And it is beautiful not just to be in southern California, but to see such architecture as here. 

So I found today’s discussion enlightening and look forward to 

sharing our discussion with our colleagues. And, Ms. Chu, for your 

closing? Thank you. 

Ms. CHU. Well, I would just like to thank all the panelists for 

coming today. If there is anybody that doubts women’s intelligence 

and entrepreneurial knowledge, they would really have to come 

here and listen to you. You had so many insights, and you gave me 

much room for thought, and a thought about what we could do 

back in Washington, D.C. to improve the situation of women entrepreneurs. 

So I thank you so much for sharing your experience with us as 

well as your whole incredible body of knowledge. 

Mr. KNIGHT. Thank you, and I ask unanimous consent that 

members have 5 legislative days to submit statements and supporting materials for the record. 

And without objection, we are adjourned. 

[Whereupon, at 11:44 a.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

SBREP-219A with DISTILLER


Insert offset folio 30 here 99716.001
31 

Good morning Congressman Knight, Ranking Member 

Chu, and Members of the House Small Business Subcommittee on Economic Growth, Tax & Capital Access. 

Thank you for holding this hearing today to examine ways to increase access to capital for small businesses. My name is Jeri Harman, and I am the Managing Partner & CEO of Avante Mezzanine 

Partners, an investment firm and Small Business Investment Company (SBIC) based in Los Angeles. I am also the Chair-Elect of the 

Board of Governors of the Small Business Investor Alliance (SBIA). 

I am here on behalf of SBIA, the premier organization of lower 

middle market private equity funds, debt funds, and investors. 

SBIA members provide vital capital to growing small and medium 

sized businesses nationwide, resulting in job creation and economic 

growth. SBIA is also the primary voice of the SBIC industry. While 

many SBIA members traditionally do not provide venture capital, 

i.e. equity capital for start-ups or early stage companies, our members are significant sources of capital for small and growing companies and fill a critical gap that exists in the lower middle market. 

About Avante Mezzanine Partners 

Avante Mezzanine Partners provides debt and equity for high 

quality, lower middle market businesses that generate at least $3 

million in cash flow. Avante invests between $5 million and $25 

million of capital in the form of unitranche or one-stop debt as well 

as traditional subordinated debt and minority equity Avante works 

with private equity and independent sponsors in buyout transactions, as well as with entrepreneurs and owners to finance recapitalizations, refinancings, acquisitions and growth. 

Avante is somewhat unique in our industry, given the diverse 

leadership and ownership of our fund. Three out of our five investment partners are women, making it one of the only majority 

women-led and owned private equity funds in the nation. And four 

out of five are women and minorities o9r both. 

Prior to founding Avante, I started-up and led Los Angeles offices 

for two multi-billion publically traded private equity and mezzanine investment funds—American Capital and more recently Allied Capital, where I was also a member of Allied’s Investment 

Committee. Earlier career highlights include various senior level 

positions with Prudential Capital. 

As the next Chair of the Board of Governors of the Small Business Investor Alliance, I will be leading an annual gathering of limited partners and general partners, including SBICs, at the National Summit for Middle Market Funds later this year. SBIA provides a platform for senior executives in the industry to agree on 

best practices—these best practices are good for small businesses 

and good for investors. In addition to my role as Chair-Elect at 

SBIA, I serve as a Steering Committee Member of the Private Equity Women Investor Network (PEWIN) and as the Co-Chair of the 

Association for Corporate Growth (ACG)—Los Angeles Business 

Conference. 

SBREP-219A with DISTILLER

32 

1http://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters 

2Women on Boards: Global Trends in Gender Diversity, MSCI. https://www.msci.com/www/ 

blog-posts/women-on-boards-global-trends/0263383649 

I feel honored to have been recognized as one of the top women 

in the private equity industry. In 2013, the National Association of 

Women Business Owners (NAWBO) Los Angeles inducted me into 

the Hall of Fame. In 2015, I was named one of the Most Influential 

Private Equity Investors in Los Angeles by the Los Angeles Business Journal. In January of this year I was on the cover of Mergers 

& Acquisitions magazine and named one of the Most Influential 

Women in Mid-Market M&A. 

According to March 2016 data compiled by Preqin, senior female 

women accounted for 10.5 percent of all employees in private equity firms across North America. These statistics indicate that we 

have a significant amount of work to do to improve diversity in the 

executive ranks at private equity funds. With incre4asing attention 

to this issue, more senior women as role models, continuing 

changes in firms’ cultures and openness to flexible work arrangements, I am hopeful we can increase our pipeline and retention of 

talented women in private equity. 

As Chair-Elect of SBIA, it is a goal of mine to increase diversity 

at regional events, provide new opportunities for women to network 

with one another, and include new content aimed at women in private equity. For example, as part of SBIA’s regional and national 

events, SBIA has organized the Women Investors Networking 

Luncheon, an exclusive networking event for senior-level women 

fund managers, limited partners and investment bankers. Our first 

Women Investors Networking Luncheon was in May 2014, and we 

have hosted the luncheon at every subsequent regional and national event. These opportunities provide a platform for women to 

discuss how to make private equity more diverse and how to find 

and invest in companies that are led by women and minority entrepreneurs. 

As private equity becomes more diverse this should result in better returns to shareholders as well as support job growth. Two recent reports support that gender diversity has a positive impact on 

performance at corporations. A study by McKinsey & Company 1

found that companies in the top quartile for gender diversity are 

15 percent more likely to outperform their respective national industry medians. The study also found that companies in the bottom 

quartile for gender and ethnic diversity are less likely to achieve 

above average financial returns. A study by MSCI indicates that 

companies with strong female leadership generated a return on equity of 10.1% per year versus 7.4% for those without strong female 

leadership.2

SBICs Provide a Critical Source of Capital for Small Businesses 

The SBIC program was created by the Small Business Investment Act of 1958 to ‘‘improve and stimulate the national economy...by establishing a program to stimulate and supplement the 

flow of private equity capital and long-term loan funds which 

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3Public Law 85-699, as amended 

4SBIC Program Overview, https://c.ymcdn.com/sites/sbia.site-ym.com/resource/resmgr/Docs/ 

SBICProgramOverview—-—Q12016.pdf 5https://www.sba.gov/sbic/financing-your-small-business/directory-sbic-licensees 

small-business concerns need for the sound financing of their business operations and for their growth, expansion, and modernization, and which are not available in adequate supply.’’ 3

Avante Mezzanine was licensed for our second SBIC in 2015. 

This fund was $250 million in assets under management and we 

started investing in companies with this fund in late 2015. Our 

first SBIC consisted of $218 million in assets under management 

and we are proud to have invested in 20 companies across the 

country. 

SBICs allow small businesses to access patient capital—capital 

that cannot be called back at a moment’s notice. This capital is 

available for helping businesses survive and thrive in the face of 

the unexpected bumps in the road. The importance of SBIC capital 

was abundantly clear in the financial crisis and the recession that 

followed. While most financial institutions were cutting off capital 

to small businesses and recalling loans, SBICs were throttling up 

and filling the capital void. Demand for capital from SBICs has 

grown dramatically since the financial crisis and continues to grow. 

This growth is not driven by government directive, but by the market needs of small businesses and the opportunities being recognized by private investors. 

It is important to note that the SBIC program has facilitated 

record amounts of private capital into SBICs and, in turn, into the 

small business economy. For example, according to the SBIC Program Overview 4 provided by the SBA, from 2012 to 2015 SBICs 

have deployed $18.4 billion to 4,457 companies nationwide. The 

SBA data also indicates that during the time period between 2012 

and 2015, SBIC financings created or retained 385,274 jobs. As of 

December 31, 2015, there was a total of $25.9 billion in assets 

under management, a record amount for the SBIC Program. Currently, there are 300 SBICs across the country, in all corners of the 

country, from Portland, Maine, to Portland, Oregon, and Miami, 

Florida to Los Angeles, California.5

SBIA Supports Enhancements to the SBIC Program 

The SBIA appreciates the constant stream of communication between Small Business Administration leadership and staff and the 

Board Members and staff of the SBIA. This open dialogue has 

helped the SBA and SBIC industry work together to find common 

ground on many improvements to the SBIC Program. 

We also appreciate the work of the Committee over the past several years to improve SBIC operations and increase leverage available to SBICs. While the SBIC program has grown steadily, there 

are additional actions that SBA and the Committee can take to 

strengthen the program, and expand the pool of SBIC investors. 

These actions will increase the number of SBIC funds, increase the 

attractiveness of the program to existing SBIC investors, and inSBREP-219A with DISTILLER

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6 Capital Requirements, Small Business Investment Act of 1958, Section 302(b). 

7 Banks holding a National Bank Charter, and regulated by the Office of the Comptroller of 

the Currency (‘‘OCC’’) can make aggregate ‘‘public welfare investments’’ that do not exceed 15 

percent of the bank’s capital and surplus. SBICs qualify as public welfare investments. If making such an investment over 5 percent, OCC written approval must be received. See 12 CFR 

24.4. 

crease the amount of capital that can be deployed to American 

small businesses. 

The SBIC Act Should Be Adjusted to Encourage More 

Bank Investment in SBICs 

The SBIC program is in a unique position to attract investment 

from banking institutions. Since prior to the repeal of the GlassSteagall Act in 1999, SBICs have been encouraged as a strong investment for banks, allowing them to expand their lending activities beyond what the bank itself could engage in. Bank investments 

in SBICs are actively encouraged by bank regulators through the 

Community Reinvestment Act (CRA). Bank investments in SBICs 

receive CRA credit due to the public welfare benefit that they provide, including lending to small businesses, particularly minority, 

women and veteran-owned businesses, but also to economically disadvantaged and rural areas that generally see little capital investment. Since the passage of Dodd-Frank, and the institution of the 

Volcker Rule framework, SBICs have once again become very attractive vehicles for banks. Small businesses seeking capital from 

SBICs have greatly benefitted from this interest, as more SBIC 

funds will form and more capital can be deployed out of the program as new banks decide to invest in SBICs. 

Unfortunately, many banks and savings institutions that have 

an interest in increasing the amount of their investments in SBICs, 

are unable to invest more than 5% of the capital and surplus of the 

institution due to a provision in the Small Business Investment Act 

of 1958 (SBIC Act).6 However, depending on the type of charter of 

the banking institution, some banks are permitted to invest up to 

15% of their capital and surplus in SBICs 7, with bank regulator 

approval. A number of SBIA’s bank members are currently at the 

cap and wish to invest more than 5% of their capital and surplus 

in SBICs, and are not permitted to do so. An adjustment to the 

SBIC Act, which has been discussed with members of the Committee, could remove this barrier, and ensure SBICs can continue 

to grow the amount of investment from banking institutions. I encourage the Committe4e to study this issue closely and adopt legislation that would raise the percentage that banks are permitted to 

invest under the SBIC Act, to match that permitted by their respective banking regulators. 

Technological Updates and Modernization of SBA Processes Will Increase the Attractiveness of the SBIC Program 

For many years, the SBA has provided important and helpful 

data to the industry, Congress and the public about the SBIC program through their ‘‘SBIC Program Overview.’’ The SBIC Program 

Overview, up until October 2015, was provided monthly. The inforSBREP-219A with DISTILLER

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8 Attached as Appendix A. 

mation provided in this report 8 includes, among other things: (1) 

information on the number of SBICs; (2) SBIC capital at risk; (3) 

the number of applicants going through the licensing process; (4) 

how long license applications are taking to clear the SBA’s process; 

(5) information about how many companies received financing; (6) 

the number of jobs that were created and retained with that financing; (7) and the number of businesses located in LMI or 

women, minority and veteran owned that received financing from 

SBICs. The timeliness and frequency6 of this information is critical 

to ensure the SBIC program is running smoothly, particularly the 

licensing process. Investors or limited partners (LPs) in the program also rely on this data to get a sense of how long the licensing 

process is taking for funds in formation they are investing in. In 

addition, the data was a meaningful economic indicator on the 

small business sector, as well as an indicator of SBA’s performance 

and activities. The SBIC Program Overview has only been released 

once since October 2015 (the end of FY 2015), while being released 

monthly beforehand. 

In addition to the ‘‘SBIC Program Overview’’, SBA previously 

provided information about the names of companies that were financed by SBICs, at the state level, as well as the total amount 

of capital SBICs had invested in all fifty states. This data was extremely helpful to make sure the program was making an impact 

across the entire country, and to share with members of the Congress and the public about the companies in their region that were 

actively benefitting from the program. The SBA has not released 

this data to the public since 2013, while doing so for many years 

beforehand. We encourage the Committee to ensure the SBA resumes providing all of this necessary information on a monthly and 

timely basis that is not only critical for oversight of the program, 

but also critical for Congress, the public, and the industry to review. 

SBIA also believes that SBA should embark on an initiative to 

utilize ‘‘virtual data rooms’’ provided by a private sector provider, 

and paid for by the SBIC. Updates should be made to technology 

to help share files, reports, contracts, and other information that 

is communicated between Small Business Investment Companies 

and the SBA. Virtual data rooms would make it easier to find these 

documents because they would be searchable and housed in one 

digital location. Virtual data rooms would also streamline the collection of data by SBA staff, removing redundant processes at the 

SBA and saving time and resources. SBA should allow for the use 

of existing off-the-shelf virtual data rooms to provide a communication vehicle for SBICs and the SBA in a single, secure location for 

all regulatory documents, submissions, requests, and communications. This approach will reduce costs for the SBA, as well as provide for storage of information in an easily-accessible format for the 

life of the SBIC. 

In addition to the restoration of data provision by the SBA and 

suggested use of virtual data rooms, SBIA has a number of suggestions that can improve the licensing process for SBICs, in which 

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9 H. Rept. 114-194, Financial Services & Genera Government Appropriations Bill, 2016, (July 

9, 2015). 

the time from application until licensure has significantly crept up 

in the past few years, rising from 5.6 months in FY 2011 to 8.4 

months at the end of FY 2015. In contrast, several years ago, the 

SBA set a goal to approve licenses in six months. SBA has taken 

some positive steps to improve the licensing structure, including 

folding together the teams that handle licensing and the management assessment questionnaire (MAQ) process, but more could be 

done to streamline the application process. This includes a number 

of recommendations of the House Appropriations Subcommittee on 

Financial Services & General Government, which requested the following in House Report 114-194, reported out of the full Committee 

on July 9, 2015: 

SBIC Program Licensing.—The Committee believes the SBA 

Investment Division should consider reorganizing the Small 

Business Investment Company (SBIC) licensing process and 

personnel to more efficiently use the resources allocated. In 

particular, SBA should: combine the licensing and Management Assessment Questionnaire (MAQ) staff; reduce the number of licensing committees and steps for all applicants; and 

create a meaningful fast track process for repeat licensees that 

takes no longer than six weeks, which will allow SBA to focus 

their resources on first funds and ensure that there is a written record of the decision made by the Investment Division for 

applicants and any court that might review such licensing decisions.9

Making the changes suggested by the Appropriations Committee 

would be extremely helpful in eliminating the slowdown in license 

application approvals at the SBA, particularly by the elimination 

of duplicative licensing committees and implementing a fast track 

process for second-time funds which have an established track 

record at the SBA. This meaningful fast track process for repeat licensees should not be longer than 45 days after an application is 

submitted to the SBA, which will allow SBA to focus their resources on first funds. There are a number of other suggestions 

which SBIA has communicated to SBA staff in the hopes of further 

streamlining processes, better utilizing staff resources and providing more transparency and consistency to the licensing process. 

Conclusion 

I am grateful to be part of the SBIC program and excited by the 

impact it has on capital access for small and middle market businesses. The SBIA looks forward to working with the Committee to 

continue to explore ways to increase access to the SBIC program 

for women and minority fund managers and expand the number of 

businesses that are receiving investments from SBICs. Thank you 

again for inviting me to testify, and I look forward to answering 

any questions that you have. 

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TESTIMONY OF RENE ́ E LABRAN 

General Partner, Rustic Canyon / Fontis Partners 

Senior Advisor, Idealab 

U.S. House of Representatives Committee on Small Business 

Subcommittee on Economic Growth, Tax and Capital Access 

‘‘Bridging the Gap—Increasing Access to Venture Capital for Small 

Businesses 

April 5, 2016 

Rene ́e LaBran 

155 No. Lake Ave., Suite 800 

Pasadena, CA 91101 

(818) 790-3464 

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Good morning Chairman Knight and Ranking Member Chu. My 

name is Rene ́e LaBran and I have worked in venture capital since 

2000 when I was invited to help start a venture capital fund called 

Rustic Canyon Partners, funded by the controlling shareholders of 

the company where I was working at the time. In 2006, I helped 

Rustic Canyon spin out another fund called RC/Fontis Partners, 

which focused on underserved markets. That fund is now in its 

final stage, and we are harvesting those investments. 

In addition to winding up the portfolio of RC/Fontis, I currently 

serve as an advisor to Idealab, a tech incubator that just celebrated 

its 20th anniversary. I also co-founded a start-up competition for 

female entrepreneurs now entering its fourth year. I am personally 

a small angel investor in several women-founded companies. All 

that said, I have a pretty good first hand look at the challenges 

faced by women entrepreneurs and women in venture capital. 

When I started in venture, there were a handful of women. Industry social events typically involved golf and cigar smoking. I can 

only think of a few women who came to pitch companies to us. I 

am pleased to say that things have got a little better. I am amazed 

at the number of women focused events that have sprung up in the 

last few years. However, the statistics are still dismal. 

I am sure many of you have read the Diana Project report that 

has tracked women in venture capital on both sides of the table 

since 1999. For the benefit of those who have not read it, here are 

a few key statistics from the report: 

- In 2011 - 13, 15% of companies that received venture in 

capital had a woman on the executive team, up from 5% in 

1999. That is great news, but still a small percentage overall. 

- And speaking of a small percentage, only 2.7% of the companies that received VC had a woman CEO. 

- Companies that had a woman on the exec team also tended to be later stage compared to the overall profile of companies receiving VC, leaving one to wonder how these companies 

found their seed capital. 

These are just the problems of the entrepreneur side. On the 

venture side, the problem is even more severe. The number of 

women partners in VC fell from 10% to 6% between 1999 and 2013. 

The number of women partners is particularly problematic since 

VC firms with a woman partner are 2x as likely to invest in a company with a woman on the exec team and 3x more likely to invest 

in a company with a woman CEO. The reasons for this should be 

obvious, but just in case, let me elaborate. Entrepreneurs find venture capital firms through their networks. Thus, VCs invest in entrepreneurs who tend to run in their own circles and are must 

more like themselves. The proverbial old-boy network prevails. 

When women do come to pitch, they find themselves facing a table 

of male partners, who are more comfortable meeting with other 

men who look like they do. There is plenty of other evidence in the 

press today about how woman are often judged in ways that men 

are not. 

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It is even more difficult for women entrepreneurs to find seed investment, since the vast majority of seed investors are men, and 

successful angels tend to invest in entrepreneurs they know. 

Women who do break into the VC side also face challenges. Many 

firms who do have a woman partner have just one or maybe two, 

which is often an uncomfortable position. The shortfall of the VC 

side is the flip side of the entrepreneur coin. Men who have access 

to capital to start a fund often start them with close colleagues out 

of their own network. Successful entrepreneurs who have large 

exits often join VC funds, but there are fewer women at the top of 

venture backed companies to achieve such exits. Breaking in is difficult for women. Some women have chosen to start their own 

funds, but often struggle to raise capital since most new funds have 

to raise from individuals, and once again the network effect comes 

into play. 

What I am describing here is a vicious circle rather than a virtuous cycle. The Diana Report urges VC firms to take corrective actions. However, despite the evidence that this might improve returns, I don’t think we are likely to see these changes soon. 

If we are truly an economy that relies on innovation and entrepreneurship as our growth engine, we need to find ways to include 

the half of the population that is missing out. (By the way, male 

entrepreneurs of color face many of the same barriers). Over the 

years, there have been various programs for emerging managers 

that provided access to capital for first time funds formed by 

women and minorities. However, these programs seem to be cyclical and have diminished rather than increased. Government is also 

in a position to provide incentives to potential limited partners to 

provide capital either directly or through funds that are more likely 

to deploy capital to those who currently lack access. Without incentives or nudges, it will take far too long for the problems to selfcorrect, if ever. 

These are just some of the issues facing both women entrepreneurs seeking VC funding and women seeking a career in the 

industry. There is so much more that I could tell you, and am 

happy to answer any questions you may have. I appreciate the opportunity testify today. 

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U.S. House of Representatives Committee on Small Business 

Testimony Regarding the Challenges of Raising 

Venture Financing for Women-Led Entrepreneurial Businesses 

Presented by Louise J. Wannier, True Roses, Inc. 

(Board/Advisory Services) 

April 5, 2016 

———————————————————————————————————————

Chairman Knight and Ranking Member Chu, 

Thank you for the opportunity to share my thoughts with the 

House Small Business Committee today. I would also like to thank 

Andy Wilson, Pasadena City Councilman and Amy Millman, Executive Director of Springboard.org for recommending that I be asked 

to contribute to the discussion today. 

I have long pondered why is it so easy for my male CEO/Entrepreneur colleagues have had, from my perspective, a much easier 

time raising sufficient capital to fund their ventures. I have often 

felt that I have had a disproportionately difficult time raising capital for the business plans I have presented. It has been extremely 

difficult and I have in the past failed twice to raise sufficient capital to be able to weather the economic downturns that inevitably 

occur in the cycles of our free-market economy. Each of those two 

companies had products that were well received in the market with 

either thousands of companies using the products or hundreds of 

thousands of consumers using the internet service and still were 

unable to raise the follow-on capital during the transition cycles 

following the drop of the market economy in 2000 and 2008 respectively. Of course, there are many reasons why ventures are unable 

to raise capital, and it would take a deeper study, but the facts are 

that I was unable to raise follow-on capital for ventures that had 

successful products in the market but were not yet profitable and 

needed growth capital, even after meeting with many individual 

professional venture capital firms nationwide, while, in my opinion, 

many ventures run by male colleagues were able to achieve followon financing for ventures that did not represent, in my opinion, as 

strong an investment opportunity for the investors. I am sure that 

this was not simply due to the difference between men and women 

but I do feel it was a factor. 

So this request has given me the opportunity to reflect freshly on 

the question: Why do women have a harder time raising venture 

capital than men, or do they, and if they do/or do not, why so or 

why not? 

I was trained in my undergraduate studies to think as a scientist. In 1978, I graduated with a Bachelors of Science with Honors in Astronomy from the California Institute of Technology, here 

SBREP-219A with DISTILLER

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in Pasadena, followed by a Masters in Business Administration 

with concentration in Management Science and Finance with Honors in June, 1980. For the first six years of my career I worked in 

the Los Angeles offices of the management consulting division of 

what was then Ernst and Ernst/Ernst & Whinney (what is now 

E&Y) doing financial feasibility and strategic M&A studies for 

large healthcare organizations and other corporations in diverse industries. Following those years, I temporarily relocated to Sweden 

and as I often say, accidentally became an entrepreneur because I 

‘‘didn’t have a job’’. I was very fortunate to have the opportunity 

to work in Gothenburg, Sweden and gain my first experience as an 

intrapreneur, founding a company in education technology on behalf of Chalmers Industriteknik. Following that experience I returned with my family to the United States and ended up becoming 

one of the six principal founders of Gemstar Development Corporation and was instrumental in developing and executing the go-tomarket strategy that resulted in VCR Plus+ being one of the most 

successful consumer electronics products worldwide. 

In summary, as an experienced Corporate Director and CEO, I 

have chaired Boards of Directors and as CEO built companies in 

four different industries: Education Technology, Consumer Electronics, Information Management Software and Fashion/ 

eCommerce. In my roles as Board Chairman and CEO, I have led 

capital raises, recruited board members and established advisory 

boards including bringing on independent non-financial board 

members to lend strategic industry experience. I currently serve as 

business advisor to entrepreneurs with venture to mid-size small 

businesses and non-profit community boards. 

I was a member of the fifth class of women to graduate from 

Caltech and our ratio was one woman to ten men in the class at 

that time. Since then I understand the undergraduate percentage 

of women has risen to over 30% (perhaps higher) and there are 

now a significant number (although not that high of a percentage) 

of faculty members who are women and even, now retiring, one or 

more female senior members of the administration and board of 

trustees. So some progress has been made. 

From this excellent training, I learned the scientific method, in 

which one first thinks hard about the problem, attempts to make 

a hypothesis and then looks at the data, or designs one or more experiments to gather data to then look at the question of whether 

or not the data supports the initial hypothesis. 

Using this foundation, I contemplated the question, reviewed my 

own experience and reflected on what my hypothesis is related to 

this issue of concern: 

My reflections lead me to this initial hypothesis, which I offer for 

your consideration: 

The data will tell us that: 

1) A higher proportion of women-founded businesses succeed 

than do those started by men, yet women are unrepresented 

significantly in the proportion of venture capital financings 

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both in number and average amount invested over the lifetime 

of a venture, and, 

2) A high proportion of women-founded businesses succeed 

by bootstrapping using personal financing/friends and family, 

credit-card debt, and all other non-professional venture methods of financing and therefore result in lower-growth companies which succeed at a greater rate over the longer term than 

do the businesses founded by male entrepreneurs who tend to 

raise and risk larger sums of capital on average per venture; 

and 

3) There is a venture capital ‘‘SEED and A-round’’ gap between what can be raised through friends/families/small angel 

investor networks and what can be raised through Professional 

VC’s. This trend affects both male and female entrepreneurs. 

The VC’s have been amassing larger and larger funds which 

has correspondingly resulted in a proportionally significant increase in the average amount raised per Series (VC round) 

simply because any one Venture partner cannot sensibly/fiscally responsibly manage simultaneously ore than a certain 

number of investments sot hat they have to put a larger portion of assets to work at a time. This pushes the Professional 

VC’s towards higher and higher risk and this criteria does not 

tend to be the type of venture that women entrepreneurs more 

often gravitate towards. 

4) There is a venture capital gap for first-time entrepreneurs. Entrepreneurs who do not have a prior-successful 

exit as a track record have an almost impossible time raising 

venture capital. Most VC’s and most Venture capital is invested in entrepreneurs who have already had successful exits. 

I have personally experienced (I have had senior executive men 

tell me these things at various points during my career) and I believe overall that there is a cultural bias still remnant in our society that women are to be cared for as the nurturing portion of our 

society and that as a whole we are less capable in business than 

are men. There is a cultural bias that women often do not have a 

strong financial grounding and are incapable emotionally of making the tough decisions and choices that are necessary to be successful in business; that women are too compassionate and too 

emotionally biased and therefore will be unwilling to do what it 

takes to win in the US game of business. 

I do NOT believe that this pertains to all men, and unlike most 

women, I have personally been very fortunate to have been able to 

raise significant amounts of professional venture capital for two different ventures (Enfish and MyShape). I was very fortunate to 

have the support Womens’ Growth Capital in DC and Intel Ventures for Enfish and to have the support of a rare woman partner, 

Emily Melton, at DFJ, a well-recognized ‘‘A’’ player, Venture firm 

in Silicon Valley. I feel this is largely because I was very fortunate 

to have been part of the early success of Gemstar coincidentally occurring during the first significant economic boom in the late 

1990’s due to the advent of the Internet and Technology businesses. 

I have also raised significant amounts of Angel Capital from indiSBREP-219A with DISTILLER

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vidual investors through my personal network of friends and colleagues. This gave me the track record that investors at the time 

would follow and it is this track record that is often difficult for 

women to establish, for the reasons discussed above. 

Secondarily, women have until recent generations (and I see continual improvement and hope in my childrens’ generations, work 

experiences and attitudes), not naturally developed the business 

and insider-friend-networks necessary to raise capital. Because 

women are naturally social; social media has been a strong enabler 

of facilitating womens’ ability to raise funds and we are starting to 

see some shifts in this trend. 

This is a brief summary and I recommend that a further study 

be made. Thank you for the opportunity to be of service. 

Kind regards, 

Louise J. Wannier 

Board/Advisory Services, True Roses, Inc. 

(626) 675-8541 

lwannier@gmail.com 

1446 Rose Villa Street 

Pasadena, CA 91106 

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1Womenable. ‘‘The Growth and Development of Women-Owned Enterprises in the United 

States, 2002-2012’’ (Commissioned by NWBC, 2016). https://www.nwbc.gov/research/SBOTrends. 

Chairman Tim Huelskamp and Ranking Member Judy Chu and 

distinguished members of the Subcommittee, thank you for inviting 

me to speak on behalf of the National Women’s Business Council 

today before the U.S. House of Representatives’ Subcommittee on 

Economic Growth, Tax and Capital Access for this Bridging the 

Gap - Increasing Access to Venture Capital for Small Businesses 

hearing. 

I will begin with some brief background on myself. I co-founded 

teamCFO in 2000 to improve performance and support the growth 

of the private business community through a ‘‘hands-on’’ financial 

working relationship with their clients. As a long-time champion of 

financial literacy for women business owners, I have lectured on 

the subject to diverse audiences, including young girls who are aspiring business women. I have also been a key collaborator in the 

curriculum design for financial literacy. Additionally, I have spoken 

at several national seminar series on the subject of financial literacy for business owners. I have also served as the National Chair 

of the National Association for Women Business Owners (NABWO) 

as well as the Chair for the Los Angeles Chapter. 

The National Women’s Business Council (NWBC) is a non-partisan federal advisory council created to serve as an independent 

source of advice and counsel to the U.S. Small Business Administration, Congress, and the White House on issues of impact and importance to women business owners, leaders, and entrepreneurs. 

The NWBC was established via the Women’s Business Ownership 

Act of 1988 (HR. 5050), a landmark piece of legislation that most 

notably eliminated individual state laws that required women to 

have a male relative cosign a business loan. The Council is committed to producing best-in-class, actionable research on the most 

relevant issues facing women in business and those who aspire to 

start and lead businesses. Compelling, rigorous research is the 

springboard for action and change. We act as convener, collaborator, and councilor; it is our mission to be a resource, to put forth 

actionable policy recommendations, and then to engage and support 

influencers, stakeholders, and decision makers in the implementation. 

I was appointed as a Council Member of the National Women’s 

Business Council in June of 2013. The Council is composed of 15 

dynamic women; we are small business owners, we are members 

of women business organizations, we are diverse in industry, stage 

of business, geography, race, story, and more. It’s so important that 

we are a representative Council, and truly represent the ever-growing and ever-diversifying population of women in business. 

Women-owned firms represent an important segment of the business sector. As of 2012, women-owned businesses comprised 36% of 

the country’s businesses, a significant increase from 28% in 2007.1

SBREP-219A with DISTILLER

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2The term ‘‘women-owned’’ refers to enterprises that are at least 51% owned and operated 

by a woman or group of women. Businesses equally-owned by a man and a woman (or equal 

numbers of men and women) are not included—primarily because the way that equally-owned 

firms have been identified has differed in each of the past four business census years, thus precluding accurate trend analysis. 3 NWBC Analysis of U.S. Census Bureau 2012 Survey of Business Owners. 

4Womenable. ‘‘The Growth and Development of Women-Owned Enterprises in the United 

States, 2002-2012’’ (Commissioned by NWBC, 2016). https://www.nwbc.gov/research/SBOTrends. 

As of 2012, there were nearly 10 million women-owned businesses 2

in the United States.3

These firms generate an estimated $1.4 trillion in sales and employ over eight million people. Between 2002 and 2012, the number 

of women-owned firms increased at a rate 2-1/2 times the national 

average (52% vs. 20%), employment in women-owned firms grew at 

a rate 4-1/2 times that of all firms (18% vs. just 4%), and the 

growth in revenues generated by women-owned firms paralleled 

that of all firms (up 51% compared to 48%).4 As women-owned 

business increase in number, revenue per firm, and employment 

per firm, it is important to address the needs of this growing population. 

Women’s Access to Capital is a Priority 

Access to essential business assets—capital and markets—continues to be a challenge for too many women. Our work here focuses on changing the infrastructure, and increasing and improving 

resources, so more women can access the capital they need to start 

and grow their businesses, and enter new and emerging marketplaces, which will help them grow even more. Per Council research, 

on average, men start their businesses with nearly twice as much 

capital as women—$135,000 vs. $75,000. This disparity is slightly 

larger among firms with high-growth potential—$320,000 vs. 

$150,000; and it is much larger in the Top 25 firms—$1.3 million 

vs $210,000. High-growth businesses have considerable economic 

impact-think revenue and receipts, but they are much more likely 

to rely on outsider financing, both debt and equity. Among highgrowth firms, differences across gender exist with regards to 

amount of financial capital used, as well as the source of that capital. It is in the best interest of the economy to understand any barriers to these firms’ success. With lower levels of capital, regardless 

of growth aspiration or potential, women-owned businesses are no 

doubt on different trajectories. We believe that a multifaceted approach—involving all components of the entrepreneurship ecosystem—is critical to increasing women’s access to capital. 

Closing the Venture Capital Gap 

Thanks to great innovation in the capital space, with 

crowdfunding, peer to peer lending, microfinancing, and more, 

women have greater opportunities to pursue and raise the capital 

they need. However, women continue to lag behind men in terms 

of equity investment. The Diana Project research conducted in 1999 

explored the reasons why fewer than 5% of all ventures receiving 

equity capital had women on their executive teams. It was hypothSBREP-219A with DISTILLER

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5 Brush, Candida, Patricia Greene, Lakshmi Blachandra, and Amy Davis. ‘‘Women Entrepreneurs 2014: Bridging the Gender Gap in Venture Capital.’’ The Diana Project. 2014. http:// 

www.babson.edu/Academics/centers/blank-center/global-research/diana/Documents/diana-projectexecutive-summary-2014.pdf. 6Kelley, Donna J., Candida G. Brush, Patricia G. Greene, Yana Litovsky, and Global Entrepreneurship Research Association. ‘‘Global Entrepreneurship Monitor: 2012 Women’s Report.’’ 

Global Entrepreneurship Monitor. 2013. 7Stengel, Geri. ‘‘Money’s There if Small Businesses Know Where to Look.’’ Forbes. 2014. 

http://www.forbes.com/sites/geristengel/2014/03/05/moneys-there-if-small-businesses-know-whereto-look/. 8 Brush, Candida, Patricia Greene, Lakshmi Blachandra, and Amy Davis. ‘‘Women Entrepreneurs 2014: Bridging the Gender Gap in Venture Capital.’’ The Diana Project. 2014. http:// 

www.babson.edu/Academics/centers/blank-center/global-research/diana/Documents/diana-projectexecutive-summary-2014.pdf. 

esized then that women entrepreneurs were neither prepared nor 

motivated to found high-potential businesses; and were thus not 

good candidates for venture capital investors. But this 

groundbreaking research found otherwise, concluding: ‘‘fundable 

women entrepreneurs had the requisite skills and experience to 

lead high-growth ventures.’’ The research concluded that women 

were consistently left out of the networks of growth capital finance 

and appeared to lack the contacts needed to break through. Updated research, performed by Babson College, found that of the 

6,793 companies funded by venture capital between 2011 and 2013, 

only 2.7% of the companies had a woman as the CEO. More than 

a decade later, and the percentage has dropped! 

Only one woman raises equity financing for every nine men who 

do. Early-stage venture capital investing represents the greatest 

proportion of the total venture capital investments, 49% (3,166 out 

of 6,512), while later-stage venture capital comprised 31% (2,042) 

and seed capital made up 20% (1,301). Companies with a woman 

executive on the team were more likely to receive later-stage funding, or 21% (421) of these investments. On the other hand, companies with a woman executive received only 13% of the total investments in the early stage and only 9% in the seed stage.5

Per Council research, women-owned businesses are receiving 

only 2.0% of equity funding—as opposed to 18% for men-owned 

businesses. When more than a third of all business is womenowned or women-led, and they receive less than three percent of 

the available venture capital, the flag is raised. Women stand to 

benefit greatly from a more balanced venture capital landscape. 

Women are majority owners of nearly 10 million businesses in the 

country. And, per the Global Entrepreneurship Monitor, 36% of 

women with established businesses want to grow their ventures 

which show that the appetite for funding outpaces the current supply.6 Babson College has concluded the lack of sufficient capital 

funding for women entrepreneurs will cost the economy nearly six 

million jobs over the next five years.7

Women Investing in Women—An Opportunity 

One explanation for the disparity is that the number of women 

in the upper echelons of investment firms is down—in 1999 it was 

at 10%; and as of 2014 only 6% of top management and investment 

firms are women.8 About a year ago, in a Tech Crunch article, ‘‘The 

Real Unicorns Are Female Angel Investors,’’ Kristi Zuhlke wrote 

‘‘to get more women in tech today, we need women investors.’’ She 

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9Zulkhe, Kristi. ‘‘The Real Unicorns Are Female Angel Investors.’’ Techcrunch. 2015. http:// 

techcrunch.com/2015/08/31/the-real-unicorns-are-female-angel-investors/. 10 Brush, Candida, Patricia Greene, Lakshmi Blachandra, and Amy Davis. ‘‘Women Entrepreneurs 2014: Bridging the Gender Gap in Venture Capital.’’ The Diana Project. 2014. http:// 

www.babson.edu/Academics/centers/blank-center/global-research/diana/Documents/diana-projectexecutive-summary-2014.pdf.com. 11 ‘‘Who We Are.’’ Golden Seeds. 2015. http://www.goldenseeds.com/who-we-are. 

continued to assert that ‘‘women investors are important because 

they signal to women YOU belong here.’’ 9 Venture capital firms 

with female partners are reportedly two and one half times more 

likely to invest in companies with women on the management team 

(34% vs. 13%).10 Based on the argument that women investors 

would be more likely to invest in women entrepreneurs, the declining number of women investors is a concern. 

We are pleased to see that women are establishing funds for 

women. Examples include: Golden Seeds—a woman-focused early 

investment fund; Astia—a nonprofit dedicated to identifying and 

supporting high-growth women entrepreneurs; and Texas Women 

Ventures—an investment firm giving millions to women entrepreneurs in Texas. Women are establishing funds that specifically 

look for companies with women founders and leaders. Golden Seeds 

has invested over $70 million in more than 65 women-led businesses since 2005.11

Spreading the Wealth—Increasing Women’s Access to Venture Capital 

The Council is committed to broadening the dialogue through engagement of the full entrepreneurship ecosystem and the exploration of innovative ways to increase investment in women-owned 

and women-led businesses. In 2014, the Council conducted research 

on Access to Capital by High-Growth Women-Owned Businesses; 

this research confirmed that 1) men are starting businesses with 

significantly more capital; 2) female ownership was negatively correlated to the proportion of capital coming from external sources; 

and 3) women-owned firms exceed their own expectations regarding 

growth. Other Council research, also conducted in 2014, on Undercapitalization as a Contributing Factor to Business Failure for 

Women Entrepreneurs, confirmed that all things being equal, 

undercapitalization negatively impacts business survival. 

In September of 2015, the Council hosted a conversation on women’s access to venture capital, featuring: Jules Pieri, co-Founder 

and CEO of The Grommet, an entrepreneur-in-residence at Harvard Business School, and one of Fortune’s Most Powerful Women 

Entrepreneurs in 2013; Julia Pimsleur, CEO of Little Pim, founder 

of Double Digit Academy, a bootcamp training for women planning 

to raise venture capital or an angel round of $500k+, and author 

of Million Dollar Women: The Essential Guide for Female Entrepreneurs Who Want to Go Big; Jeanne M. Sullivan, an advisor, 

speaker, investor and connector and the co-Founder of StarVest 

Partners, a venture capital firm in NYC; and Trish Costello, 

Founder and CEO of Portfolia, a collaborative equity investing platform, and recognized internationally for her pioneering work in 

educating and preparing venture capital investment partners, 

through the prestigious Kauffman Fellows Program. During this 

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online session with over 200 participants, a panel discussed the importance of venture capital for women-owned and women-led firms, 

shared best practices and actionable insights on how to secure venture capital, and proposed solutions to eliminate this gender gap. 

Trish Costello asserted: ‘‘Five million women are accredited investors—either they make more than $200K or have $1 million in assets. Collectively, women own about $10 trillion in private 

investable assets. So when we look at these numbers if women just 

began to put a very small amount of investment wealth behind the 

[women-led] companies they want to see, we could greatly shift 

what is happening in entrepreneurship world.’’ 

In our 2015 Annual Report, which we shared with this esteemed 

committee, the Council proposed a few potential remedies, including: 

• Eliminating the carried interest loophole for venture capital firms that do not fund female-owned or female-led firms 

proportionally to male-owned or male-led firms—to ensure 

higher levels of investment for women ventures. 

• Introducing tax credits for investment in women-owned 

and women-led businesses—to provide incentives for investors 

to seek out women-owned and women-led firms that are generally undercapitalized and face a higher burden to securing. 

• Increasing and/or improving the promotion of capital opportunities and sources—to broaden and diversify the outreach 

to the many women that do have investment-ready firms. 

• Strengthening the pipeline of women into careers in finance—Specifically increasing the number of women on the financing and investment side, as angel investors, members of 

venture capital pitch committees, investment bankers and 

more—to diversify the perspectives and authority in the decision-making process. 

• Providing entrepreneurial support—particularly in the 

form of education and mentorship—early and consistently for 

women—to better prepare women as they seek to start and 

grow their businesses. 

Conclusion 

Dan Primack just published an article last week, titled: ‘‘Venture 

Capital Still Has a Big Problem With Women’’ in Fortune. They 

used PitchBook to compile a list of all U.S.-based venture capital 

firms that had raised at least one fund of $100 million or more 

since the beginning of 2011. They found: ‘‘Among firms that had 

raised funds of $200 million or more, the percentage of female decision-makers was 5.67%. For firms that had only raised funds of between $100 million and $199 million—a much smaller group—it 

was 5.97%.’’ As the government’s only independent voice for women 

entrepreneurs, the Council’s mission is two-fold: to 1) support and 

conduct groundbreaking research that provides insight into women 

business enterprises from startup to success, and to 2) share the 

findings to ultimately incite constructive action and policies. The 

numbers confirm that the full economic participation of women and 

their success in business is critical to the continued economic recovSBREP-219A with DISTILLER

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ery and job growth in this country, and we are committed to sustaining he potential that women entrepreneurs present. We know 

women have innovative ideas and that women are leaders. We 

know women are launching businesses that create value and solve 

problems. And we believe women with innovative and scalable 

ideas should be able to grow their businesses, increase their receipts and create more jobs; it’s good for business, and good for the 

economy overall. 

Thank you for this opportunity to testify, and I look forward to 

your questions. 

Æ 

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