When cell technologist Jennie Mather founded Raven Biotechnologies in 1999, her friends and family served as her primary financial backers. But as her South San Francisco startup got off the ground, Mather discovered that she needed the wads of cash that venture capital provides. Thanks to her 15-year career at Genentech, Mather had a high-level network that helped her attract interest and investors. Genentech's founder, Robert Swanson, made a private investment in Raven, as did Eugene Kleiner, one of Genentech's initial investors. Mark Hirsch, who had been part of Genentech's business-development team, helped Mather with her business plan before his death in 2000. Since 2001, Raven has raised a remarkable $60 million in venture investment. "If I hadn't had those contacts, [raising money] would have been a much bigger problem," Mather says.
Mather's story illustrates how women entrepreneurs in health care -- more than in any other industry -- are learning to play the venture capital game. Although women still win only a minuscule share of U.S. venture capital dollars -- just $783.8 million, or 4.2% of the total for 2003, according to a June study by Growthink Research and re:invention consulting -- health care is the bright star. Last year women-led health-care companies garnered $427.7 million, or 7% of venture-capital money. The majority of that funding went to biotech and pharmaceutical outfits.
Why health care? A combination of factors are at work. First, the number of women studying medicine and life sciences in postgraduate programs has risen significantly. With that education comes a familiarity with raising money in the form of grants. And as women with PhDs rack up years of industry experience, they're building the professional networks crucial to raising money.
There are some powerful statistics underscoring women's prominence at health-care startups. When Mather received her doctorate in 1975, only 743 women were awarded PhDs in the life sciences nationwide, according to the National Center for Education Statistics. That's 22% of the total number of life-sciences PhDs. By 2001, 2,028 women picked up the same degrees, doubling the percentage to 44%. And a PhD is much more important to biotech entrepreneurs than it is for startup CEOs in most other fields.
A doctorate in life sciences provides training in both science and fund-raising. "As a part of getting PhDs, scientists really receive specific training in grantsmanship," says Dr. Lois Margaret Nora, president and dean of Northeastern Ohio Universities College of Medicine in Rootstown, Ohio. "They're more comfortable asking for money, and they're better at asking for money."
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The health-care field now boasts a critical mass of women who not only are comfortable asking for money but also have the high-level networks that are key to raising funds. "These women just weren't far along enough in their careers 10 years ago," says Amy Millman, president of Springboard Enterprises, which hosts forums for women looking for venture capital. "In the biotech world, you just don't come up with an idea. You can't just make it up. If you don't have any credibility, you can't do this. Now a lot of women have reached that point in their careers where they do have that credibility." Mather spent nine years in drug development and six as staff scientist at Genentech before striking out on her own. Carol Ammon, CEO of specialty pharmaceuticals company Endo Pharmaceuticals in Chadds Ford, Pa., founded her company in 1997 after working in everything from research to marketing at DuPont (DD ) for 23 years.
Ammon is optimistic about the younger generation of women entrepreneurs' prospects for getting funding for their health-care companies. "It won't be a question of whether or not to give it to them," she says. "If you've got great business propositions and credibility as a management team, you'll get funded." While most VCs maintain that they don't care about the gender of the CEOs they back, in the past many women entrepreneurs have found sentiments such as Ammon's to be a bit pie-in-the-sky. For those in health care, Ammon's words may soon be coming true.
By Julia Cosgrove