Why Don't Women Start Funds?

Check the roster of MBA students at Stanford University, and you'll find that more than a third are women. So it seems odd that only one, Karen Moriarty, has launched a search fund.

After getting her MBA from Stanford in 1989, she didn't want to return to investment banking. "I could start a search fund immediately," says Moriarty, now 45. She launched her fund, Sansair, with $250,000 raised from a dozen investors inside Stanford's largely male alumni network. Although Moriarty kept four industries -- cable TV, alarm monitoring, bottled water, and nursing homes -- in the dealmaking hopper, nothing worked out. Four years later she was running out of money and closed the fund. "It was painful," she says. "You're dealing with older men who are sole proprietors. I had to face issues of youth and an extra layer of disbelief as a woman. I faced an extra layer of questions on financing."

Do those kinds of attitudes keep women from starting funds? Stanford lecturer Jim Ellis says he doesn't know why women aren't interested. "There were no women in the audience during my talks on search funds," he says. Irv Grousbeck, who came up with the search fund concept,thinks women may be reluctant to commit to the six or more years it takes to turn around and sell a company, adding that buying a business also often means relocating. Moriarty agrees. "Women are self-selecting out of this opportunity," she says. "There are a lot of career and life trade-offs, such as geographic flexibility, that [are] more difficult for a married woman."

For her part, Moriarty started Carillon Assisted Living in Raleigh, N.C., in 1996. It is now a $12 million company. Proving that her search fund experience didn't go to waste, she raised much of her $2.65 million in startup cash from the same investors who supported her fund.

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