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

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Contents and Abstracts
1 Introduction: Why Growth?
chapter abstract

Chapter 1 discusses some of the motivations for and benefits of firm growth from the perspective of women entrepreneurs. Growth-oriented firms provide women with the opportunity to generate market and economic impacts on a larger scale. From a public policy perspective, growth is important because larger firms generate a greater number of jobs. Launching a growth-oriented firm also provides women entrepreneurs with opportunities for greater personal economic gains in the form of income and accumulated wealth. This wealth, in turn, creates additional investment opportunities. Chapter 1 sets the stage for the sections that follow by highlighting why growth-oriented entrepreneurship represents such an opportunity for women entrepreneurs at this particular time.

2 A Status Report on Growth-Oriented Women Entrepreneurs
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Chapter 2 provides a profile of women's entrepreneurship today, using data from the Census Bureau's Survey of Women Business Owners. It also also draws on data from the INC 500, Startup Weekend, Legal Zoom, AngelList, and TechStarts, all of which are focused on high-growth firms. Chapter 2 discusses firm size, revenues, employment, and industry mix by gender. These data will allow the authors to establish a baseline for where growth-oriented women's entrepreneurship is today.

3 What We Know About the Challenges for Growth-Oriented Women
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Chapter 3 reviews some of the challenges facing growth-oriented women entrepreneurs that research has documented. These are not necessarily impediments, but they do represent potential barriers that astute and well-informed women entrepreneurs need to recognize and manage. The chapter discusses the stages of a firm's life cycle: the nascent stage, the early stage, the survival stage, the rapid growth stage, and the maturity stage. Thus Chapter 3 provides a theoretical framework that describes how growth-oriented firms develop and grow from the earliest stages to rapid growth and maturity.

4 A Star is Born! Financing Strategies for Nascent Entrepreneurs
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Chapter 4 focuses on firms in their nascent stage. A nascent firm is one that is just getting started. The major tasks of the entrepreneur at this stage include assessing her motivations and goals, taking an inventory of her resources in financial, human, and social capital, gaining an understanding of her industry dynamics and structure, and formulating her firm's business model. Chapter 4 draws upon data from the Kauffman Firm Survey and the Panel Study of Entrepreneurial Dynamics to highlight the approaches used by growth-oriented women entrepreneurs address these key tasks. It also identifies and discusses differences between a traditional business plan approach and the lean startup model.

5 First Things First: Financing Strategies for Early Stage Firms
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Early stage firms have already launched, so they have products and/or services as well as customers. Firms at this stage are generating minimal, if any, revenues, so they are not yet candidates for most sources of external financing. Chapter 5 documents the financial strategies that growth-oriented women entrepreneurs have used at this early stage in order to get their firms off to a good start. Prior research often reveals that women entrepreneurs are more reluctant to seek external funding, particularly external sources of equity. Further, when they do so, they often do not raise enough capital, thereby diminishing their opportunities for growth. Chapter 5 also discusses the perspective of early stage investors, including family and friends, as well as strategies for managing those investors.

6 The White Knuckle Flight: Survival Stage Strategies for Growth-Oriented Firms, Part I
chapter abstract

The survival stage is a critical time for growth-oriented entrepreneurs. This is the stage at which the business has started to generate revenues and acquire customers. Nevertheless, expenses far outstrip revenues, so the company is still unprofitable, and the rate at which the company is burning through cash exceeds its ability to generate cash. At this point, there is a real risk that the company will fail because it simply runs out of the money needed to keep itself alive. Chapter 6 describes strategies for finding, securing, and working with angel and VC investors, as well as the advantages and disadvantages of doing so. This chapter also addresses the investor perspective by discussing the characteristics that angels and VCs look for in growth-oriented firms and growth-oriented entrepreneurs.

7 Brave New World: Survival Stage Strategies for Growth-Oriented Firms, Part II
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Chapter 7 focuses on governmental sources of financing. These include government grants and other sources of support. Examples of federal programs include loan and loan guarantee programs available through the U.S. Small Business Administration as well as SBIR grants which are directed toward firms developing new technologies. This chapter also discusses government certification programs that have the potential to open up new markets and provide a much broader access to potential customers. In addition to these types of federal programs, examples of various state programs are also provided. Chapter 7 concludes with a discussion of entrepreneurial ecosystems.

8 Crowdfunding: The New Kid on the Block
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Chapter 8 focuses on crowdfunding, an innovative funding mechanism that leverages the Internet and social networks in order to raise funds from a large number of investors, many of whom contribute small amounts. Over the course of the last decade, technological progress has allowed for the widespread adoption of crowdfunding for a broad range of purposes. Crowdfunding is a disruptive innovation that it enables the entrepreneur to establish a direct connection with potential investors, thereby bypassing financial intermediaries such as venture capital firms. This has important and potentially game-changing implications for women entrepreneurs who have often been excluded from the more formal angel and VC networks. In effect, crowdfunding has the potential to "democratize" the private equity market enabling both women entrepreneurs and women investors to participate more fully. Chapter 8 demystifies this new funding landscape.

9 Liftoff! Financing Strategies for Scaling Up and Managing Rapid Growth
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A key challenge for growth-oriented entrepreneurs, once they have proven the viability of their revenue model, is scaling the firm up to achieve significant size and scope. This is a challenge for many growth-oriented entrepreneurs, but it is an even greater challenge for women entrepreneurs because they are less likely to have had prior experience at the most senior levels of large and growing firms. Similarly, there are fewer growth-oriented women entrepreneurs who can serve as role models. Chapter 9 highlights the strategies and experience of women entrepreneurs who have successfully scaled up their firms. It describes the benefits and challenges of venture capital funding and the ways in which VCs can provide value to the firm.

10 Going for Gold: Harvesting Value
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Chapter 10 focuses on financial strategies for firms that have achieved significant size and scope. The chapter begins with a discussion of bank loans and lending relationships, a key source of funding for firms that have achieved a track record of profitability. Chapter 10 also discusses strategies for harvesting value or the means by which the entrepreneur achieves liquidity and financial gain in return for her investment of time, talent, and capital. The two best known strategies for harvesting value are an initial public offering or sale of the firm. This chapter will address the strategies for pursuing these two paths, along with various considerations the entrepreneur needs to take into account. The topic of harvesting value is particularly suited to a discussion of growth-oriented women entrepreneurs, because it is typically only growth-oriented firms that actually go through the IPO process.

11 No Rest: Life After Harvesting Value
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Once the company has gone public, it has access to the public debt and equity markets and a broad range of financing alternatives. Post-IPO, financial strategies over time shift from managing growth to managing operations and profitability. This new set of tasks often entails replacing the original entrepreneur and her team with individuals who will take over the management of the firm as a going concern. One of the key issues for the entrepreneur is her role going forward. Chapter 11 focuses on the financial strategies women entrepreneurs use to manage this period of transition. Some remain with the firm as a member of the Board of Directors. Others choose to deploy their newly acquired wealth to launch a new entrepreneurial venture. Other successful growth-oriented women entrepreneurs assume leadership roles in their industry or choose to pursue philanthropic goals.

12 Let the Circle Be Unbroken: Women Investors
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One of the most exciting dimensions of women's entrepreneurship is that a growing number of successful women entrepreneurs are using their wealth to become angel or VC investors, thereby promoting the development and growth of additional women-owned firms. This sequence of activities or "virtuous circle" takes our growth-oriented entrepreneur from being a recipient of human, social, and financial capital to the point at which she is able to become a major contributor in each of these areas. Chapter 12 will discuss some of the support services and programs that are helping women learn how to evaluate and select companies to invest in, i.e. Golden Seeds, Springboard Enterprises, and Astia. Programs of this type help women entrepreneurs close the loop by creating opportunities for them to become givers as well as receivers. For growth-oriented entrepreneurs to succeed, they need the support of other entrepreneurs.