It's All About Access
Kay Koplovitz, Founder and Former Chairman and CEO, USA Networks
Networking, in the sense of meeting like-minded people, making contacts, exchanging cards and anecdotes and sharing similar experiences for the purpose of doing business, has become a critical asset-building strategy for an entrepreneurial-driven economy. But the word hasn't always meant what it means now. In 1977, when I founded and launched the first advertiser-supported cable station—which later became USA Networks—the term referred to the titans of the broadcast industry. These broadcasting conglomerates that controlled information and viewer perceptions were a closed system that provided privileges and profits to just a few.
A number of years later, when negotiating the first national cable rights to major-league sports, I encountered another kind of networking called the "boys' club." And, when I wanted to take my company to the New York Stock Exchange, I strategically made the rounds within the corporate finance networks.
Today, however, we have another scenario altogether. The exclusive and corporate-based networks of the 1980s have evolved into an inclusive and entrepreneurial model that fosters the connection between innovation and economic expansion. In today's high-growth, outperforming market, investors are using networks to exchange information and highlight prospects as a way to identify companies for new deal flow.
Connections and Communities
Going into business as an executive or an entrepreneur, you need to build "human capital" as well as financial capital. Six months ago, investors were looking for the new, new thing, the cutting-edge idea. Now, they want to see strong business relationships, lucrative partnership deals and an experienced management team, with the passion and expertise to manage both the launch and growth of the business. Successful businesses are still based on who's at the table and who can help your financial and business development. Now, more than ever, it's what you know, whom you know and how you manage that will make the difference between a strong opening-day debut on the IPO market and a fledging B2B that can't seem to make it out of the basement.
Women are the newest entrants into the high-growth business sector and as such are at a competitive disadvantage by not knowing about access points to the right networks. Since women are traditionally affinity-minded, it only makes sense to create a network or exchange that develops strategic business connections and fosters a community of relationships among women in business who want to correspond and transact with like-minded women.
Springboard 2000, a venture forum for women-led companies created by the National Women's Business Council, and other trade groups like Red Herring, Venture One and MAVA have made progress in providing access to the right financial networks for entrepreneurs. Working Woman Network, a leader in providing solution-based services to women, recently rolled out the first interactive business-to-business network exclusively focused on professional women. WorkingWoman.com and its Women's Business Exchange are the "roadmaps" to the means, knowledge and industry connections we need to succeed in today's digital economy. The success of such forums is not just in choosing "winners" and getting them funded, but in providing entrepreneurial women with the right information, contacts, intelligence and rules of engagement, personally shepherding them through a process that moves at Internet speed.
Show Us the Money
My objective, when I started in business, was simply to be financially successful. I really was not a part of the women's movement. I picked up very little from other women with regard to my "destiny"—I simply knew, from an early age, that I was to be a leader and help others come along in their careers. Today, there's no question that there is much more fluidity in the marketplace for young female entrepreneurs, who seem more open to the possibilities facing them, less concerned with what "can't be done." The conditions are better in general, the opportunities are greater.
However, when it comes to funding and access to capital, the doors are still not as open for women. I think banks are realizing that women entrepreneurs bring growth and strong track records, and they are investing in these women. But the venture world is still not there. Angel investors—who are these men of mystery? Traditionally, these networks have been more than just inaccessible to women; they have been downright invisible. Right now, women only garner about six percent of the $35-billion venture-capital market.
Credit scoring in microlending is still a problem as well. There are some grass-roots efforts to change this, such as Count Me In, which is looking to make small loans available to women who are starting businesses, by creating a scoring system that does not discriminate, even unintentionally. The current scoring system is stacked against women who may have been out of the workforce raising children, or may have had their finances affected by divorce.
Opening the Doors Wider
That's why Springboard, the venture-capital forum for women that I've created with the National Women's Business Council, is so critical. It is helping women access venture capital in this country. And, last year, after discussions on how to get women comfortable with high-risk investing—knowing there are women who control an enormous amount of capital—arose the idea: investment clubs with women angels. Thus far, there are about five of these angel investment networks coast to coast, including my own club in New York City. You can bet we are looking for solid investment opportunities.
But, in addition to being driven by rate of return, as is any savvy investor, we are dedicated to providing access for women entrepreneurs to good deals. Our angel investment networks will funnel new deal flow to venture funds, creating velocity for yet another type of financial network. And by all indicators, these new finance networks are starting to show women the money! Venture One's most recent statistics for the first quarter of 2000 show women receiving just over 12 percent of $17.8 billion in venture-capital investments. That's a considerable jump from the five percent invested in women-led companies during all of 1999.
Years ago, when I was first asked how women entrepreneurs could build financial partnerships and affiliations, I could only say, "Join business organizations, attend conferences, learn sports." Remember, it is only with the explosion of women-owned businesses in the mid-1990s that the doors to these closely held groups started inching open. And even if women are armed with the right expertise, experience and knowledge, that may still not be enough to succeed in our "turn-on-a-dime" economy.
Now, when a woman asks me about networking and the building of these essential relationships, I answer, "It's all about access." Access is the key that will open the doors to a level playing field for women entrepreneurs. Walking through the doors, however, will also not be enough. The winners in tomorrow's entrepreneurial challenges will be those with the strongest affiliations and the established partnerships, and those who have mastered the art of the network.