The Other Gender Gap

It’s Time to Create a New Norm for the Way the Financial Services Industry Views Women-Led Companies

As a female CEO on Wall Street for much of the past 25 years, I have been the only woman in the room more times than I can count. I have had my share of moments in meetings where, to put it gently, I have heard misperceptions or denigrations about female CEOs. But over time, while the situation has improved, I recognize that having other women in the room gives us the confidence and power that come from allies. Building on this dynamic, I have used any opportunity during my career to help female business owners reach their financial, business, and professional goals.

Leading a woman-owned broker-dealer in corporate capital markets—and the first to participate in corporate debt issuance by some of the largest Fortune 50 issuers—I have worked to publicize and advance other talented women-owned companies. My passion is also in my DNA. One of my earliest memories is being taken to the office by my father and seeing my grandmother, Sayra Lebenthal, who was a female founder of the family municipal bond firm on Wall Street in 1925, sitting behind a large desk while she ran the company. Impressed upon my four-year-old mind was that women—even grandmothers—can and do run companies.

In 1925, there were only a handful of women leading companies. Today, there are 12.9 million women-owned businesses in the U.S. generating $1.9 trillion in revenues and growing at an unprecedented rate—21% in the past five years alone.⁽¹⁾ And they have succeeded while receiving hardly any funding compared to their male counterparts. Women-owned businesses receive only 4.4% of VC funding and 2% of all forms of funding.⁽²⁾

In the past several years, however, I have noted the significant success of some of the largest female-led companies, many of which have been disrupters and changed consumer behavior: IPOs by women-led companies, such as Stitch Fix, The RealReal, and Eventbrite; sales of companies valued in the hundreds of millions like Tate’s Bake Shop and Mirror; and investments by private equity companies, such as Tory Burch. I have also seen an increasing focus on women by the investing community, with the creation of several female-focused funds, including Springboard Growth Capital, Gingerbread Capital, and BBG Ventures; partners at well-known funds leading investments in female founders, such as Kirsten Green at Forerunner Ventures; and a commitment to invest in women-led companies and fund managers, such as Goldman Sachs’ $500 million transformative Launch With GS. 

There is still much more work to be done to level the playing field for women-led companies. I recently wrote about the opportunity that private equity and venture capital firms have to make a contribution to this effort, but this doesn’t just apply to institutional investors. It is also an opportunity for investment banking and advisory services. Many women-led businesses don’t have the experience working with private equity firms and pitching to investors, or they lack 

the contacts to even get in the room in the first place. Finding the right financial partner—and ensuring the most favorable terms—requires the right advisor.

Women-owned and led businesses are a giant opportunity hiding in plain sight for any investment bank willing to make a real commitment to them. Beyond the headline companies and unicorns, there is a deep and varied universe of individual companies on which to focus this practice. Women-led businesses of meaningful size number in the hundreds. In 2018, more than $50 billion in total capital was raised by female-founded startups, and female-founded companies executed exit transactions with a total value of more than $26 billion.⁽³⁾ Of the 42 female-founded unicorns—which have received nearly $55 billion in funding—12 were created in 2018 and 21 were created in 2019.⁽⁴⁾ By my count, there are now more than 60 venture funds that are either primarily focused on women or have declared a dedicated focus on them.

Just imagine how impactful it would be to a female CEO if an investment bank devoted resources into the banking, fundraising, valuation, or restructuring her company needs. Imagine if that bank also put resources into understanding the differences a female CEO faces, which includes often being the only woman in the room, and in so doing create an identity as the firm for women-run and women-owned businesses.

With that in mind, I am thrilled to announce that I have joined Houlihan Lokey to lead a new initiative focusing on women-owned businesses. As a Senior Advisor in the Financial Sponsors Group, the initiative I’m leading will provide investment banking services, industry relationships, and growth opportunities to female entrepreneurs and business owners in the U.S. The goal is to address this gap between women-owned and founded businesses and the investment banking industry. The initiative will leverage my experience as a female CEO in the financial services business and as a female CEO who has been an investment banking client, as well as my industry relationships, and combine them with Houlihan Lokey’s network and suite of products and services.

Houlihan Lokey is the perfect fit because its long-term dominance in the mid-cap space and financial sponsor universe demonstrate its suitability to build this women-owned platform and network. Houlihan Lokey’s proven expertise and network will allow these businesses to grow and offers a truly comprehensive set of services for companies that are looking to expand, meet challenges, or take advantage of opportunities.

Our initiative at Houlihan Lokey will disrupt traditional norms by focusing on women-owned and led companies. Here’s how:

• Work with women-led companies—be they privately held, mid-market public, private equity, or venture-backed portfolio companies—to help them navigate growth strategies that will work best for their firm’s full scope of investment banking services, including capital raising, M&A, restructuring, and valuation that every C-suite executive needs to make the best financial decisions for her firm.
• If they don’t have them already, we will make sure that women-led companies develop strong relationships with our bankers, all of whom have deep industry expertise and an ability to impart value-added, actionable ideas.
• Connect with women-run businesswomen in a foundational way. While female CEOs are no shrinking violets, having a trusted advisor during the spectrum of a company’s life cycle is critical.
• Create thought leadership and convenings around the challenges and opportunities women-led companies face. It is not enough to simply launch this business with an eye toward outreach and call lists. We seek to develop our focus on female business as its own sector, just like we have our traditional focus by industry, geographical region, or transaction type.

Creating a new norm for the way the financial services industry views women-led companies won’t happen overnight and will require a systematic, comprehensive focus across the financial services industry. But the potential to create something genuinely meaningful and impactful at the very moment when women-led businesses are starting to achieve unprecedented growth is undeniable. This new initiative I’m leading at Houlihan Lokey is a huge step in that effort. I look forward to sharing our progress and to helping women-run businesses reach new heights.