Female CEOs Missing in IPO Boom Just 3% of Firms Going Public Had Female CEOs; Care.com’s Marcelo Joins Club

Female CEOs Missing in IPO Boom

Just 3% of Firms Going Public Had Female CEOs; Care.com‘s Marcelo Joins Club

TELIS DEMOS And DOUGLAS MACMILLAN

Jan. 24, 2014 1:03 p.m. ET

As a female, Filipino-American entrepreneur and CEO, Sheila Lirio Marcelo doesn’t fit most corner-office stereotypes.

When her company, Care.com Inc., began trading Friday following its initial public offering, Ms. Marcelo joined another small club: Just 3% of companies that went public in the U.S. between 1996 and 2013 had women CEOs, according to sociologist Martin Kenney and economist Donald Patton at the University of California, Davis.

The figures haven’t changed much recently. Last year, 82 “emerging-growth” companies went public, the most since 2007. But only two— Marrone Bio Innovations Inc.MBII -1.07% and Veracyte Inc. VCYT -3.03% —had women CEOs, according to Messrs. Kenney and Patton, who updated their study for The Wall Street Journal.

Mr. Kenney suggests the dearth of women-led IPOs could reflect the underrepresentation of women among venture capitalists and as founders of venture-backed companies. In a 2011 census by the National Venture Capital Association and Dow Jones VentureSource, 11% of venture-capital investors were women.

“It’s not necessarily that there’s some sort of discrimination, but rather structural factors,” said Mr. Kenney, a professor of community and regional development. The study excludes blank-check shell companies, real-estate investment trusts, companies founded more than 30 years ago, and spinoffs of larger companies.

Shares of Care.com were up 31% midday Friday, from the IPO price of $17. The offering priced above its initially proposed range of $14 to $16 a share, raising $91 million for the company.

Women are scarce in U.S. corporate executive suites, and even scarcer at technology companies, the source of many IPOs. Law firm Fenwick & West recently found that 11.5% of top executives in top publicly traded Silicon Valley firms are women, compared with 14.7% at companies in the S&P 100.

Women are underrepresented in the board room of many IPOs as well. Neither FacebookInc., FB -2.90% the biggest IPO of 2012, nor Twitter Inc., TWTR -0.91% the biggest technology IPO of 2013, had a woman on its board at the time of the IPO. Facebook has since added two women to its board, Twitter one.

“The deck is rigged against [women] at all levels,” said Vivek Wadhwa, fellow at the Stanford University Rock Center for Corporate Governance. “Women don’t get to hob nob with the board members. So the trust never builds,” he said.

Curiously, women CEOs are more prevalent before and after an IPO than around the time of an initial offering. A study by Dow Jones VentureSource last year found women CEOs at 6.5% of privately owned, venture-capital-backed companies—the pool from which most IPOs emerge. Among companies in the S&P 500 index, 24, or almost 5%, are led by women, according to S&P Capital IQ.

Selina Lo, CEO of networking-equipment maker Ruckus Wireless Inc. RKUS -5.06%before, during and after its 2012 IPO, says that there are few women present in the IPO process.

“In my segment, it is extremely male dominated. You really don’t find that many female executives, and primarily it starts with the venture community being predominantly male,” said Ms. Lo, who was also a senior executive at Alteon SYNI 0.00% WebSystems Inc. during its 1999 IPO. Alteon was acquired the following year by Nortel Networks Corp. for more than $7 billion.

A forthcoming research paper suggests investor bias may be a factor. Researchers at the University of Utah’s David Eccles School of Business presented M.B.A. students with public-offering prospectuses of the same company, but changed the gender of the CEO.

The students were four times as likely to recommend an investment in a company with a male CEO. The paper is to be published in a coming issue of the Journal of Management.

During the long road to an IPO, “a series of unconscious biases kills it for some women,” says Lyda Bigelow, lead author of the study.

At Care.com, an online marketplace for nannies and other at-home caregivers, Ms. Marcelo is a public face for the company and an advocate for women in business. She left her role as entrepreneur-in-residence at Matrix Partners in 2006 to start the company. She has expanded the service to 9.7 million members, many of whom pay a monthly, quarterly or annual subscription to find and solicit care givers. Care.com doesn’t disclose how many customers pay for the service.

Ms. Marcelo in an interview Friday said, “All along the line there are certainly challenges for women.” She added: “A lot of people face different types of challenges, whether it’s color or age, and it’s about mustering that extra strength to have that conviction and passion to do what you love.”