Just a few years out of residency, Dr. Mary Jo Gorman was practicing medicine at SSM DePaul Health Center when she started her first company, in 1991. Over the next two decades, the serial entrepreneur founded two more health care companies.
Her latest effort aims to help other women follow a similar path by nurturing early stage businesses with funding and mentoring.
Gorman is managing partner at Prosper Capital, an accelerator program in St. Louis that connects women entrepreneurs leading health care, technology or consumer product startups to capital.
In January, Prosper invested $50,000 each in six women-led companies — three from St. Louis — and connected them with mentors during a 13-week-long program.
Next month, the second class of companies will go through the program and get the funding that could be critical to their survival. Twelve more companies will get funding next year.
The Post-Dispatch recently interviewed Gorman at Prosper’s offices in the T-Rex building downtown. Below is an edited transcript.
As a doctor, how did you get your start as an entrepreneur?
I became an entrepreneur by trying to solve a problem. I was practicing in the intensive care unit, and I thought there was a way for us to do that better, so I started a medical group with that in mind. That was how I started my first company in 1991, Critical Care Services.
I didn’t have any business classes in medical school, so I went to Washington University and got my MBA in 1996. While I was there, I came up with the idea for my second company, the Inpatient Care Group — the first hospitalist group in St. Louis and one of the first in the country. (A hospitalist is a physician who specializes in the care of hospital patients.) I grew that for a couple of years and then sold it to IPC–The Hospitalist Co., a Los Angeles-based hospitalist company, then continued to work for them for about five years.
What led you to join Prosper Capital?
The Kauffman Foundation did a study that showed St. Louis ranked last out of 25 cities for women-led businesses. That spurred a lot of discussion among groups here, and I was aware that a group was working to try to identify ways to improve St. Louis as an environment for women-led businesses.
Ultimately that became two organizations, Prosper Institute, which is a not-for-profit organization that is geared for very early stage entrepreneurs. Prosper Capital is a venture fund that’s investing in companies and helping take them to the next level.
Being a successful entrepreneur is really hard work. There are certain things you can only learn by being an entrepreneur. If I can take some of those things I learned and help somebody else avoid a mistake or shortcut something, then I can see their progress. I really like to see progress with whatever I’m working on. I thought by taking the things I learned and apply those to companies that were early in their journey, I would be able to advance them forward and that would advance the community and really, women led-businesses generally.
Why is it difficult for women led-businesses to get funded?
There are a lot of national studies that show that even though women start 1,200 businesses a day, they only represent 1 percent of the venture capital investment. I’m not sure anyone knows 100 percent why that is. A couple of things have been identified: women have a hard time identifying what’s the right network to participate in and aren’t sure about how to go about forming that network or using that network to acquire capital to grow their business.
There’s obviously room for us to improve here in St. Louis, just like there’s room to improve nationally.
We identified what we believe is the best way to make an impact, which is to not only provide capital but also to provide programming, to help entrepreneurs understand what’s their best way to identify the resources to really grow their businesses.
What’s the potential of the companies that go through Prosper?
We had over 200 applications for our first class, and we were looking for companies that had a very scalable business and could apply to a very large marketplace.
We were able to pick six amazing companies and then worked with them very closely with our mentors and programming, help them form their strategic approach: how they would approach their market, products they’re going to build or how they were going to raise their funds.
We’ll have several great winners out of that group. All of the companies have grown since they’ve been in the program, in terms of adding funds, adding resources to their companies or using services such as marketing or accounting. Right now, they look really good. It’s early. Time will tell.
We started this venture fund on the premise that women led companies are an underrepresented asset class. So, we believe that we will have better than average results for investing in this early stage asset class. Hopefully we’re developing a model that can be used in other communities that would help them grow their women-led businesses as well.
There are a number of funds that are being developed to invest only in women led companies, so we are part of the growing trend that’s happening nationally.
Is it a good time to start a business in St. Louis?
In the last 10 years, the landscape here has changed dramatically for early stage companies. Some of the success features that people need are access to co-working space, which we now have a lot of, and access to capital, and there’s a lot more people in the market investing in early stage companies.
They also need the success of other entrepreneurs who are willing to engage with them and advise them, and we have that happening. We’ve had this continuing layering of the right landscape where trying to do something here. Ten years ago, I think the risk would’ve been much greater than it is today. We have a long way to go, but we have a lot happening in a really positive way.
If people feel like they want to take the plunge, or they’re considering it, there are resources. Go out and explore, talk to people, and find those places where your idea can fit in. In St. Louis, even though we have some really large companies, we have risks. We all saw that happen with Anheuser-Busch being bought by InBev and staff leaving here. We need to be growing our next big companies. Starting and building these companies is going to create employment, use of services and just adds to the economic gain for the whole region.
The community has been very supportive of this. We raised the funds for Prosper locally and we raised it rapidly.