(FORTUNE Small Business) – For many female entrepreneurs, finding startup money seems like an impossible dream. Although $22.7 billion in venture capital flowed into the U.S. economy during the first quarter of 2000, according to Venture Economics, industry sources estimate that only 2% to 5% went to women-owned companies.

To gain some insight on why women lag men on the road-show circuit, FSB spoke with Carol Sands, a founder and member of the Angels' Forum LLC, a group of 25 private investors in Palo Alto. Since it was founded in 1997, the forum has invested in 48 early-stage technology companies in sectors ranging from medical services to consumer products. Of the 48, 17% were owned by women. Among a string of hits: PhorMax, which creates portable, digital X-ray machines for ambulances; and Light Engineering, a firm that has redesigned the electric motor.

Sands, who screens some 400 business plans a month, doesn't believe discrimination is a women-only problem. She thinks female entrepreneurs need to hone their business plans and sharpen their negotiation skills in order to attract more venture capital money. To help women snare funding, this 48-year-old mentors both the founders of portfolio companies she backs and female entrepreneurs in a variety of organizations across the country, including the Silicon Valley Association of Software Engineers. According to Sands, a whole new generation of so-called power skirts has emerged as a force to be reckoned with. They're the women cracking the latest glass ceiling. Edited excerpts:

Is discrimination holding women back from raising venture capital?

I don't think in today's world there is a conscious level of discrimination. I think that my male counterparts in the investment community apply a single standard and expect all entrepreneurs to act the way a male entrepreneur would act.

How should women change their pitches to investors?

Because the majority of VCs are male, women need to present their plans in a way that appeals to men. Investors want to see a management team with a high level of confidence. Because women tend to want to have an honest relationship with their investors, many start off by saying, "I'm not perfect. These are my strengths. These are my weaknesses. You should know everything so that you're fully informed as an investor." Most male entrepreneurs don't do that. They never underscore their negatives.

So do you think women are underselling themselves?

Not intentionally, but they need to focus more on marketing the unique skills they have that can help their startup succeed in the marketplace. Many haven't founded companies before, but they have launched product lines for companies they've worked for, managed large and diverse staffs, had profit and loss responsibilities, and still have networks of industry contacts that can help a fledgling fly. Those are the things they need to stress when they meet VCs.

Where else do you see female entrepreneurs going astray?

Most first-time women entrepreneurs do not dream big enough. It's not just a women's issue; it's a first-time entrepreneur's issue. They develop business plans for something that is small and easy to execute. But such ventures aren't usually the kind that will grow into big public companies. That's not the type of company that would get my attention. When I look for investments, I'm looking for gigantic growth potential, the same potential Sun Microsystems had when it was first launched. Keep in mind that I'm an angel investor. My return on investment needs to be higher because my risks are higher.

You must get 100 business plans a week. Which plans from women are you most interested in following up on?

The plans I get come through referrals. Business plans that come unintroduced rarely get looked at and funded. Most of the time, someone I know and trust--or someone who is close to one of the members of the Angels' Forum--will call and say, "I've already looked at this and think it's worthy of your time and energy." When that happens, I read it.

What will ultimately persuade you to make an investment?

If the new venture is involved in what I call a disruptive technology, I will certainly take notice. That's a new technology that fills an overlooked niche in the marketplace that I think will create a new industry. On top of that, I also look at the management team. I like to back a woman with a good track record. She should be someone who is driven by a passion to succeed that is so powerful it makes her scoff at her formidable challenge and say: "I am going to crawl over any obstacle, dig under it, get a blasting gun, and blast through it. No matter what, I'm not going to let it stop me from reaching my goal."

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