spend their careers looking for meaningful ine;ciencies
that will drive returns, and this one is right in front of us.”
Why don’t venture capitalists—about 90 percent of
whom in decision-making roles are male—invest in more
women? There’s sexism and bias, of course, which look
increasingly pernicious—and obvious—in the era of
#Me Too. It’s also that the deals investors make often
depend on who’s in their networks. Men tend to have
other men in their networks; women, other women.
Marie Rocha, an independent software developer,
saw this firsthand when a man in her social circle raised
$2 million for a light-up toilet. Meanwhile, she knew
plenty of women—many of them her clients—who
couldn’t get capital to grow their businesses. “He had
a network who believed in him and was very well connected,” says Rocha. “That was the catalyst for us.” She
teamed with a partner to raise $5 million for Realist
Ventures, which invests in underrepresented founders.
Other women say they’ve experienced a di;erent
hurdle pitching men: Male VCs have a hard time getting
excited about businesses that appeal primarily to women.
In 2013, when Mariah Chase was trying to raise money as
the CEO of Eloquii (see page 41), a fashion brand for
plus-size women that had been shut down
by the Limited, she knew it would be hard.
Still, the mostly male investors’ reluctance
surprised her: No one wanted to bet on
Eloquii until it had traction, even though
the team was essentially relaunching a
Chase says the men couldn’t quite
step outside themselves to learn about
something new. She repeatedly heard
the comment women entrepreneurs dread:
“Let me ask my wife.”
“I laugh,” Chase says. “With love.
Sure, ask your wife, but if she’s a thin white
woman, we might not be working with the
right data set.” Eventually, Eloquii got two
big angel checks that allowed the company
to take o;—one from a woman, and another from a family
o;ce where a woman championed the investment. Chase
went on to raise $42 million, and sold Eloquii to Walmart
in 2018 for $100 million.
Perhaps nowhere is the disconnect between market
need and VC interest more frustrating than in women’s
health care products and services. Antoinette von dem
Hagen, who’s a limited partner in nearly a dozen private
equity and venture capital firms, says she forwarded
information to one of them about Joylux, maker of a medical device to improve vaginal health. “They passed it on to
a lad right out of business school who had no idea how
big the women’s sexual wellness industry is, but he told
me it couldn’t be very big,” she says. “What an untutored,
uninformed … ” Von dem Hagen can’t find the right word.
“There’s just an attitude.” After the incident, von dem
Hagen learned about a new fund, Avestria, that focuses
exclusively on innovations in women’s health care. And,
yes, she plans to be a part of the fund’s second close.
In 2014, Anu Duggal closed one of the first funds to invest
only in women: It took 700 meetings over 18 months to
get 70 people to contribute $5.8 million to her New York
City–based Female Founders Fund. And Duggal was a
successful entrepreneur herself, with Silicon Valley connections. In 2013, as she was raising her fund, only one
woman-led company in New York raised a Series A round:
Zola, helmed by Shan-Lyn Ma (see page 49).
Four years later, Duggal raised $27 million for a second
fund with much less hassle. She says she saw a surge in
the level of interest in backing underrepresented found-
ers. Plus, more women were landing follow-on funding: In
2018, 19 women in New York had raised Series A rounds,
including Scentbird, Maisonette (see page 40), and Kin-
dur. Says Duggal, “There has been a monumental shift.”
Driving part of that shift are LPs—limited partners—
in new funds who made their money in big corporations,
finance, or law. They’re new to early-stage investing, and
they’ve given rise to a new type of fund, sometimes called
a learning-by-doing fund.
In these funds, such as Portfolia and
Next Wave, LPs can watch and ask questions as entrepreneurs pitch the portfolio
managers. They participate in due diligence and leverage their networks on
behalf of the founders. The goal is to train
these LPs—often women—to become more
active investors. “We see the real value of
our funds as putting together thousands
of women who know the innovations they
want to see in the market,” says Trish
Costello, founder of Portfolia.
The recent flood of startup IPOs will
doubtless contribute another wave of
investors, although fund managers don’t
expect to see their impact anytime soon.
The top level of startup execs—overwhelmingly male—
tends to reap the most gains. And, then, says Karen
Appleton Page, a general partner at investment firm
B Capital Group, investment decisions will largely be
driven by networks, with the guys investing in companies
led by men, and women seeing pitches from other women.
Over time, she says, she expects these new angels to invest
more in women than their predecessors did. But it won’t
happen by accident—these networks need to start to
blend. “In the long term, we can’t have women-backed
venture funds investing in just women-owned companies,” she says. “But today, we don’t have the opportunity
to just ignore gender. Not if we want to change things.”
KIMBERLY WEISUL is an Inc. editor-at-large.
BAY AREA $398 million
NEW YORK CITY $373 million
TORONTO $228 million
LOS ANGELES $105 million
TOP CITIES FOR FUNDS
DEDICATED TO WOMEN-LED