By Justin Biel, trends editor at Grow Wire
Female Founders Fund is the first venture capital firm dedicated solely to early-stage investments in female-owned companies.
By helping to fill the VC gender gap, the Fund has built an impressive portfolio since opening shop in 2014.
Partner Sutian Dong shares the firm’s origin story, examples of companies it invests in and insider tips for entrepreneurs approaching VCs.
Female Founders Fund, the first venture capital (VC) firm to invest solely in women, opened its doors in 2014 with about $5 million under management. What started relatively small quickly took off: So far, the company has invested in dozens of female-led startups spanning a wide array of industries including healthcare, wedding planning, staffing, hospitality, health and wellness, beauty, technology and education.
Following the success of its initial portfolio, Female Founders Fund recently launched Fund II, a $27 million institutional early-stage fund. (VC funds with an “institutional” classification have $25 million-$1 billion under management, signaling quick growth and newly-acquired investing power they can wield in future deals.)
The purpose of Fund II is to “expand on [the] thesis that it is possible to achieve outsized returns by investing in women, and to build the strongest ecosystem of female founders and investors worldwide,” the founders wrote in a blog post.
Partner Sutian Dong discussed with Grow Wire the origins of the Female Founders Fund, the type of companies the principals look to invest in and what entrepreneurs need to know about approaching a VC.
Investing in the changing face of entrepreneurship
“As female investors, we saw an opportunity to not only invest in female-led companies,” said Dong, “but also to support them during the growth phase, providing services and community to help take their companies to the next level.”
Duggal (L) spoke on a panel at TechCrunch Disrupt SF 2017.
The timing for a female-focused fund couldn’t be better. A 2018 report on female entrepreneurship from SCORE, a nonprofit association with backing from the Small Business Administration, shows a 45 percent increase in the number of women-owned businesses between 2007 to 2016. But there’s a massive VC funding gap. In 2017, female entrepreneurs received only 2.2 percent of total VC funding, according to Fortune. Put into real numbers, of the $89 billion in capital dished out last year, female-led teams received only $1.9 billion.
Duggal and Dong embarked on a mission to change that upon realizing there was an abundance of female-backed, high-growth ideas stuck in the early stages of development.
“We saw a wave of women founders that had expertise along with venture scaling, industry-defining companies," said Dong. "But they hadn't quite achieved the metrics or track record necessary to raise capital and go to market."
As an entrepreneur who raised capital during the launch of her own e-commerce business, Duggal had intimate knowledge of the challenges her peers faced, especially the mismatch between female founders and the male-dominated venture landscape.
How two companies snagged VC deals with Female Founders Fund
Dong cited two companies, Maven and Billie, that especially aligned with the Fund’s investment ethos and thus closed deals.
Company #1: Maven
Maven Clinic is a female-focused, digital healthcare clinic which caught the Fund’s attention as the first online telemedicine service specifically for women.
"It's an end-to-end platform for women to conveniently and cost-effectively take control of their health and wellness," said Dong.
With studies showing that women make the majority of family-related health decisions, Maven Clinic’s women-oriented approach made tons of business sense while providing room for market growth.
Since its funding, Maven has launched a corporate-facing solution called Maven Maternity, a 24-hour digital support system for employers’ pregnant and postpartum workforces.
Maven's brand identity involves celebration of women's health. (credit: Instagram/mavenclinic)
Company #2: Billie
Think Dollar Shave Club for women: Billie offers high-quality razors designed for women at half the price of traditional brands. The direct-to-consumer company also sells premium body-care products and donates a portion of sales to women’s causes worldwide. It made a splash with its viral marketing campaign Project Body Hair, which aimed to destigmatize female body hair and grooming.
In other words, it was an ideal investment for the fund. Today, Billie is progressing faster than expected: The brand met its 12-month goals in four and a half months, according to Racked.
Billie's product line includes razors, body wash and lotion. (credit: Instagram/billie)
Think you’re ready to pitch to Female Founders Fund? Consider these five tips.
There are many financing options for early-stage companies. If you want to go the VC route like the brands above, consider these five tips from Dong.
1. Access and build relationships in the VC network.
VC is a relationship-driven industry. Talk with your business network, and find ways to get introductions. Early-stage deals can last 10 years or more, so it's vital for VCs to have emotional connections with company founders.
2. Approach firms that align with your business.
VCs are specific about the kinds of businesses they invest in, as well as the size and stage of investment. Do research, and approach firms that are most aligned with both your business and funding objectives.
3. Be prepared with your pitch deck.
A pitch deck is how you present yourself and your business to interested VCs. It should include: who you are, which market you’re operating in, which opportunity you’re taking advantage of, what your product or service does, what traction you’ve received, how much you’re looking to raise, what you want to spend the money on and where you want to go with that raise. It’s also important to tell investors why now is the best time to invest in this opportunity. You can find templates and examples of pitch decks online.
4. Remember, securing funding is a process.
Unfortunately, the “Shark Tank” version of funding is not how deals get made. In the real world, raising money with VCs takes time. The process includes a lot of due diligence and many meetings before there’s ever a conversation about how to structure a deal.
5. Get advice from others who have raised VC.
Talk to other entrepreneurs who have been through the funding process. Acquire first-hand knowledge about what to expect, the opportunities of partnering with a VC and insight into the challenges of a long-term partnership.
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