I had an interesting experience during our recent fundraiser when a male VC friend commented that our team should consider renaming the fund. “Your profits are huge,” he said, “but funding only women-led companies is a tough sell for institutional investors.”
His remarks summed up exactly what continues to be the single most important obstacle facing women entrepreneurs today. Many investors see women-founded companies as “impact investments,” rather than an opportunity to generate alpha returns — or excess returns earned from an investment that is above benchmark returns — in a previously undervalued asset class.
Over the past 12 months, for the first time in history, we’ve seen incredible momentum from a diverse cohort of growth-stage female-owned companies. In February of this year, Bumble CEO Whitney Wolfe Herd, 31, listed her company, becoming the 22nd woman to ever do so. She set another example of success with her vibrant yellow, holding her one-year-old son as she rang the NASDAQ bell. In May, FIGS became the first company to go public led by two female co-founders in the healthcare apparel sector. A month later, in June, Anne Wojcicki led the public offering of genetic testing company 23 & Me valuing the company at $3.5 billion. Just this August, Hello Sunshine, a female-founded media company specializing in creating content specifically for female audiences, was acquired for an estimated $900 million and Maven Clinic, the largest virtual clinic for for women and home care is valued at $1 billion. These companies vary by sector, founder experience and focus, and demonstrate that we are at the cusp of a real inflection point. The clear opportunity is that there is real money invested in women, but investors themselves have yet to catch up.
Despite these successful examples, we continue to see women face many of the same challenges when it comes to actually raising capital. Women-led startups received only 2.3% of VC capital in 2020. In absolute terms, 2.3% breaks down to about $3.7 billion for women, in contrast. with $160 billion received by male founders. In this day and age, this is antiquated. We know the issue of diversity and diverse perspectives produce more favorable outcomes. And while institutions have been vocal about their commitments to inclusivity, the dollar has yet to come into play.
But as investors pull their feet, the opportunities only grow. The dial has changed over the past 10 years, with the number of female entrepreneurs in the United States increasing by more than 30% since 2007. So while there have been strides towards gender equality in the funding space, the market has not. The larger field is still not fast enough. . We need to maintain momentum moving forward in the broader ecosystem to see significant, long-lasting and sustainable progress.
Over the past eight years, the Women Founders Fund has raised more than $90 million to invest in women-led businesses. This July, we closed our third fund after raising $57 million. We have created what we consider to be the largest investment fund specifically for female founders, with the backing of top institutional investors. Looking back on our first fundraising in 2012, which included 700 meetings to raise $5.85 million, what struck me the most in the final realization was the many conversations we had. already with institutional investors today remains unchanged. Questions continue to swirl around whether their investments…
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