Venture Funds for Women-Led Start-ups  

With women controlling an estimated 65% of consumer spending and influencing more than 80%, it makes sense that the rising target market for angel investors and venture capitalists would be women-led businesses.  Women are not only the perfect producers for the products they will consume, they are also at the forefront of embracing digital platforms and innovative products that offer solutions to enrich the lives of them and their families.

“Women make better entrepreneurs. They experience greater successes – and fewer failures – than their male counterparts,” as the Female Founders Fund notes.  Still, the majority of venture funds are focused on companies founded by men 18-34 years-old; there are a select few, however, that almost exclusively target this ripe market of female innovators.

Quick Review: What is Venture Capital?

Venture capital is money provided by an outside investor to finance a new, growing, or troubled business.  Capital is invested, in exchange for an equity stake in the business (i.e. rather than given as a loan).  Since the VC is a part owner rather than a creditor, the business owner doesn’t have to pay the money back as they would with a loan, and the investor hopes the investment will yield a better-than-average return.

Most VCs are limited partnerships that have a fund of pooled investment capital.  They vary in size from firms that manage just a few million dollars’ worth of investments, to much larger VCs that may have billions of dollars invested.  While some VCs may invest small amounts of capital for very early ventures, known as “seed funding,” typically most focus on expansion funding and foster growth at the company through their involvement with managerial and strategic decisions.

Note: It’s important to do your homework before approaching a VC for funding.  Make sure you’re targeting the right potential partner for your business needs and don’t underestimate the value of mutual respect, teamwork, and understanding.  You can often gain insight into a VC’s investment preferences by reviewing its website, and especially reviewing its portfolio companies.

Venture capital is not an option for all new businesses.  VC’s are mostly interested in businesses with high growth potential that will allow them to successfully exit with a higher-than-average return,   typically three to five times its investment in a five- to seven-year time period.

There are some excellent alternatives to venture capital that you can also explore in your search for funding sources:

• • • Angel Investor — A term for an investor who takes you under its wing and lifts you up to the next level of growth.  Angel investors typically do not have deep pockets, so the average investment tends to be smaller than that of a VC — typically hundreds of thousands of dollars, rather than millions.
    • Strategic Partner — This could be a vendor, customer, or other business partner with whom you’re currently working with, who might be interested in investing in your company.

Venture Funds Only Investing in Women-Led Companies

• • • Female Founders Fund – Based in NYC and founded in 2013, F Cubed is a seed fund that invests in female-founded digital startups: e-commerce, media, web-enabled products and services, marketplaces and platforms.  Portfolio companies include Lover.ly, Minibar, & Manicube.
    • Women’s Venture Capital Fund – Based in Los Angeles, WVCF makes early stage venture investments in digital media companies, along with companies that are good for the environment or that enhance healthy living.  Portfolio companies include Omni Retail Group &  EdSurge.
    • BBG Ventures – Based in NYC, backed by AOL, and led by Susan Lyne – BBG Ventures is a seed and Series A venture capital fund investing in women-led technology companies that include  multiplatform media, services and commerce. Portfolio companies include GLAMSQUAD & Gracious Eloise.
    • Springboard Fund – Based in Washington D.C., Springboard Fund is the investment fund into Springboard Enterprises , offering mentoring, accelerator programs, and a network of investors for female innovators.
    • Texas Women Ventures – Based in Dallas, and started in 2005, TWV is a growth fund for women-owned businesses in the Southwest with an established track record who are achieving $10 – $100 million in annual revenue to help them reach their full potential.
    • Merian Ventures – Based in San Francisco, and founded in 2014 by Alexsis de Raadt St James of the Althea Foundation, Marian Ventures is a seed and early stage venture fund that invests in women-led companies founded by female entrepreneurs who are obsessed with changing markets through innovation — either technology platforms, or consumer goods and services.

Venture Funds Investing in Women and Led by Female Founders

• • • Cowboy Ventures – Based in Palo Alto, CA and founded in 2012 by Aileen Lee, Cowboy Ventures is a seed-stage fund focused on helping technology companies focusing on E-Commerce, games, hardware or software, to grow.
    • Illuminate Ventures – Based in Oakland, CA and founded by Cindy Padnos in 2009, Illuminate Ventures invests in early-stage high-tech companies that deliver innovative enterprise cloud and mobile solutions.
    • Forerunner Ventures – Based in San Francisco and founded in 2007 by Kirsten Green, Forerunner Ventures is an early-stage VC firm dedicated to partnering with ambitious entrepreneurs who are defining a new generation of commerce, which they have dubbed “The Commerce Revolution.”
    • Starvest Partners – Based in NYC and founded in 1999 by Laura Sachar and Deborah Farrington, Starvest is an early-stage investor in Enterprise Software-as-a-Service (SaaS) and Business-to-Business (B2B) Marketplace Solutions.

Photo: Ed Yourdon/Flickr