New York City is so serious about helping women succeed in business, Deputy Mayor Alicia Glen says, that the city has decided to "put our money where our mouth is."
WE Venture--a partnership between four female-led venture capital firms and an accelerator--will invest at least $30 million in early-stage, New York-based tech startups founded by women and minority entrepreneurs over the next five years, the city announced Monday. The new venture capital consortium includes Archer Gray, Future Perfect Ventures, Golden Seeds Venture Fund, WOCstar Fund, and Morgan Stanley's Multicultural Innovation Lab. The goal is to fund as many as 25 startups per year--starting as soon as next quarter. The average check size will be about $500,000, though the amount may vary depending on the startup's stage and needs.
"Let's be honest. In the past 10 or 15 or 20 years, the needle hasn't moved," Glen tells Inc., pointing to a persistent gender pay gap and the low number of women occupying C-suite or CEO roles. "The only way we're going to really, really change the status quo is by making a conscious intervention and doing it with a gendered lens," she adds, citing a report that shows all-female teams have received roughly 2.2 percent of all venture capital dollars in the U.S. for the past two years. "Gender neutrality hasn't gotten us anywhere."
There is a bright side, however. In New York City, women-led companies accounted for 12 percent of all series A deals in 2018, compared with 8 percent in San Francisco, according to a recent analysis by Female Founders Fund. The report also highlights a number of fast-growing New York-based startups, including wedding registry company Zola, which raised $100 million in 2018; fitness subscription service ClassPass, which closed an $85 million series D round in July; and co-working space the Wing, which secured $75 million from Sequoia Capital in December.
The deputy mayor says it's a sign that there's "something going on" in the region that makes it an ideal place for women entrepreneurs. Of course, New York had more than 50 percent fewer series A deals close than San Francisco did, according to the Female Founders Fund report, which is based on Crunchbase data.
Still, the goal is to achieve long-term change by propping up both female entrepreneurs and women investors. WE Venture--which is part of a multipronged strategy to support women's entrepreneurship called WE NYC--is set up so that the Big Apple effectively becomes a limited partner. New York City's Economic Development Corporation will supply $10 million, and the VC firms will provide the remaining $20 million, consistent with a two-to-one matching ratio agreement. The female-led venture capital firms will take charge on everything involving deal flow, vetting the companies and completing all due diligence.
As NYC will be one of the decision makers, the city's Economic Development Corporation will appoint a representative to the investment committee to sign off on prospective deals, Glen says. The city will also promote the initiative through its Women.nyc website, which launched last year. And, as any investor would in a venture capital deal, the city will also get an equity stake. She adds: "If one of these companies turns out to be the next Google, that will be good for the taxpayers of New York City."