When it comes to women and venture capital, the most often-cited numbers don't show much progress. If anything, they seem to be saying that things are getting worse. Using the most current data available, Babson's Diana Project found that teams with a woman co-founder got 18 percent of venture capital in 2013; at the end of 2017, Crunchbase, using a different methodology, pegged that number at just 10 percent

But in the past few months, there have been a number of signs that women entrepreneurs, and ventures designed to funnel more money to them, are finally starting to break through. There's new money being allocated to women, and some of the money already invested in women entrepreneurs is starting to pay off, big-time. 

In roughly chronological order, here are seven signs the ground is beginning to shift for women founders:

1. New Voices looks to invest $100 million in black women.

In November 2017, Richelieu Dennis sold his company, Sundial Brands, to Unilever. Sundial built its business developing and selling hair and skincare products for Black women, and Dennis has thought long and hard about the community upon which his business depends. As part of the Unilever deal, he insisted on the formation of the New Voices Fund, a $100 million venture fund that will invest in Black women entrepreneurs. At Black Women Talk Tech in February, Richelieu said that he expected New Voices to make its first investments in the second quarter of 2018.

2. A dream investor backs women in tech.

Melinda Gates is no stranger to entrepreneurship, of course. But in February she made her first startup investment from Pivotal Ventures, which is separate from Gates Foundation money. Gates put $200,000 into Alice, a machine-learning platform designed to integrate more women into the startup ecosystem. It's co-founded by Elizabeth Gore and Carolyn Rodz. The investment is structured as a so-called impact investment, and doesn't need to be repaid.

In a story written by my colleague Diana Ransom, Gates made it clear that she's serious about supporting women in tech. "The data tells us that a lack of diversity in tech limits innovation," she said. "If we choose to accept the status quo, we're also accepting the constraints it imposes on human progress."

3. Women take on traditional venture capital with All Raise.

"Last year shone a spotlight on all the bad things you hear about venture capitalists and startups," says Jess Lee, the former CEO of Polyvore, now a partner at Sequoia Capital. But when she spoke with Aileen Lee, the founder of Cowboy Ventures, she found Aileen Lee had a slightly different take: "It feels like there is a window to do things." The first meeting of what would become All Raise, which became an association for women in venture capital, was a dinner of about 15 women held last summer. By April, All Raise had officially launched with two big goals: Double the number of women in venture capital and double the share of venture capital going to women.

Since then, All Raise has instituted Female Founder Office Hours, recruiting 30 venture capitalists to provide advice and mentoring at five live events in San Francisco, New York, Los Angeles, and Boston. They also encouraged more than 700 founders to sign a pledge saying that the diversity of their investors was important to them. Says Maha Ibrahim, a founding member of All Raise and a general partner at Canaan Partners, "There has been more activity around females, minorities, and people of color in the last couple of years than I've seen in my 18 years in the business." All Raise's next task: Recruiting men to join the cause.

4. Boston Scientific buys a woman-led health tech company.

On April 16, nVision Medical, a company that is developing an early-screening device for ovarian cancer, sold to Boston Scientific for $150 million, plus an additional $125 million if the company meets certain milestones. NVision was founded by a woman--32 year-old Surbhi Sarna--and also addresses a problem unique to women. So its success supports the thesis that women entrepreneurs are more likely than male entrepreneurs to help solve important problems that are experienced by women.

Importantly, nVision was also partly funded by women who believe that venture capitalists' reluctance to fund women-led companies is creating a market opportunity for those who will. NVision's A round included both Golden Seeds and Astia Angels, both of which were formed specifically to invest in women-led companies. Astia participated again in the B round.

Sharon Vosmek, the CEO of Astia, says the various Astia Angels investors realized a return between 6x and 7.3x with the nVision sale, and could see another 40 percent if nVision hits its milestones in the next few years. Vosmek says the internal rate of return of the Astia Angels portfolio is double what Astia modeled when it launched its investment strategy. NVision is the fourth exit for Astia Angels, which began investing in startups in April 2013.

5. Portfolia, a family of women-run funds, has its first exit.

Portfolia, which was founded to help women learn to become angel investors, announced its first exit, OtoSense, in May. It returned more than 2x to investors, but the investment is just two years old. OtoSense applies artificial intelligence to the analysis of sound. It has applications in home health care--is that a baby crying or just someone yelling?--but also in manufacturing, where it can help determine if a machine needs some type of repair or upkeep.

Each of Portfolia's funds concentrates on a specific sector, and can accommodate a maximum of 99 investors. They invest in "areas where we know women are the buyers, even within corporate," says Trish Costello, the founder of Portfolia, which she says "almost always" backs gender-balanced teams.

Portfolia currently has six funds, including a FemTech fund launched in April, and about $6 million under management. Next up will be an Inclusion Fund, which will invest in people of color and LGBTQ individuals. There are plans for a food and AgTech Fund by the end of the year. By that time, Portfolia hopes to have $10 million under management.

6. Arlan Hamilton launches $36 million fund for black women founders.

On May 5, Arlan Hamilton, the founder of Backstage Capital, announced that she was raising a $36 million fund to invest in companies founded by black women. She plans to invest $1 million at a time, in 36 companies. "They're calling it a 'diversity fund,'" she tweeted triumphantly. "I'm calling it an IT'S ABOUT DAMN TIME fund."

Hamilton's first fund raised $5 million to invest in women, people of color, and those who identify as LGBT. To raise it, she quit a job in the music industry, learned everything she could about venture capital, and for a while slept on the floor of San Francisco's airport--she was that broke. Eventually, she recruited such big-name limited partners as Marc Andreessen and Chris Sacca. Her 80 portfolio companies include clothing companies Wildfang and Haute Hijab; Airfordable, which lets people pay off airline tickets in installments; and Kairos, an artificial intelligence company.

7. Female Founders Fund raises $27 million.

Female Founders Fund is exactly what it sounds like--an early-stage fund that invests in female founders. It's own founder, Anu Duggal, says she needed to hold 700 meetings to close the first fund, which raised $5 million and closed in 2014. Since then, portfolio company Tala has gone one to raise a $30 million B round to help it make micro-loans via phone, and wedding company Zola raised a $100 million Series C. In May, Female Founders Fund announced the closing of its second fund, at $27 million.

"We do think the funding environment is getting better," says Duggal. "The more traditional funders are realizing that to attract female deal flow, you can't have a web site with 10 male founders. We've had a few founders recently go out and raise large series B, C, D rounds, and they've been very clear: We want to work with funds that are diverse. That's not where we were five years ago."

Published on: May 30, 2018