Women start 40% of the businesses in the U.S., but they receive just 3% of venture funding. It doesn’t take a math whiz to recognize that such an extreme funding gap could spell opportunity, but it might help if you are math minded, a longtime investor and happen to be a woman and so conceivably understand certain products and pitches better than some men.
That was certainly the thinking of both Lori Cashman and Suzanne Norris, who came together in 2016 to form Boston-based Victress Capital, a consumer-focused, seed and early-stage firm that just closed its second fund with nearly $22 million in funding to back gender-diverse teams, meaning there is at least one woman on the founding team.
Cashman is a Duke grad who has spent her career as an investor, including previously co-founding a private equity firm, Linear Capital, to invest exclusively in owner-managed businesses. Norris, meanwhile, with two degrees from Harvard, has been an investment banking analyst and a management consultant, and spent nearly four years as a VP focused on e-commerce with the company Kate Spade.
The two friendly acquaintances originally joined forces to enhance their “cognitive diversity,” says Cashman, scraping together a total of $2 million from friends and family so they could establish a track record.
Ultimately, they used that money to fund 14 startups by writing checks ranging from $100,000 to $150,000. A couple of them have already been acquired.
Moxxly, which sold silent, wearable breast pumps, was acquired by Medela, a leading breast pump maker, in 2017. Last summer, it was shut down, but Cashman and Norris suggest that investors (another of whom was Randi Zuckerberg) got their money back and that they were happy to see it acquired by what seemed at the time like a strong strategic partner. A second portfolio company, Werk, more recently sold to a Chicago-based startup called The Mom Project for undisclosed terms.
Others of their bets include Daily Harvest, a direct-to-consumer organic food delivery business that has so far raised $43 million from investors, according to Crunchbase; Mented Cosmetics, a cosmetics company catering to women with darker skin tones that has raised $4 million to date; and Copper Cow Coffee, a young LA-based startup that makes organic Vietnamese coffee and has raised $3 million.
The idea all along has been to raise a larger fund so that as Victress’s young portfolio matures, it can invest more into its breakout winners, as well as to fund other young startups. Toward that end, Victress — whose newest fund came largely from family offices — has been adding to its team. In February, it brought in Kate Castle, a longtime marketing partner at Flybridge Capital Partners who later co-founded XFactor Ventures as a partner. In 2018, it also hired HBS alum Madeline Keulen, who previously interned with Victress and is now a vice president. (Because of Norris’s background and network, Victress receives some of its deal flow from Harvard and HBS and typically brings in HBS students as interns.)
It wasn’t easy assembling its team — or its new fund. Norris half-kiddingly calls $20 million “no man’s land” in the eyes of institutional investors. Though they are just now closing the vehicle, they began assembling checks for it in late 2018 and have already funded seven startups that represent 25% of their new investing capital.
Still, they’re playing the long game and think the relationship-building they’ve done will pay off — both with institutional investors that will be tracking this second fund with an eye toward its third, and with venture firms around the country with whom they’ve syndicated deals.
A big win would help grow the outfit from here, too, of course. Only time will tell if they’ll have one, but Norris and Cashman talk enthusiastically about numerous portfolio companies, including Minneapolis-based Rae, which is marketing libido-enhancing vitamins, among other vitamins. Rae sells its products directly to consumers but they’re also available at Target, a retail giant that, notably, has remained open throughout the pandemic.
Rae was able to secure such valuable real estate partly because its co-founder and CEO, Angie Tebbe, spent the previous 12 years as a senior director in merchandising at Target, where she oversaw the private label products in the chain’s beauty and wellness aisles. But Rae’s products are also priced affordably, with a 30-day supply of vitamins costing $14, compared with many alternatives that cost twice as much and more.
That’s partly what drew Victress to the company. Victress is focused on tech-enabled consumer services, marketplaces and digitally native brands. But if a startup in the last camp wants its attention, its products can’t be priced for the most affluent consumers with money to burn. With a growing number of people simply looking to make ends meet, Victress is far more interested in startups that aim to sell at an “authentic, accessible price point for the majority of America,” says Cashman.
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