Venture fundraising has been slowing down since the middle of last year. Larger firms are cutting their targets, and emerging managers are struggling to secure funds. But it isn’t all negative by any means. While some firms are struggling, others are seeing success — and a lot of the latter are funds run by women.
Well, it seems that way at least. We can’t know for sure if women-led firms are actually doing better in 2023 than in past years — there isn’t fundraising data on exclusively women-led funds — but there have been multiple fundraising rounds worth paying attention to.
Back in January, Monique Woodard closed a $17 million debut fund at Cake Ventures. Adverb Ventures, run by Slack product veteran April Underwood and Twitter alum Jessica Verrilli, closed on $75 million in July. Supply Change Capital, run by Noramay Cadena and Shayna Harris, raised $40 million last month, too. And that doesn’t cover all of it.
Multiple women-led firms have also launched funds and are currently in the market to fundraise this year, including Public Ventures and Oversubscribed Ventures. Plus, it’s worth pointing out that while raising a fund that is $5 million or $10 million is nothing to scoff at, the funds we’ve seen in 2023 — mentioned above — are pretty big, especially when considering the median fund size so far in 2023 is $13 million, according to PitchBook.
Kyle Stanford, a senior venture capital analyst at PitchBook, said that anecdotally, it does feel like women-led funds have had a great year so far. He told TechCrunch+ that the appearance of there being more funds is likely partially due to optics in this slower market.
“It is probably standing out because there are only so many funds being raised and there aren’t 10 funds being closed every day,” Stanford said. “But it doesn’t negate the fact that women are coming to the table from an investor standpoint.”
One piece of it could be the pressure on LPs in recent years to back more funds run by women and people of color, said Kari Harris, a member and chair of the fund formation practice at Mintz law firm. Some LPs have money set aside for this, and that money wouldn’t be as affected by economic conditions as investing out of their other pools of capital might be. Some funds are focused exclusively on backing these types of managers, too.
In today’s market, LPs may be looking for firms that are differentiated from what else they are seeing — or from what they already invested in that didn’t work out — and many of these women-led funds offer that. “At a time when fundraising slows down, we therefore heighten our focus and see [the] success of those that differentiate themselves,” Harris said. “If you can differentiate yourself, you give the person at the institutional investor a reason to invest.”
Cake Ventures, for example, is run by a woman of color and invests in less common sectors like aging and longevity and the increased spending power of women. Supply Change Capital focuses on food tech.
And there could be deeper reasons, too: The successes of the women-led firms this year have more to do with the women themselves. Women in venture have always seemed to need to be twice as qualified to raise half as much as their male counterparts, both anecdotally and evidenced through how few women-led firms exist — so few, in fact, that the data isn’t really tracked. Many of the women going out to raise this year knew that and likely wouldn’t have set out if they didn’t think they could land the capital they needed.
April Underwood, who together with Jessica Verrilli co-founded Adverb Ventures, said that the tougher fundraising market didn’t affect her and Verrilli’s decision to launch their fundraise this year because they knew their experiences as both angel investors and working at startups was attractive to LPs.
“We had been building a track record, effectively bootstrapping for a decade,” Underwood said. “Adverb invests early-stage; we bring a ton of operating experience, and Jess has an amazing track record around finding and acquiring 30 companies over the years [at Twitter]. I bring the product experience, which is something that founders and other investors are looking for.”
There are signs that this momentum will continue for women-led firms past this current fundraising cycle, too. There are more women investing in venture now than ever, more LPs and firms looking to back them, and more women founding startups, too. This lays the foundation for more women-led firms to find success in the future, and not just because they are women, but also because what they have to offer is just too good for LPs to ignore.