11-20-2024 9:08am

Leading By Example: Women-led Funds and Companies Are Showing What Innovation Looks Like

Ypsilanti PressLLC Editor

November 18, 2024By Erin Harkless-Moore, Vice President and Managing Director, Investments

It’s been a challenging year for fundraising across the venture capital industry, with many investors pulling back for a variety of reasons. While we seem to have avoided the recession that loomed in 2023, exit markets have remained tight, which has left investors with less liquidity to deploy to new ideas. Pitchbook reported recently that because of the slowdown, the number of VC firms that don’t plan to raise another fund has more than doubled in just the past year.

The truth is, we need more investment activity right now, because there are so many amazing opportunities for fund managers and entrepreneurs to take advantage of. At this critical juncture in history, the economy and society in general are going through important structural shifts: building a modern caregiving system, coping with the consequences of climate change, learning how to use artificial intelligence in equitable ways. We should be fostering new ideas about how to meet the moment. Since venture capital is responsible for seeding innovation, it’s vital to keep bringing new voices into the conversation.

Bringing a Different Perspective

My team at Pivotal Ventures is doing everything it can to do just that. Since 2018, we’ve been investing in funds led by women, as well as investing directly in early-stage companies, because we believe that funders and founders who bring a new perspective can meet customer needs that weren’t visible from the old perspective. For that reason, we also believe they can deliver strong returns.

So far, we have backed 20 firms, 100 percent of which are led by women, 65 percent by women of color. They currently have $5 billion in assets under management (AUM), and they are growing fast. The firms we’ve supported for more than one fund have seen their AUM increase by 75 percent since our first investment.

In other words, our thesis is proving out, and we’re going to keep proving it by investing in inspiring funders and founders who are carving a path toward a brighter future.

Here are just a few examples from this year.

Bucking Trends and “Living the Future”

In 2024, despite the overall slowdown across the industry, several firms that Pivotal supports closed new funds. BBG Ventures raised $60 million to back founders whose companies are uniquely positioned to meet the needs of what they call an increasingly “polycultural” society. Rethink Impact, recently profiled in Forbes, raised $250 million. And Acrew Capital, which believes that “VCs should not only fund the future, but live the future,” brought in $700 million.

Also in 2024, our partner the Female Founders Fund returned its first fund, raised in 2014. That means that all further proceeds from the fund will be pure profit for investors. Many young firms never fully return their first funds. Now, FFF is looking to raise a fourth fund, projected to be more than 10 times larger than the first one. As I’ve said before, FFF has shown that investing in women isn’t niche—it’s mainstream.

The funds I just mentioned are all invested in founders who have been overlooked, and many of those founders are in turn offering products and services to customers who have been overlooked. That’s good for society and good for business. Pivotal was founded by Melinda French Gates to accelerate the pace of social progress. Through high-impact investments, philanthropy, partnerships, and advocacy, we’re working to get more power in the hands of more people—especially women.

https://www.pivotalventures.org/about