Despite the tough market, female founders are proving resilient in the venture capital landscape

Nearly a decade ago, venture capital funding and gender diversity strategies were hard to find in the vast US heartland between coasts.

Austin-based True Wealth Ventures is out to fix that. It is looking for startups out of financial run led by women who have the goal of improving the health of the environment or people.

General partners Sara Brand and Kerry Rupp began raising money for their firm’s first two investment funds and quickly discovered that most of their investors had never been invited to put money into a VC fund. Neither do they, even tech industry veterans.

“So that’s a real focus of ours right now, having more of a local network of women investors in VC and we think that Texas is uniquely positioned for that.” said the brand.

Sara Brand (left) and Kerry Rupp, partners behind Austin-based venture capital firm True...
Sara Brand (left) and Kerry Rupp, partners behind Austin-based venture capital firm True Wealth Ventures. (Tom Fox / The Dallas Morning News)

Women make up less than a fifth of managers at VC firms, and less than 5% of stores have a majority of female check writers, according to the Pitchbook report examining US venture capital trends for women over the last 14 years.

Having more female decision-makers, or general partners, in venture capital firms can open the door for female founders to access the necessary capital and provide limited partners with diversified investment opportunities, the report states.

Women-founded companies represent a quarter of the total number of VC deals this year. But the amount of money flowing to them is less than 3% of the $158.5 billion invested this year.

To make the VC landscape more equitable, there is an emphasis on increasing the number of women in decision-making roles in companies, said Annemarie Donegan, an analyst at Pitchbook. Female entrepreneurs can benefit greatly from having someone at the table who can better understand the company’s demographics.

“Just as we hope to see the number of female GPs increase, we can also expect to see an increase in venture dollars given to female founders,” said Donegan.

True Wealth’s Rupp says the firm’s decision to support female entrepreneurs is a financial thesis.

“It’s not just a feminist manifesto,” Rupp said. “This is an amazing comeback opportunity and it’s not to be missed.”

Data for the year to September 30 showed venture capital transactions with female founders totaling $32.4 billion – making 2022 the second biggest year for them in terms of deal value. The 2,800 deals involving women-founded companies rose 39% this year, Donegan said.

Screenshots of some of the health coaching programs available to Flourish subscribers on the app.
Screenshots of some of the health coaching programs available to Flourish subscribers on the app.(bloom)

Of the 16 companies in True Wealth’s portfolio, nearly a third of the founders are based in Texas, e.g Claire Siegel Austin, who is preparing a new round of business fundraising in 2023. He founder of Flourishsubscription-based application that offers personal health coaching for women.

Before pitching and working with True Wealth, his first outside investment came from a technology accelerator program. While Siegel’s cohort was filled with diverse founders and businesses, he knew outside the incubator that he would most likely bring Flourish to men.

“I know I don’t have to go into a world full of people who look like me, or even understand me, or the problems I’m trying to solve,” she says.

While the pitching process can be nerve-racking, Siegel said he focuses on how to present the company’s potential for financial success in a way that resonates with any investor.

“This is not philanthropy,” Siegel said. “It’s not a charity job to invest in women-led companies. It’s an amazing opportunity to invest in a great business that’s doing great in the world that will produce amazing results.

Across the country, there were mixed results on how companies navigated the challenging investment market this year after a year of highs in 2021, Donegan said.

In Dallas-Fort Worth, the VC spigot tightened considerably this year for companies founded either solely or jointly by women. They have raised $272 million in 33 deals. Last year, startups founded by women hauled in a record $969 million in 35 days.

When it comes to dollars invested, Texas women-founded companies fall behind their coastal peers. Texas companies attracted nearly $8 billion in capital over 1,300 deals over the last 14 years, and more than half of the money invested went to Austin-area companies.

The San Francisco Bay Area tops the list with more than $61 billion of capital invested in a span of 14 years, followed by New York City, Los Angeles and Boston.

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