If Trish Costello, CEO of Portfolia since 2014, has her way, there will be no financial cliff where founders of tech startups catering to women and girls can fall to their financial ruin.
Her goal is specific and clear: 100,000 women to invest in Portfolia funds in five years. The recently launched FemTech Fund will invest directly or indirectly in equity-related securities of early-stage companies in the U.S. FemTech marketplace. Costello’s latest push is healthcare-related companies.
The goal there is to raise a minimum of $500,000 and a maximum of $3 million to invest in institutional systems and services that enable or support the health of women and girls.
“Solutions will come into the world because of women’s investment,” says Costello, the co-founder, former CEO and now CEO Emeritus of the Kauffman Fellows Program, a global leadership program for 550 venture capitalists in 50 countries with $200 billion in funding.
“Research tells us that women want context and a bigger impact with our money. We know that iin using our money, that can be where out power lies,” Costello says. “We want to know we are making a difference.”
After studying accounting in college, Costello grew into an entrepreneur role when she launched a venture-backed Child Health Corporation of America in 1985, a children’s health company that created products in the pediatric marketplace, including the first pediatric medical education television channel.
“You can teach people with deep expertise in a space the venture business,” says Costello, who was Founding President of CVE Capital Corp, the holding company of a $1 billion venture capital fund.
“Having been in the venture world, I think the big opportunity is I saw women were excellent investors,” Says Costello, who was on the start-up team of the Kauffman Foundation’s entrepreneurship center, led the Commercialization Sub-Committee of the National Science Foundation, and also directed the Arthur Blank Center for Entrepreneurship at the globally-ranked Babson College.
The need for women investing in women-centric ideas, issues and companies is crucial.The need for women investing in women-centric ideas, issues and companies is crucial. #womeninvestors Click To Tweet
Kia Kokalitcheva writes in Axios, “Only 39 percent of all-female founder teams raise follow-on funding for their startups, compared to 52 percent for all-male teams. Moreover, follow-on rounds for all-female teams comprise just 1.57 percent of all VC rounds since 2008.”
Kokalitcheva adds, ”A smaller percentage of all-female founder teams (30 percent) raise a second round of funding than do all-male teams (38.8 percent), according to data from PitchBook. Last year, startups founded by all-female teams raised only 6 percent of all seed capital and just 3 percent of all VC dollars beyond that stage, according to Crunchbase. Since 2012, mixed-gender founder teams have raised between 11- 13 percent of seed capital (compared to less than half of that for all-female teams), according to Crunchbase.”
A new study from the Canada-United States Council for Advancement of Women Entrepreneurs & Business Leaders interviewed 25 leaders from a variety of financing institutions (in both Canada and the United States), representing $2 trillion of market capital, regarding issues related to women entrepreneurs’ access to capital.
The results show “a broad recognition that capital providers have not penetrated the women entrepreneurial market as well as they have the male entrepreneurial market,” the study says.
Costello knows well the gender inequity in investments.
“You might have 200 dating apps, but very few solutions in women’s health,” Costello says. “And that is because of who makes the investments.”
Women’s health is routinely undervalued by the traditional venture capital marketplace. In 2015, FemTech startups received just 1.4 percent of the $5.8 billion raised among health technology startups overall. The FemTech market is expected to reach $50 billion dollars within the next five years.
Costello says The FemTech Fund does not only invest in women-led companies, but in companies that affect the lives of women and girls.Trish Costello's The FemTech Fund does not only invest in women-led companies, but in companies that affect the lives of women and girls. #investinwomen Click To Tweet
For instance, she says, FemTech backed a fertility company, Sandstone Diagnostics, with an at-home fertility test for men. “Women basically own the fertility space,” she says. “And one sperm test means nothing, you need multiple data points.
The mother of grown twins, Costello says, “If I had this, life would have been so much better,” she says.
Women make at least 80 percent of healthcare decisions for their families , yet 90 percent of venture capitalist partners making investment decisions in the FemTech startup arena are male.
Costello says 1.5 percent of venture capital dollars go into healthcare companies that focus on women.
“Some of my male VC counterparts say they are uncomfortable and do not want to talk about vaginas in every Monday morning meeting. Man don’t understand or are uncomfortable, but these are huge markets,” Costello says.
The Portfolia FemTech Fund focuses on emerging technologies, products, platforms, and services improving women’s health and wellness throughout their lives. From fertility to menopausal care and overall fitness, the fund will invest in high-potential opportunities that can be both profitable and grant women greater health and wellness.
“These are fabulous investments. That is why we need to be at the table, it’s the only way,” Costello says.
With a minimum investment of $10,000, FemTech will invest in 6 to 10 companies at an early stage. Costello says she has groups of investors that include grandmothers, mothers and their granddaughters.
“This is definitely personal for me, “Costello says. “Women look at our money differently. We want context around it. I get excited about investing in women’s health companies, rather than just looking at returns.”
She adds, “I want my money to make money, but I also want it to be meaningful.”