Magazine

Ellevest Impact Area Spotlight: The Women-Led Venture Fund

By Sylvia Kwan

2021 was a complicated year for women founders. They enjoyed a record-high year for dollars raised, but at the same time, the venture capital market also posted massive gains overall — which ultimately meant that those women still only saw roughly 2% of total venture capital dollars invested. And those numbers only got smaller for Black and Latinx women founders, and even smaller when you look at later stages of funding. Why do women founders receive so little funding? For starters, just 15% of partners at VC firms are women.

At Ellevest, our mission is to get more money into the hands of women. Our Private Wealth team, in particular, specializes in helping you invest for impact, supporting companies committed to making the world better for women. But we don’t stop at traditional investments like stocks and bonds. We believe that alternative investments can provide opportunities to invest directly toward impact — so we’re highlighting a few to give you a sense of the kind of difference your money can make through investments at Ellevest.

One area of impact we offer our clients is the opportunity to invest in funds of young companies founded and led by women. This “women-led venture fund”* — is part of a global investment organization (also led by women) that specifically addresses gender disparities in venture capital funding by investing in teams where women hold positions of power, equity, and influence.

Here’s how they do it.

The strategy: Filtering out funding bias

Inclusive teams outperform. That truth is also the motto that guides the women-led venture fund’s approach to investing. To combat the unconscious biases that fuel the gender and race disparities in funding, the fund has developed a proprietary process to minimize them as they source and screen new candidate companies. It’s a documented and rigorously tested methodology that has evolved from the collective insights from thousands of experts to reliably identify and cultivate success for high-potential ventures (led by women, of course!).

The result: Women-led companies connect with the funding they deserve

Since starting investment activity in 2013, the global investment organization has connected companies with over $730 million in outside capital, and directly invested over $37 million into women-led companies themselves. Among those companies:

  • Candesant Biomedical, a clinical-stage company that offers an uncomplicated, effective, and non-invasive alternative to current therapies for hyperhidrosis — also known as excessive sweating. Founded by a Black woman with 25 years of experience in product development, and with an all-women C-suite and an experienced team behind it, Candesant has a target market of over 84 million who could benefit from their technology. The lead product — a topical patch administered via a quick, in-office procedure — is both affordable and highly sought after by consumers; the pay structure for physicians who offer it is attractive as well.

  • Pallet, a company working to end unsheltered homelessness and offer people a second chance at employment. The transitional shelter villages it builds are designed to help bridge the gap from living on the street to finding permanent housing. When a resident moves into Pallet’s temporary housing, they also have immediate access to support services provided by cities and municipalities such as meals, hygiene facilities, a case manager, and more. To date, Pallet has assisted over 4,000 people with 1,764 cabins in 63 shelter villages. In addition to helping end unsheltered homelessness, Pallet's shelters are relevant to international disaster response efforts and people displaced from their homes.

Looking toward the future is critical to the organization, too. That’s why it’s also working specifically to invest in young companies led by Latinx and Black women, who regularly experience the worst of both racial and gender funding gaps. Back in 2018, while 40% of companies failed nationally, only 27% of Latinx- and Black women–led companies did. Nevertheless, the median seed funding for Black women-founded companies is still just $125,000 — when the national median was $2.5 million in 2020.

Doing our part to close the funding gap

Ellevest was founded by women, for women, so we know first-hand how challenging the funding search can be. We’re proud to be working directly with a venture capital fund that helps to connect early-stage companies with the resources they need to thrive.

And that’s just one example of the kinds of impact alternatives you might find in an Ellevest Private Wealth client portfolio. Talk with your Ellevest advisor today to find out more about how your investments could help close the funding gap for good.

Click here to contact an Ellevest financial advisor in your area.


Disclosures

© 2022 Ellevest, Inc. All Rights Reserved.

*The Women-led venture fund referenced herein is a minority investor in Ellevest. This conflict is mitigated because you are free to choose other investment options and are not required to invest in this fund offering. For more information about conflicts of interest, see Ellevest’s Form ADV Part 2 brochure.

All opinions and views expressed by Ellevest are current as of the date of this writing, for informational purposes only, and do not constitute or imply an endorsement of any third party’s products or services.

Ellevest’s Private Wealth Management (PWM) services are provided to high and ultra high net worth individual investors, trusts, foundations and other institutional investors and there is a minimum investment amount for Ellevest PWM client portfolios. The fund described in this report is an impact investment and was not chosen based on performance. The investment mentioned may not be available to all Ellevest PWM clients and may not be suitable for all eligible clients.

The information contained herein (the “Information”) is being provided to you by Ellevest, Inc. (“Ellevest”), an SEC registered investment adviser. Registration with the SEC does not imply a certain level of skill or training.

The Information was obtained from third-party sources, which Ellevest believes to be reliable, but is not guaranteed for accuracy or completeness. The Information is current as of the date noted above and Ellevest does not undertake any obligation or responsibility to update or amend the Information provided.

The Information does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product. The Information also does not take into account the particular investment objectives or financial circumstances of any specific person who may receive it and should not be relied upon as financial or investment advice; before making an investment, recipients are advised to consult with their financial, legal and tax advisers to determine whether an investment such as this is suitable for them. No representation is being made that any investment will or is likely to achieve profits or losses now or in the future. Additionally, the impact data provided herein is based on unaudited data and reporting provided by unaffiliated third-parties of Ellevest. These statements are not guarantees of future performance, and undue reliance should not be placed on them.

Investing entails risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.

Sylvia Kwan

Dr. Sylvia Kwan is the Chief Investment Officer of Ellevest. She researches and oversees Ellevest portfolios and develops the algorithms behind Ellevest’s investment recommendations.