How Hard Is It To Raise A Series B?
Two major announcements happened last week to push funding for female founders in fintech forward.
First, Anthemis announced its Female Innovators Lab Fund has received additional investments from Visa, BMO, and other institutions totaling $50 million, making it the largest early-stage fintech fund dedicated to women-founded companies.
The fund will invest in beauty, sustainability, fashion, crypto, law and more, helping unlock a new cohort of fintech leaders.
Then we saw the introduction of Vesey Ventures, a new venture firm founded by three female former managing directors of Amex Ventures. Even more remarkable, their debut fund totaled a whopping $78 million – significantly more than the $74 million raised by female-led firms this year.
So why do these announcements matter?
Let me show you…
When Sallie Krawcheck and the Ellevest team decided to pursue their series B round a year and a half ago, they were confident it would be a cinch.
After all, the markets were hot, and the fintech sector was riding a wave of investment. It seemed everyone wanted to back fintech, and Ellevest’s impressive numbers looked like a surefire ticket to a fat financing round.
Little did they know that the journey would be anything but easy.
We’ve all heard the statistic – that women raise less than 2% of venture dollars.
Do you know what’s the ratio of venture dollars raised by women in fintech, specifically for a series B?
1 in 10,000.
I don’t think we as an industry realize what a burden that is even for successful women.
Because Sallie Krawcheck, with her being the icon for women in fintech plus a well-established powerhouse in financial services, is still walking into meetings with one strike because she’s a woman, and another because she’s above the age of 50.
“I’m not anyone’s idea of the innovative next-generation founder or Mark Zuckerberg type,” she said during her talk at my event, Fintech Is Femme, last Monday.
While Sallie was able to get her lead and existing investors in on the second financing round, she still struggled to find female investors interested in funding a female fintech founder’s series B.
But she did find one. A woman of color investor who told Sallie and Ellevest that the company reached 14 out of 15 criteria.
So, she told Sallie she was not going to invest.
It was heartbreaking. Not to mention because this investor has 52 portfolio companies – all founded and led by men.
Now, Sallie and this investor later have a glass of wine together, and she admitted to Sallie that she could have invested in Ellevest if Sallie had been a man. That’s because as the only woman and person of color on her investment firm’s entire leadership team, if she had invested in Ellevest and failed, she would’ve lost her job.
She’s right. And it’s frustrating. But there’s got to be a way.
It hit me hard when Sallie shared her determination to succeed. “We have to be successful, since we’re the only ones doing what we’re doing,” she said. I could feel the combination of passion and disheartenment in her voice. Helping women build wealth shouldn’t be this hard.
Then, one day Sallie gets a call from a young woman in Portland, Oregon, who works at a seed fund.
And she said, “I heard you’re raising from one of your investors. I’m a seed investor. I’m obsessed with what you’re doing. I cannot reach your minimum at all. But I would if I brought together my community of small investors and formed a special purpose vehicle, and we can raise you a couple million bucks.”
But they raised more. And then someone within that group said, “I’ve got a group of friends who I think would be interested in this too. What if I pull them together?”
That cycle continued to be perpetuated, and Ellevest raised a $52 million Series B within three weeks and brought in 650 new investors, majority from underrepresented groups.
The moral of the story is that our superpower as women is each other, as Sallie put it.
We knew it in high school and college when we never traveled alone – always in a pack.
“As we grow into our careers, we as women have been convinced to play the game of success as an individual sport, when in reality, the men in our lives have been playing it as a team sport for some time,” she said.
We have to make promises to ourselves that we will support all women. We want to support the obnoxious women, the rambunctious women, the boring women, or the women who seem like it’s not their turn yet.
For me, I’m going to support women the best way I know how by trying to help women build wealth through media representation, community building, and helping our allies expand their networks.
Remember, our impatience with the status quo is fueled by optimism that progress is always possible. Stories like Ellevest, Anthemis, and Vesey are a testament to that.
(P.S. If you are looking to start your community of women and allies in fintech dedicated to seeing each other succeed, check out Real Talk – I’ve already saved you a seat).