Venture capitalist and social media influencer, Carrie Colbert, founding and general partner at ... [+]
New research highlights an unfortunate paradox:
- All founders are facing greater investor scrutiny, but female founders face even more, according to The Seed Round in 2021-22: Proving Market Fit and Monetization Amid Uncertainty by DocSend.
- Yet these companies are more resilient, according to All In: Female Founders in the U.S. VC Ecosystem by PitchBook, Beyond the Billion, J.P. Morgan, Apex, and Pivotal Ventures. Female founders had lower burn rates, more significant valuation growth at the early stage, and lower valuation declines at the late stage compared to all-male-founded companies.
What's a girl to do?
Use her wealth to close the gender fundraising gap. Female accredited investors can invest in female founders as limited partners (LPs) in women-led venture capital funds. By investing in these venture funds, women can make an impact aligned with their values, make the world a better place, and close gender gaps.
The Genesis Of A Female Venture Capitalists
Carrie Colbert was an executive in the oil and gas industry. She learned a lot while there but wasn't passionate about the industry. However, the success of Hilcorp Energy Company, where Colbert worked, allowed her to retire at 38. Inspired by the founder and leadership there, she wanted to do something entrepreneurial, something about which she was passionate.
"I started connecting with brands I liked and their founders on Instagram," said Colbert. "It was the early days when you could grow fairly quickly on Instagram, and I became a small influencer."
She also started investing in female-founded brands.
Investing in female-founded companies was fun. Colbert had great returns and had more deal flow than she could invest in personally. She decided to start a venture capital fund—Curate Capital—focused on accelerating the success of companies founded by women for women. "I had the deal flow part covered," she said. "But I had a lot to learn about fundraising and administration." Through referrals, she filled the holes in her expertise with experts.
Target Market Fit Leads to Exceeding VC Fund Goal By 50%
Colbert wanted to launch Curate Capital early in 2020, but the economic uncertainty of the Covid-19 pandemic caused her to delay fundraising for about a year. In 2021, she started reaching out to her colleagues—primarily men—from the oil and gas industry. They didn't get the value propositions of female-founded companies. Fundraising stalled.
"I started talking about Curate Capital on Instagram," said Colbert. Rather than focusing on the lack of funding for female founders, she focused on the positive. Women are underfunded and overperforming. "Even if you don't care about righting that wrong...there's an arbitrage opportunity."
By taking advantage of the lower valuation of female-founded companies and better performance, you can make a better return than if you invest in male-founded companies.
Women got the value proposition of investing in female founders through a venture capital fund. According to How Women (and Men) Invest in Startups, women accredited investors are risk-astute.* Women are more likely than men to de-risk their investments by investing in funds that invest in multiple companies, investing for the long haul, and investing in private companies as a way to diversify your portfolio.
Colbert wanted to make investing in the venture fund accessible. On average, LPs wrote checks for $100,000, but she had the latitude to go below that commitment. Research finds that nearly three-quarters of accredited investors would invest in startups if the commitment were $25,000.
Words matter, too. To bridge the knowledge gap, Colbert used approachable language. "Investing in venture capital is opaque, kind of black box, shrouded in a bit of mystery to most women," she said. Colbert demystifies investing in venture capital by speaking in plain English.
"Over 60% of my investors found out about Curate Capital via Instagram," said Colbert. "I'm super excited about how I've activated a new generation of female investors." Over half of the LPs are investing in private companies for the first time.
Curate Capital's goal was to raise a $10 million venture fund. It exceeded its initial goal by 50%, raising $15 million to be invested in female founders.
Money And Marketing: The Power Of Social Media Influencers
Influencer marketing outreach can bring enormous value to fledgling brands. Still, these social media trendsetters want to be compensated for their efforts. As startups, companies don't have the budget to pay.
Influencers are time-starved and don't have the time to do due diligence on startup investment opportunities. But they understand the value of having a professionally managed process that a venture fund provides.
Influencers provide essential funding and marketing by investing in Curate's portfolio companies. If the company is successful, they benefit when the company sells to someone else and profits are distributed by the fund.
When Colbert learned that Packed Party, one of Curate's portfolio companies, was releasing a new collection of pool floats at a big box retailer, she texted an influencer investor who had a relationship with that retailer. "I'm on it," was the response. A post about summer outdoor entertaining followed.
"Thirty percent of our capital comes from female influencers," said Colbert. "Together, these 20 influencers have 10 million followers and have invested $4 million."
How can you leverage social media to grow your company?
*How Women (and Men) Invest in Startups was co-produced by Ventureneer, the author of this article’s company.
