Women start 40 percent of the businesses in the U.S., but they receive just 3 percent of venture funding. It doesn’t take a math whiz to recognize that such an extreme funding gap could spell opportunity, but it might help if you are math minded, a longtime investor, and happen to be woman and so conceivably understand certain products and pitches better than some men.
That was certainly the thinking of both Lori Cashman and Suzanne Norris, who came together in 2016 to form Victress Capital outside of Boston, a consumer-focused seed- and early-stage firm that just closed its second fund with nearly $22 million in funding to back gender diverse teams, meaning there is at least one woman on the founding team.
Cashman is a Duke grad who has spent her career as an investor, including previously cofounding a private equity firm, Linear Capital, to invest exclusively in owner-managed businesses. Norris, meanwhile, who has two degrees from Harvard, has been an investment banking analyst, a management consultant, and spent nearly four years as a VP focused on e-commerce with Kate Spade.
The two friendly acquaintances originally joined forces to enhance their “cognitive diversity,” says Cashman, scraping together a total of $2 million from friends and family so they could establish a track record, money they used to fund 14 startups by writing checks ranging from $100,000 to $150,000.
A couple of those startups have already been acquired. Moxxly, which sold silent, wearable breast pumps, was acquired by Medela, a leading breast pump maker, in 2017. Last. summer, it was shut down, but Cashman and Norris suggest that investors (another of whom was Randi Zuckerberg) got their money back and that they were happy to see it acquired by what what seemed at the time like a very strong strategic partner. A second portfolio company, Werk, more recently sold to a Chicago-based startup called The Mom Project for undisclosed terms.
Others of their bets include Daily Harvest, a direct-to-consumer organic food delivery business that has so far raised $43 million from investors, according to Crunchbase; Mented Cosmetics, a cosmetics company catering to women with darker skin tones that has raised $4 million to date, according to Crunchbase; and Copper Cow Coffee, a young L.A.-based startup that makes organic Vietnamese coffee and has raised $3 million, per Crunchbase.
Of course, the idea all along was to raise a larger fund so that as its young portfolio matures, it can invest more into its breakout winners, as well as continue backing startups that are selling products that resonate with Victress or else the infrastructure to support retailers more broadly. In fact, toward that end, Victress — whose newest fund came largely came from family offices — has added to its team in recent years. It brought in Kate Castle, a longtime marketing partner at Flybridge Capital Partners who later cofounded XFactor Ventures as a partner. It also hired HBS alum Madeline Keulen, who previously interned with Victress and is now a vice president. (Because of Norris’s background and network, Victress receives some of its deal from Harvard and HBS and typically brings in HBS students to shadow them and help with due diligence.)
It wasn’t easy assembling that team — or the fund. Norris half-kiddingly calls $20 million “no man’s land” in the eyes of institutional investors. Though they are just now closing the vehicle, they began assembling checks for it in late 2018 and have already funded seven startups that represent 25% of their new investing capital.
Still, they’re playing the long game and think the relationship-building they’ve done along the way will pay off — both with institutional investors that will be tracking this second fund and with the venture firms around the country with whom they’ve been co-investing and that now reach out to Victress when they are looking at nascent startups with diverse founding teams.
A big win would also help, of course. While it’s impossible to know now whether they’ll have one, the team seems particularly excited about a Minneapolis-based startup that they’ve backed called Rae that makes what it markets as libido-enhancing vegan vitamins and that not only sells them directly to consumers but has shelf space at Target, a retail giant that has remained open throughout the pandemic.
It’s very valuable real estate, and Rae was able to secure because its cofounder and CEO, Angie Tebbe, spent the previous 12 years as a senior director in merchandising where she was responsible in part for overseeing the private label products in the chain’s beauty and wellness aisles.
Rae’s products are also priced affordably — it costs $14 for a 30-day supply. That’s important to Victress, too, incidentally. The team is focused on tech-enabled consumer services, marketplaces and digitally native brands. But if a startup in the last camp wants its attention, it had better also feature an “authentic, accessible price point for majority of America,” says Cashman. “That’s important to us.”