Dec 8, 2021
After enduring eight rounds of chemotherapy, Kate Dilligan, founder of Ad Astra portfolio company Cooler Heads, began revolutionizing the cold cap industry so that other solid-tumor patients could have the opportunity to keep their hair.
Kate is changing the old way of doing things in order to help women recognize themselves when they look in the mirror. It’s founders like Kate — a woman who is innovating for women — that deserve a piece of the pie.
Venture capitalists (VCs) and angel investors have historically invested in surefire, traditionally- male-led industries and companies like tech and finance. This pattern recognition is a biased strategy that has overlooked the underestimated. But, the tide is rising and shifting, ever-so-slightly, as more VCs and angel investors back female-led businesses in underserved industries like women’s healthcare — and in founders like Kate.
It’s a regularly bemoaned statistic in the VC and startup world: female-led companies are significantly less funded than male-led, and it’s categorically more difficult for women to find – and secure – startup capital. Devoted advocates for an equitous venture table for both founders and funders are changing the narrative by investing dollars, opportunities, resources, experience and networks.
As Fortune points out, “In the U.S., angels invest about $24 billion each year. Women-led companies are now 19% of startups funded by angels — a big improvement over 2004 when they were just 3%.” While the leap from 3% to 19% is significant, the industry still has major progress to make. As an angel investor, I regularly have entrepreneurs who pitch me and say I’m the first woman angel they’ve ever pitched to — and it’s a familiar sentiment across the industry.
Even as more women than ever before are starting businesses, the amount of money they’re getting from traditional VCs is underwhelming. Forbes reports that, “Investment dollars for the first three quarters of 2021 have nearly doubled from 2020, according to The Q3 2021 PitchBook-NVCA Venture Monitor. While investment dollars have increased in startups with at least one female founder, their share of dollars in 2021—17.2%—hasn't reached the record set in 2018—18.5%—the year the #MeToo movement took off. A whopping 80.2% of venture capital went to all-male founded companies. Only 2.0% went to all-female-founded companies.”
Luckily for female founders, the tides are starting to change. The New York Times reports that already in 2021, “start-ups with a female founder raised more than $40 billion through September, almost double the amount invested in companies founded by women in all of 2020 or 2019.” And what I’m seeing across angel investing is a focus, not only on female-led businesses, but female-focused products in healthcare.
This is notable because in previous years, women’s healthcare products weren’t recipients of much, if any, venture capital. But as more of these types of businesses and products earn more market interest, and by extension, big profits, more VCs are tuning in.
Investors are finding that women-led companies are successfully solving women’s health problems that are true needs in the marketplace but have been overlooked for decades. Women are helping take charge of the products marketed and sold to them. Like JoyLux: a pelvic floor medical device that strengthens tissue around the vagina so women can decrease leakage. Or Uqora, a treatment for urinary tract infections in women, whose co-founder, Jenna Ryan, exited successfully to Permavite, makers of Nature Made, during the pandemic. Female founders want to help other women, and this drive makes them ideal candidates for capital and with exits like Uqora with healthy returns of investments, VCs are perking up.
Female founders have a special hold in the underserved women’s healthcare niche. Women have the empathy, strength and nurturing spirit to capture an audience, and more importantly, customers. They understand their customers in an authentic and sustainable way – and that’s where the magic happens. “Of course, I’ll buy from her,” the female consumer thinks. “She understands me, and her product makes a significant difference in my life.”
Founders in the women’s healthcare space who honor and understand the customer are the most likely to have the best ROI for VCs and angel investors. Here are the ways to identify the most promising female founders to support:
1. Look for forward-thinking problem solvers.
Founders find gaps in markets and fill them; sometimes with unicorn dust. Founders in this industry need to understand the science behind what they’re building as well as have astute business acumen. Out with the same old game plan of pattern recognition, pronounced pedigree and existing startup experience, and in with business and product innovation. Funders should find curious & tenacious humans who have a solid grasp on the big picture but are also able to solve the inevitable day-to-day problems.
2. Find founders who consistently engage the customer.
This is critical. A good founder, particularly one developing a healthcare product, needs to be in constant communication with their customer, pay attention to what they are saying and accelerate and/or pivot based on the feedback; then rinse and repeat. Doing so will help the company reach more customers, earn customer trust and grow that customer segment’s revenue.
3. The best founders have servant’s hearts.
Servant leadership is a buzzword in the startup world right now but I believe wholeheartedly in its importance. Founders who believe their impact will make a difference in their ecosystem — from the teams they lead, the products they innovate and the values-aligned investors they attract — are the ones truly driven to succeed for a higher purpose, albeit impact or legacy. They want to make the world a better place, and nothing will stop them.
4. The founders are humbly aware to listen and learn.
When launching a product or business in a new space, it can be difficult to claim your stake. Invest in leaders who know how to actively listen, learn and lead, and then sit back and watch them soar. The most successful founders I’ve met are empathetic listeners who can distill feedback to move product development forward efficiently, are coachable to iterate and eager to build a strong team of values-aligned humans equipped with strengths to scale the startup.
VCs and angel investors need to commit to spending more time hearing pitches and assigning capital to female-led ventures in the women’s healthcare space. They’ll be glad they did.