The newest, best trend in VC investment? Women. Some of the sharpest minds in investing are taking not just a second look, but a focused look at this rising asset class.
For example, Intel recently announced its launch of the Intel Capital Diversity Fund, a $125 million venture fund that, over the next five years, will invest in startups run by women or other under-invested founders.
Fewer than 1% of Silicon Valley firms are black or Latino-founded; only 15% of VC-funded companies in the US have women on their executive teams. That means for some, there’s potentially greater opportunity in exploring diversity, rather than over-investing in more, and more, and yet more of the homogeneous white male, well educated, engineer-oriented startups that are the pattern of Silicon Valley.
Finding female founders
Intel’s Fund is using its first $16.7 million to support four firms, including Brit + Co, a San Francisco-based media and e-commerce platform with a female founder and CEO and a heavily female employee base, and CareCloud, a Miami-based digital health firm with a largely female workforce.
Intel isn’t alone in thinking about investing in women.
Action bias building a groundswell
Philanthropist and co-founder of the Bill and Melinda Gates Foundation, Melinda Gates understands the impact of investing in women-centered business. At Fortune’s Most Powerful Women Summit, Gates addressed prominent female executives: “It’s not enough to just talk about women and girls,” she said. “We have to be willing to stand up and say, ‘I’m willing to fund some of these things.’” In an interview with Fortune later, she explained that, “The way I think about it is that when we invest in women, we invest in the people who invest in everyone else.”
Investing in female founders makes financial sense, say VCs
But as venture capitalist Adam Quinton sees it, it’s not just that women make about 80% of purchasing decisions (and so it’s just good business to include them) or that it’s an issue of being fair and equitable. Investing in women makes good money-sense. In interview with Anne Ravanona, he laid out his experience investing in female entrepreneurs: first, gender diverse teams make better decisions, a crucial tilt factor in making decisions about investment. (See more of Adam’s perspective here.)
Under valued assets offer discounts to opportunity
Secondly, investing in under-valued assets makes you a savvy competitor. If the only reason a business is ignored is soft-bias based on gender, you can increase your profit exponentially by coming in early and snapping up a great opportunity no one else can see.
Lastly, the way women founders tend to think—multiply, flexibly, across many expert positions—makes them very good at predicting the future and very good judges of opportunity and risk. That means that investing in female founders makes the very best money sense. Not as a do-gooder, but as a rational investor.
But if you want to do good, investing in women makes that kind of sense to. As Melinda Gates says, supporting women can make huge positive change. Women who are supported, confident, and leading, who “speak up for themselves and for those around them, is the strongest force we have to change the world.”