True Wealth Ventures’ $20 Million Fund Invests in Women-run Startups

By LAURA LOREK
Publisher and Senior Reporter with Silicon Hills News

Women run startups outperform all male teams yet they still struggle to get venture capital.

That’s a problem Sara Brand and Kerry Rupp, with True Wealth Ventures, are seeking to solve. They are raising a $20 million venture capital fund focused on investing in women led companies in the sustainable consumer and consumer health industries.

“It’s not a feminist manifesto, it’s a real thesis we have here,” Brand said. She spoke last week along with Rupp to a group of mostly women at RealCo, a new technology accelerator at Geekdom, during the second annual San Antonio Startup Week.

San Antonio is the number one place for women entrepreneurs out of 100 U.S. metropolitan cities to start a business, according to the 2015 State of Women Owned Business Report, commissioned by American Express.

And 22 percent of all women run businesses in San Antonio have revenue of more than $1.6 million, Rupp said. Overall, Texas is number two in the nation for fastest growth in women owned businesses, she said.

Brand, who has a bachelor’s degree, master’s degree and a doctorate degree in mechanical engineering, also founded (512) Brewing Company, a microbrewery in Austin, with her husband. She has worked in venture capital, management consulting and semiconductors.

Despite evidence in recent studies showing companies with women in leadership positions outperformed all male led companies, the numbers have not increased, Brand said. A McKinsey & Company study found large public companies with women in leadership positions saw a 41 percent return on equity and 56 percent return on operations.

Yet only 4.2 percent of Fortune 500 CEOs are women and only 14.6 percent of executive officer positions are held by women, Brand said. And only 16.9 percent of corporate board seats of Fortune 500 companies are filled by women, Brand said.

Still, greater than half of all small businesses today are started by women and they experience faster revenue growth, Brand said.

Despite all the statistics showing women leaders are an asset to companies, it’s still difficult for women to get venture financing. And that hinders innovation because VC money can help a company grow faster and bigger and create more jobs.

Part of the problem is that few VCs have women in decision making positions. Only four percent of women are partners in a VC firm and less than one percent of those are making investment decisions, Brand said.

“VC firms with women partners are twice as likely to invest in a company with a woman in management and three times as likely to invest when the woman is the CEO,” she said. “When women invest in women it has a huge benefit.”

Women led startups have 32 percent greater chance of an exit when fueled by women VCs, according to a Harvard Business Study.

“We saw that there was a gap in the funding opportunity for investing in women,” Rupp said. “We decided if they are not going to do it, why not us.”

Rupp previously served as CEO of DreamIt Ventures and raised a $20 million fund and helped to launch more than 150 companies. She’s also been an entrepreneur.

Women are outperforming men because they have strong leadership, communication and innovation skills, Rupp said.

Yet 85 percent of VC-backed companies don’t have a woman on their teams, Rupp said.

“Our thesis is about diversity,” Rupp said. “Diverse teams perform better across the board….You don’t want to have a group with all women either.”

When women start businesses, they often look for alternative funding. They use their savings, their retirement accounts and some turn to crowdfunding. On Kickstarter, 35 percent of total funding goes to companies with a women CEO, Rupp said.

The reason a lot of female run companies don’t land venture capital has to do with an unconscious bias in society, Rupp said. A Harvard Business School study in 2014 revealed “that investors prefer pitches from male entrepreneurs over those from female entrepreneurs, even when the content of the pitches is identical. And handsome men fare best of all.”

But True Wealth Venture Partners is not going to invest in women-run companies, just to invest in women-run companies. It is looking for companies with a female founder or a female member of the management team that have a great business plan and can scale the company and provide ten times return to investors, Rupp said. They are looking for companies that are going to have a $100 million exit within five years, she said.

Overall, with the fund will invest in 12 companies during the next four years with initial investments ranging from $250,000 to $500,000.

So far, True Wealth Ventures has looked at more than 200 companies and has invested in one: UnaliWear, a smart watch for seniors created by Jean Anne Booth, a serial entrepreneur, in Austin. She sold her previous startups to Texas Instruments and Apple.

“At the end of the day we’re still going to choose companies the way any other VCs chooses companies,” Rupp said. “Team is still the number one thing everyone looks at.”