Leading By Example: Women-led Funds and Companies Are Showing What Innovation Looks Like

It’s been a challenging year for fundraising across the venture capital industry, with many investors pulling back for a variety of reasons. While we seem to have avoided the recession that loomed in 2023, exit markets have remained tight, which has left investors with less liquidity to deploy to new ideas. Pitchbook reported recently that because of the slowdown, the number of VC firms that don’t plan to raise another fund has more than doubled in just the past year.

The truth is, we need more investment activity right now, because there are so many amazing opportunities for fund managers and entrepreneurs to take advantage of. At this critical juncture in history, the economy and society in general are going through important structural shifts: building a modern caregiving system, coping with the consequences of climate change, learning how to use artificial intelligence in equitable ways. We should be fostering new ideas about how to meet the moment. Since venture capital is responsible for seeding innovation, it’s vital to keep bringing new voices into the conversation.

Bringing a Different Perspective

My team at Pivotal Ventures is doing everything it can to do just that. Since 2018, we’ve been investing in funds led by women, as well as investing directly in early-stage companies, because we believe that funders and founders who bring a new perspective can meet customer needs that weren’t visible from the old perspective. For that reason, we also believe they can deliver strong returns.

So far, we have backed 20 firms, 100 percent of which are led by women, 65 percent by women of color. They currently have $5 billion in assets under management (AUM), and they are growing fast. The firms we’ve supported for more than one fund have seen their AUM increase by 75 percent since our first investment.

In other words, our thesis is proving out, and we’re going to keep proving it by investing in inspiring funders and founders who are carving a path toward a brighter future.

Here are just a few examples from this year.

Bucking Trends and “Living the Future”

In 2024, despite the overall slowdown across the industry, several firms that Pivotal supports closed new funds. BBG Ventures raised $60 million to back founders whose companies are uniquely positioned to meet the needs of what they call an increasingly “polycultural” society. Rethink Impact, recently profiled in Forbes, raised $250 million. And Acrew Capital, which believes that “VCs should not only fund the future, but live the future,” brought in $700 million.

Also in 2024, our partner the Female Founders Fund returned its first fund, raised in 2014. That means that all further proceeds from the fund will be pure profit for investors. Many young firms never fully return their first funds. Now, FFF is looking to raise a fourth fund, projected to be more than 10 times larger than the first one. As I’ve said before, FFF has shown that investing in women isn’t niche—it’s mainstream.

The funds I just mentioned are all invested in founders who have been overlooked, and many of those founders are in turn offering products and services to customers who have been overlooked. That’s good for society and good for business.

Meeting Real, Urgent Needs in the Care Economy

Consider the caregiving market, a focus of several funds in Pivotal’s portfolio. In 2021, we partnered with The Holding Co. on “The Investors’ Guide to the Care Economy,” a report that sized the care economy for the first time. The figure is an astounding $648 billion—larger than the pharmaceutical industry—which makes sense when you realize that everyone on the planet requires care at one point or another. And yet nobody had even bothered to measure it, because the caregiving economy had been mostly invisible.

But the situation has changed dramatically since then. Care is now on the political agenda. And the companies we and our funds invest in are doing really innovative things to deliver real solutions to families. Summer Health provides busy parents with answers to questions about their kids’ health, from real pediatricians, in 15 minutes or less. Little Otter provides comprehensive, personalized online mental health care for children and their families. Mon Ami helps aging and disability service providers do less administrative work and focus on getting families the support they need. These companies are meeting real, urgent needs that millions of families are feeling.

The Proof is in the Pudding

Every day, I see more proof that supporting investors and entrepreneurs who approach problems from multiple angles accelerates innovation and delivers strong returns. I believe that, over time, that proof will convince investors to continue to deploy capital in funders and founders who don’t look or think exactly like the people who have dominated the venture capital industry for most of its history.

When they do, everyone—investors, entrepreneurs, parents with sick kids, caregivers helping aging or disabled friends and relatives, consumers in every segment of the market—will be better off.