Part 2 of 3: Kerry Rupp and Sara Brand talk about why they focus their investments on women-led businesses
Kerry Rupp and Sara Brand from True Wealth Innovations recently sat down with Sol Marketing to discuss their new fund, why women-led businesses are a great investment, and what they’re doing to make sure women-led businesses get the capital they need to grow. In this second of three posts, Rupp and Brand talk about their "why."
Why did you start this endeavor?
SB - Well the light bulb came on about a year and a half ago. I knew I wanted to get into venture capital somehow here in Austin. Austin is rated as the number-one startup city in the U.S., we have UT with their research and their new medical branch opening up. Over the last few years of education and career I was always around male-dominated environments. My husband and I started a microbrewery after I worked in the semiconductor industry.
All of these were very male-dominated. I was asked at the semiconductor job to become the executive sponsor of the Global Women’s Forum. After taking the position I read some studies and found that companies with more women in leadership positions performed better financially. At the same time, I was trying to figure out what my company could do about their numbers. Meanwhile I was trying to figure out my right move here in Austin. I realized that women were underrepresented and that I had never met a woman in VC here in Austin.
Of all VC partners, only four percent are women. Three percent of companies are women led, and those companies see 35% higher return utilizing a third less capital. We found a blind spot in the market without funds that are investing with this lens.
KR - When I ran DreamIt we started a DreamIt Athena for woman-run startups. Many times these people had trouble fundraising and/or they received comments from VCs that this market was just not a sector in which they invested. Then I met Sara and found out about her fund. I realized that we really had a significant gap in what the market offered today and what we could deliver.
What are some of the unique challenges and opportunities women face both on the investment side and as entrepreneurs, given this underrepresentation?
SB - Well, my mind went first to the disadvantages. What women have traditionally seen is that they are undercapitalized. They don’t have the same networks that most entrepreneurs use to get their companies off the ground. Or they are not willing to ask-- not thinking about it or willing to ask as men have typically done.
Also, as they start scaling the business, because of less capital they tend not to think as big or grow as quickly. Many woman-led businesses end up being undercapitalized and under scaled.
KR - Advantages are that with women making a lot of the purchasing decisions, we have a lot of the point of view around what marketing would resonate, what type of messaging should we use, etc. Because they understand the customer better, this can be an advantage.
SB - That reminds me of another study I read. When entrepreneurs created a product or service based on a particular need they have, they were significantly more successful. Women tend to be the largest percent of that category. The advantage women have here is that there have been a lot fewer leaders at companies addressing the certain needs that women have historically had a better understanding of.
Are you getting traction with this? What do you see coming short- and long-term?
KR - These numbers really resonate with people. When you quote the statistics on the performance of women-led companies, people gasp and it really opens their eyes. They realize there is a gap here. The health and sustainability sectors are particularly popular here in Austin, and we are already seeing many startups in these sectors here in Austin being led by women. Although we focus on Texas as a whole, it’s great that we have these types of organizations right in our back yard.
SB - As more women invest and millennials can invest more significant sums of money, this is an area that really resonates with them. Seventy-three percent of millennial women not only want a great financial return, but also to invest in areas that have a positive impact in the world. There are similar numbers for investors that want to invest in more gender diversity.
Watch this space for part three.