This story appears in the December 25, 2017 issue of Forbes. Subscribe
Venture capitalist Jenny Abramson is holding her once-a-month open office hours at Hera Hub, a women's co-working space in Washington, D.C. With her long, straight black hair swept out of the way over her right shoulder, she deftly jots notes with a stylus on an iPad while maintaining eye contact as Kimberly Linson tells her about Leaderally, a new professional learning site for teachers.
Linson, 46, is clutching a Dream/Believe/Achieve notebook and understandably seems a tad nervous about the site's planned January beta launch. She and her two female cofounders quit their longtime management jobs at a tutoring company to take the entrepreneurial plunge.
After peppering Linson with questions, Abramson declares herself "thrilled" with the Leaderally concept but suggests the women market initially to charter school teachers, who typically have less experience and more flexibility to adopt new methods than their public school counterparts. Abramson knows this space; she serves on the board of D.C. Prep, a high-performing local charter, and worked in program strategy at Teach for America between studying genomics as a Fulbright scholar at the London School of Economics and earning her Harvard M.B.A.
"The oracle has spoken!" declares a grateful Linson, as she makes way for the next mentee.
Abramson, 40, is founder and managing partner of Rethink Impact, which in March closed on a $112 million fund investing in women-led, tech-driven startups with social impact. That might not sound like a lot, but it's the biggest VC pot in the U.S. dedicated to female founders. Just 8% of partners at the 100 largest U.S. venture firms are female, and 58 of those firms have no women partners at all, CrunchBase reports. Moreover, companies founded solely by women have snagged just 4.4% of VC deals--and less than 2% of VC dollars--since the start of 2016, according to data compiled by Pitchbook.
The investment case for Rethink Impact is compelling: If worthy women-led startups have a harder time getting funded, then investors ready to give them a fair shot can pick from the best and capture extra returns. Indeed, when First Round Capital reviewed the 300 early-stage investments it made between 2005 and 2015, it found those with at least one female founder had performed 63% better than companies with all-male teams. Sure, that's just one VC firm's results. But other studies also suggest there's good money to be made backing women.
Abramson has a less mercenary goal too: "building an ecosystem" for female entrepreneurs.
Last summer, as sexual harassment claims rocked Silicon Valley, she and her West Coast partner, Heidi Patel, issued a pointed invitation to women to come in for advice: "You have kids or lots of other responsibilities? We see that as a positive. You can balance a million things at once. Your office doesn't have a Ping-Pong table in it? That's okay, ours doesn't either. Worried we are going to hit on you? Don't. We've both been in your shoes. We know. Your job is hard enough already, and we want to help."
So far, the two partners and their associates have met with or had phone and email exchanges with 700 female founders. They aim to connect with 2,500 to 3,000 companies during the life of the fund, even though Rethink Impact will invest in just 25 to 30.
"We're trying to build a new breed of VC firm,'' says Patel, a 42-year-old Stanford M.B.A. who has spent most of her career in impact investing. "Our industry has been in the headlines for all the wrong things lately. We have the opportunity to level the playing field in a way no one else is really doing now."
Abramson isn't alone in smelling opportunity. In October the Wharton Social Impact Initiative reported that 47 U.S. funds that invest with a "gender lens" have raised $1.1 billion, most of it in just the past few years.
Among new funds focusing exclusively on women, Rethink Impact is one of the best connected. Two investors--Black Entertainment Television cofounder Sheila Johnson and Sachiko Kuno, cofounder of two drug companies-- are on Forbes' 50 Richest Self-Made Women list.
Another prominent investor is Jennifer Frist, of the billionaire Frist family of Tennessee. She met Abramson at a Nashville luncheon for 30 potential investors sponsored by UBS Wealth Management, which chose Rethink Impact as the first private impact fund it offered to U.S. clients. There's a good reason for that. John Amore, who heads UBS' impact-investing strategies for the U.S., notes that women, along with Millennials, are most likely to demand their investments do more than just make money.
"I like helping other women, and I like businesses that make a difference," says Frist, who studied computer engineering at Vanderbilt and invested $1 million in Rethink Impact, including $250,000 each on behalf of her two daughters, ages 12 and 15.
Talk about power networking. Frist brought a guest to the UBS luncheon: Jessica Harthcock, the 31-year-old founder and CEO of Utilize Health, which coordinates rehabilitative care for patients who have suffered strokes and other neurological injuries. Harthcock herself sustained a severe spinal cord injury at age 17 during training for competitive diving. Frist became her lead angel investor after judging a Steve Case Rise of the Rest competition in Nashville, where Harthcock pitched but didn't win. Now Harthcock and Abramson are keeping in touch; while Rethink Impact mentors at the angel and seed stage, it typically invests in Series A or later rounds.
So far, Rethink Impact has put money into 14 companies, including Neurotrack, which offers online screening for cognitive decline to worried Baby Boomers; Change.org, the e-petition site; Werk, an online platform for finding flexible professional and management jobs; Aclima, which designs and deploys air-quality sensor networks; and Angaza, a San Francisco- and Nairobi-based pay-as-you-go solar power company. Angaza's recent Series B was led by billionaire Laurene Powell Jobs' Emerson Collective.
In August, Rethink Impact led a $34.6 million round for Ellevest, a robo-investing site for women, and Abramson joined its board. Participants in the round included billionaire Penny Pritzker's PSP Growth, Chicago money manager Mellody Hobson, Salesforce Ventures and Khosla Ventures.
There's a bittersweet aspect to Abramson's efforts. Two decades ago her mother, Patty Abramson, raised $50 million for a Washington, D.C.-based venture firm dedicated to backing women. She even posed holding a cigar on the cover of a local tech magazine with the tag line "Welcome to the Club." But after the 2000 dot-com crash, Patty Abramson returned the money to investors, exiting without an overall net loss or gain.
Daughter Jenny didn't start her work life intending to pick up her mom's mantle. After earning her M.B.A., she spent eight years as an executive at the Washington Post Co. It wasn't until 2013, when she became CEO of startup LiveSafe--which sells an app to crowdsource safety information from mobile phone users--that Abramson fully appreciated how little progress women had made, funding-wise, since her mother's aborted fund. She decided to become a venture capitalist herself.
In 2015 Abramson partnered with the Seavest Group to launch Rethink Impact and then started searching for a partner with impact-investing chops. Through her Stanford network (Abramson earned a B.A. and an M.A. there) she connected with Patel, who learned on the ground as an Acumen Fund fellow in India. More recently, Patel helped build a 34-person impact-investing team and a 130-investment impact portfolio for a rich family. On the side, she teaches impact investing at Stanford's business school.
"There is momentum,'' Abramson says, as she reflects on the growing sources of funding for women entrepreneurs. Then she hesitates and, in a nod to her mother, adds: "Some people thought there was momentum 20 years ago. What's exciting is our size. It might be a sign that there really is change coming [this time]."
Click here for the full Forbes 2018 Investment Guide.
See also: Playing The Woman Card: Five Ways To Invest In Female-Led Companies
