Breaking the traditional VC mold: Insights on fund structures for the future

Breaking the traditional VC mold: Insights on fund structures for the future

Author: Ann Hodge
Read time:  5 minutes
Published date:  February 12, 2024
Investing in female founders isn't just about making a positive impact, says the Emmeline Ventures co-founder—it's good business.
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The venture capital industry helps fund companies that disrupt industries and change the world. But it’s ripe for disruption itself. Women-only teams raise only 2.8% of all venture funding and only 15% of US VC firms have female or female-identifying partners. Yet, according to the Kauffman Foundation,  private technology companies led by women are more capital-efficient, achieving 35% higher ROI, and, when venture-backed, 12% higher revenue than startups run by men. 

La Keisha Landrum Pierre and Emmeline Ventures are committed to bringing more women into the venture capital fold.  La Keisha is co-founder and general partner at Emmeline Ventures, a female-founded early-stage fund investing in emerging female founders and businesses focused on women’s health, wealth, and well-being. 

La Keisha recently joined Carta’s Innovators Summit for a panel on “Fund Structures of the Future” and sat down with Carta for a deep dive about the subject. Among the topics discussed:

  • How Emmeline Ventures chose its investment focus 

  • How its investment thesis impacts the limited partners (LPs) it attracts

  • Trends in early-stage investing 

La Keisha (1)

Carta: Can you tell us about the inspiration behind Emmeline Ventures’ focus on investing in companies focused on women’s health, wealth, and the ability to live in a safer, cleaner world?

La Keisha Landrum Pierre: We recognized a significant market opportunity overlooked by traditional venture capital: women are gaining control over substantial assets and decision-making in households, yet financial and healthcare solutions have largely ignored their needs. This realization was our “aha!” moment. Catering to this demographic isn’t just about making a positive impact on the world; it's also a lucrative market opportunity with the potential for significant financial returns. In fact, McKinsey released a report at Davos sizing the opportunity in healthcare alone at $1 trillion dollars. Yes, trillion. 

How does this focus influence the limited partners (LPs) you attract?

I'll share an anecdote. Yesterday, I was at an event where I met a woman in her early eighties. Very accomplished, very successful, and an ultra-high-net-worth individual. When I shared with her that half of our fund is dedicated to women's health and two of the companies we’ve invested in are focused on menopause, she was intrigued and wanted to talk about investing. When she went through menopause, she looked and looked for a solution and found none. She instantly got there was a market, and she wanted to make sure the women of the future didn’t have to deal with the things that she dealt with. 

Right now, it’s a unique moment. Women are in positions of wealth, and women are in positions to start and build companies that impact women. At Emmeline Ventures, we get to bring them together—to create new pockets of wealth and change the world. Truly.

A decade ago, when a woman was trying to pitch her early-stage startup focused on menopause she’d be told it’s a niche market by investors. Fifty percent of the population is women and will experience menopause. But because most investors didn’t have her lived experience it really felt niche to them. 

Now, those same hurdles aren’t there because you have women who are in positions to write a check, and you have women building startups—both who want to create a better world for the women of the future. In a conversation with my partners we discussed the recent Series A round of MIDI Health that was led by Google Ventures – the rest of VC is starting to realize there is money to be made in these emerging categories. Menopause alone is a $600B market opportunity. 

Are all your LPs women? 

Not at all. Our focus resonates with a diverse range of LPs. There are so many amazing, wonderful men all over the world who want women to thrive. There are men who think it’s ridiculous that there aren’t many financial solutions to help women build wealth and think our care economy is broken, with the burden of elderly care and childcare disproportionately falling on women. They understand that when investing in these strategies, all ships rise. 

And of course, for all our LPs—men and women —it still comes down to returns first. We show them the market opportunity and financial returns. And we prove that you can have outsized financial returns and outsized social impact.

What’s your strategy for selecting LPs?

Our strategy is our secret sauce, but essentially, we target sophisticated and savvy investors who want to get involved with venture capital but might not have been invited to the table yet.

Despite their experience in other asset classes like real estate and public markets, they haven't invested in venture capital due to a lack of access. But they bring a wealth of network connections, diverse perspectives, and expertise that are invaluable to the startups we invest in. 

Emmeline Ventures opted to raise money under the 506(c) exemption, which allows you to market your fund publicly via the press, social media, and other marketing techniques. How did this impact how you attracted investors? 

This exemption has been huge. It allowed us to host LP circles to bring together investors and talk about our fundraising efforts. We were also able to participate in a documentary that highlights investing in women entrepreneurs and featured Emmeline Ventures. Being able to publicly speak about our fund helped us raise a substantial portion of our fund. 

What trends are you observing in early-stage investing?

With the recent market conditions, we’re seeing funds of all sizes, but especially large funds with high targets, struggling to meet their targets. And we're seeing a trend towards smaller fund sizes being more effective. 

Success in venture capital isn't just about raising a large fund but about investing strategically and building a compelling track record such that you can distribute cash to your investors and attract more investors for future funds. At Emmeline Ventures we are investing capital thoughtfully in high-quality companies with solid business economics at attractive terms. In this market, it's an opportune time for early stage  investors to look for great deals, especially when others are withdrawing.

For founders, it's crucial to be efficient with cash. Those who can navigate these times well will emerge in a strong position when the market recovers. Seed stage fundraising has remained fairly strong with a renewed focus on business fundamentals and a path to profitability. 

A lot of the Series A down rounds we see happening are a result of excess frothiness in 2021 and 2022—many of those businesses should never have been funded. 

We don't expect to see the same trends in 2-3 years. The conviction is up and everyone is writing smarter checks. This period is akin to a new dawn in venture capital, where emerging investors and managers are significantly shaping the industry.

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Author: Ann Hodge
Ann Hodge is a content strategist focused on early-stage and growth startups, taxes, and equity compensation. Before joining Carta, Ann worked at NerdWallet on the content strategy team.