Michelle Kennedy, creator of a social networking app for women called Peanut, is entering the investing space. She is launching a microfund called StartHER.
This new fund will focus on investing in women. It will also invest in other historically excluded founders “of all ages, life stages, ethnicities and sexual orientations,” the company, Peanut, announced. Moreover, StartHER seeks to address the difficulties specific groups have in raising their first capital. Investors typically refer to this round as the “friends and family round.”
StartHER Eliminates Inherent Bias
Peanut contends that there’s inherent bias in assuming that every startup founder has access to home-grown investors. Essentially, these are wealthy friends or family who can provide some startup capital. These rounds often range in size from $10,000 to as large as $150,000 or more. They can make a difference when as far as getting a new company off the ground.
“The assumption that founders should have networks able to invest in their businesses creates an unfair starting line for most groups. If we don’t remove barriers to that initial funding by providing access to capital, how can we ever hope to see a changing founder profile further through the fundraising funnel?” says Peanut CEO Michelle Kennedy, in a statement about the fund’s launch.
“Peanut’s StartHER fund opens the door to founders looking for that early funding. It’s our opportunity to finally level the playing field. We want to be the family these founders can turn to, opening the door to our professional networks too.”
Access to Funds for Female Founders Worse During COVID
The lack of access to funds for female founders may have worsened in the pandemic. Crunchbase found that female-founded startups globally saw a 27% decrease in funding in 2020 when compared to 2019.
The coronavirus pandemic stopped access to in-person networking opportunities, which disproportionately impacted the family caretakers who tend to be women. Schools, daycares, and other childcare assistance businesses closed their doors which may have contributed dramatically to this access.
Nonetheless, whether the pandemic impacted access or not, women are underrepresented in venture investing — including on the firm’s side. Research shows that just 13% of decision-makers at venture capital firms are women. This fact can significantly influence which startups receive funding.
StartHER to Fill the Gap
StartHER says it wants to fill that gap by offering small investments to early-stage, pre-seed businesses. It seeks businesses that focus on making a positive impact on society, healthcare, or the environment.
Its online application says that StartHER will write checks of between $25,000 and $50,000. These are likely one of the first checks a new startup receives. The overall fund is $300,000 in size, and will make three to four investments in 2021.
Peanut says it won’t take an equity stake in the companies in which it invests.
“Moving forward, we’ll be considering other factors such as deal flow to help inform how we invest and the companies we choose to invest in,” says Kennedy. We’re heavily focused on making the right investments that will have the most impact versus simply making returns. For StartHER, our goal is not to make X number of investments for X returns, but to diversify the VC funnel by serving as an entry point to capital for underrepresented founders,” she remarked.
Along with Duggal and Kennedy, the investment committee for the fund includes journalist and angel investor Bérénice Magistretti; Chief Business Officer at Conde Nast Britain, Vanessa Kingori MBE; Founder of Shiffon Co. and Startup Girl Foundation, Shilpa Yarlagadda; and author, columnist and Brand Strategist, Elizabeth Uviebinene.
Applications are accepted on a rolling basis. The committee meets twice a year to consider the fund’s applications.
In addition to the investment, startups who receive SheHER funds will receive additional benefits. These include access and office hours to the networks of the committee members.