Unlocking The Power Of Women Investors

Investment in women’s health innovations has been increasing, thanks partly to Portfolia’s efforts to empower women to invest in the sector. Since launching its first fund in 2015, and pioneering a FemTech fund in 2018, Portfolia has worked to demystify venture capital for women-accredited investors, driving investment into sectors that have traditionally been underfunded.

However, challenges remain, including limited access to capital, along with regulatory barriers that could hinder progress. To continue advancing women’s health innovation, it is crucial to educate and involve more women as investors while advocating for inclusive regulations.

So, while the current state of women’s health and FemTech investment shows promise, much work remains to realize their full potential. Portfolia’s mission, led by CEO and founder Trish Costello, focuses on leveraging the financial power of women and people of color to create a more inclusive and impactful VC investment landscape.

Improving Women’s Health And The Diversity of VC Investments

Portfolia encourages women-accredited “sophisticated” investors to invest in the innovation economy by demystifying VC through education, which empowers women to navigate the landscape confidently. Women bring a different perspective to investing in VC, according to How Women (and Men) Invest*.

Over nearly a decade, Portfolia has helped diversify the investor base, increase the gender diversity of VC-backed founders, and focus investor attention on sectors that traditionally receive less attention—products and services that better women’s lives, including women’s health.

One of the bright spots in the last five to seven years has been a movement of women- and people of color-accredited investors into funds managed by people who look like them and understand their unmet needs. Investing in these funds provides an opportunity to create wealth for women and people of color.

The number of high-net-worth individuals investing in women’s health as limited partners in VC isn’t the only metric improving. The Biden administration has authorized $300 million for women’s health research, enabling researchers to explore promising yet uncertain avenues with high breakthrough potential. This initiative lays the groundwork for the President’s proposed $12 billion for a Women’s Health Fund. In addition, a bipartisan group of senators is focused on funding women’s mid-life health. The recent announcement of the bipartisan Women’s Health PAC will help keep women’s health a national focus.

The Evolution Of FemTech Investment

PitchBook defines FemTech as a range of health software and tech-enabled products that cater to female biological needs and a subsector of women’s health. While venture capital investment overall increased by 14% between 2018 and 2023, FemTech investment increased by 58%, 121% for FemTech companies with at least one female founder, and 345% for companies solely founded by women.

The FemTech sector has undergone a remarkable transformation. Early on, it focused on reproductive health with limited recognition. However, the coining of the term “FemTech” helped spark a wave of innovation in menstrual health, fertility, and other women’s health areas. Investment surged, though still a drop in the healthcare investment bucket. Technological advancements fueled the development of personalized solutions. The future promises even greater personalization, data-driven insights, inclusivity, and sustainability within the FemTech space.

The investments Porfolia’s FemTech I made versus FemTech III have evolved as the sector has taken off. Fund I investments were focused on very early-stage companies because so few companies had reached a later stage and on conditions that only affected women. Fund III is investing in a mix of companies, from pre-seed through pre-IPO, that invest in diseases and conditions that:

• Only affect women, like menstruation and menopause.
• Primarily affect women, like autoimmune disorders and Alzheimer’s.
• Affect women differently than men, like cardiovascular disease.
• Improve women’s lives even though they are for men, such as a daily non-hormonal birth control pill for men or quick evaluation of sperm and testes because women often go through a year and a half of fertility treatment before deep analysis is done on the male partner.

In the early days, no network of accredited investors or VCs existed to invest in women’s health. Portfolia helped build one. Still, the network isn’t fully built out.

The Challenge Of Fundraising For Women’s Health Innovations

Women are more than half the population, yet their healthcare has been under-researched and underfunded. We have just scratched the surface regarding the products and services that would improve women’s health.

For example, a male founder looked at conditions that cause widespread pain. He focused on a chronic condition that mostly affects women and has few solutions. Portfolia invested in it. The founder had no idea that anything focused on women’s health would be so much more difficult to fundraise for than men’s.

“To get more dollars into women’s health we just have to keep telling the story,” sighed Costello. “Educating, evangelizing to other VC firms to invest and to take some risk by investing at the early stage.”

The truth is that the faster route to funding women’s health is activating more women-accredited investors to invest in VC as LPs. Their investments show larger investors the potential of the product or service. To ensure women have good health, women need to exert their power.

“Money is power, and women own a lot of wealth,” exclaimed Costello. “We can create the world we want by understanding the power of our wealth and our investment capital in an intentional way.”

A troubling concern is that the SEC is considering raising the income and wealth criteria required to become an accredited investor. “Anything that will curtail women and people of color getting into investing will hurt getting solutions into the market,” said Costello. “It behooves the political and regulatory leaders who are looking at these issues to understand that there could be unintended consequences.”

“Sophistication does not translate into wealth—owned or income,” said Costello. ”Women and people of color are, in some ways, more disciplined investors. They do more homework and due diligence and invest in what they know like Warren Buffett and Peter Lynch.”

How are you exerting your investment power?