By Padmini Parthasarathy
It’s no secret that the world of venture capital is a boy’s club — so much so that only five women made Forbes’ Midas list this year.
Portfolia, a site that connects first-time investors with start-ups that deliver products mostly for women, is seeking to change that. If you have as little as $1,000, you can now invest it in a company you believe in.
After working the field of women/money for decades, Trish Costello, founder and CEO of Portfolia, experienced an uncharacteristic crisis of confidence in the future of women VCs a few years ago.
Women traditionally find very little success in the elitist world of venture capital. A mere 13 percent of venture deals go to companies with a female founder.
“I think it is unconscious bias,” Costello says. “We use ‘we’ instead of ‘I’, and ‘we’ looks kind of weak and ‘I’ looks kind of strong. That has nothing to do with their ability to grow kick-ass companies, those are just differences in interaction.”
Women also tend to manage expectations by giving conservative estimates of the potential windfall. Portfolia offers an alternative vehicle to access capital.
“For many years I’ve been working in the equity space and with women. At the Kauffman Foundation, we put millions of dollars into trying to assist women to grow fast-growth scalable companies, training women angels, training women VCs. At some point a few years back, I was feeling somewhat negative about the progress I’d seen to date. We’d put a lot of work and effort into this, and there really hadn’t been much change over time,” Costello says.
Costello cites three major reasons for launching the site now:
· Women now own the majority of private wealth in the US.
· Companies seeking finances that offer consumer-facing products and services increased from 1-in-10 to 1-in-3, so crowd-sourced critique and revenue are becoming invaluable.
· Congress rolled out drastic amendments to securities laws that had remained virtually untouched since 1933. Before these changes, founders of start-ups could only use their networks to access capital. Additionally, the financial bar has been lowered so that now, a schoolteacher, an electrician, or, dare I say it, even a journalist, can invest money in promising start-ups. You don’t have to have a million dollars in capital or a high six-figure salary anymore to invest in a company you believe in.
“It seems that everything I’ve done in the past 20 years has prepared me to create Portfolia,” Costello says.
The site features five companies per month. One of the companies finding success on the site is Naia Health, Inc. The husband and wife team has a lead investor and half of its $100,000 goal already. Their better pump is a tenth of the size of the what’s now on the market and nearly silent. It has a corresponding app for new moms to track their milk production as well. It’s just the kind of business that might not have made traction with a top ten VC firm.
According to Costello, many successful women VCs are moving away from the big firms and starting their own ventures. The ego-driven investing of yesteryear when large firms went all in on companies that would generate a ten-fold return — or nothing — are over. It isn’t necessarily about finding the next Google anymore, but rather, several good companies with a solid product and scalable model that will earn an investor stable returns.
The site is currently in version 2, where either a company is ready to accept capital or it is in the “design lab” phase, where potential investors can give feedback about the product, marketing, and business model. Plans for an eCommerce section and a community board for users to sound off on products that they would like to see in the market are in the works.
Costello cites Billie Jean King, tennis champion and feminist, as an inspiration.
“Someone was joking with me about having a VC Battle of the Sexes. I think we’d win.”
Padmini Parthasarathy is a recent journalism graduate of New York University and worked at The Times of India this fall. Padmini has been published in The Times of India, Huffington Post, Tehelka THINKblog, Washington Square News, and on PolicyMic. She likes adventures, stories, and adventures that lead to stories.
Image: The JH Photography via flickr