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Elaine Kunda’s Disruption Ventures makes Hostfully its first woman-led deal

Canadian women-focused venture firm Disruption Ventures cut its first check, backing a startup that serves the fast-emerging vacation-rentals sector.

Disruption invested in the $1 million seed round of Hostfully, a San Francisco software provider that helps rental-property managers streamline operations and engage with guests.

The financing was led by Precursor Ventures. Also investing were MergeLane, Wharton Alumni Angels and Blue Startups.

Hostfully was founded in 2015 by a team with Silicon Valley pedigrees. They include CEO Margot Schmorak, who previously worked for tech giants Apple, where she began the first iPhone developer program, and ServiceSource.

Disruption Managing Partner Elaine Kunda said Hostfully matches the type of woman-founded startup her firm is looking to back.

“Margot has built a diverse, product-focused team that is solving a specific problem in a high-growth industry,” she said. “Hostfully has a proven model and is generating real recurring revenue.”

Margot Schmorak, co-founder and CEO of Hostfully.

Kunda in 2018 launched Disruption to invest in North American early-stage tech companies founded and managed by female entrepreneurs. It deploys $500,000 to $1 million to rounds, either as a lead investor or co-investor.

She began raising Disruption’s inaugural fund, targeted at C$30 million ($22 million), last April. Disruption Ventures I has secured about half the target, she said, thanks to some high-profile limited partners.

They include Scotiabank, which this year formed a strategic partnership with Disruption. The benefits for Disruption include deal flow through the Scotiabank Women Initiative and portfolio access to the bank’s financial services.

Kunda is pursuing a parallel track of fundraising and startup meetings. Her goal is to make more initial investments like Hostfully prior to a final close next March.

Disruption has a second deal in the offing, this one located in Canada, Kunda said.

VC’s gender gap

The idea behind Disruption took shape in 2012 but did not gain momentum with potential investors until recently. The catalyst, Kunda said, was increased attention paid to the gender financing gap.

While female entrepreneurs are attracting more notice in the VC market, the statistics show the dollar flows remain heavily skewed to men. Pitchbook data indicate that in 2017 only 2.2 percent of disbursements went to women-founded companies.

Kunda, a tech executive prior to Disruption, does not have first-hand experience with gender financing barriers. Throughout her career, however, she saw repeated instances of female colleagues being overlooked by VC investors.

“These were brilliant women with great experience and great ideas and not one of them got money,” Kunda said.

This convinced Kunda there was a “disconnect” in the market that would be remedied only by more diversity in VC teams. It also convinced her of the particular advantages a firm like Disruption would have leveraging “the upside of an untapped market.”

Kunda will support portfolio companies by drawing on a long operational career that includes tenures in the C-suite. She was CEO of women’s media network b5media, sold to Alloy Digital in 2012, and local search platform ZipLocal, sold to Canpages in 2009.

Both companies were backed by Relay Ventures, which is now playing an important part in Disruption’s launch.

Relay agreed to co-invest C$5 million in Disruption-backed startups of mutual interest. It is also incubating the firm, Kunda said, by sharing personnel and back-office resources.

Kunda said Relay Managing Partner John Albright and Partner and CFO Jeannette Wiltse were also mentors during her transition to the VC world.

Other key advisors include Scotiabank Executive Vice President Gillian Riley, Clearbanc CEO Michele Romanow and OMX CEO Nicole Verkindt.

Disruption is part of a small but growing collection of Canadian women-focused venture initiatives.

Others include BDC Capital’s Women in Technology Venture Fund and StandUp Ventures, managed by MaRS Investment Accelerator Fund.

New women-focused deals

Canada’s VC market recently saw an uptick in financings of women-founded tech companies.

Deals since January include a C$6.2 million investment in construction-software provider Bridgit and a C$3 million investment in digital-product-sampling platform Sampler, both led by BDC’s WIT fund.

Fine-jewelry brand Mejuri also reportedly raised a $23 million Series B round led by NEA.