Erika Lucas said she takes action when she’s angry or frustrated. Last year, she got angry enough at the persistent funding gap for women and people of color that she broke a vow she made when she left private equity to not return to private investments in order to launch VEST Her Ventures.
Based in Oklahoma City, VEST Her Ventures is raising its first fund, with a target of $20 million. The fund is focused on the future of human-centered work, the care economy and adjacent markets like digital health and new parent tech, and has invested in eight start-ups so far. It hopes to invest in up to 30 companies whose founding teams are led by or include women and are mostly based in Oklahoma or surrounding states.
Most of VEST Her’s LPs are high-net-worth individuals or small family offices that are committing “because they know we’re going to be bullish about our region” and understand the fundraising challenges local founders face compared with those on the East and West coasts, Lucas told Venture Capital Journal.
VEST Her is also building relationships with institutional investors, most of which won’t invest in a first-time fund and want to see a track record before getting involved.
Born and raised in Mexico, Lucas previously served as director of trade and foreign direct investment at Oklahoma’s Department of Commerce and as a partner at Acorn Growth Companies, a private equity firm where she focused on aerospace and defense companies.
After three years at Acorn Growth, she co-founded nonprofit StitchCrew in 2016 to introduce women and BIPOC entrepreneurs to funding sources and networks that can help them start and scale their businesses. Through the years, StitchCrew has developed four programs, including FemHealth Accelerator, in partnership with organizations such as FemHealth Founders and the Walton Family Foundation. A total of 130 companies have emerged from the programs.
As much progress as StitchCrew has made, Lucas said there is much more work to be done: “Unfortunately, from 2017 to now, what I have seen is instead of increasing funding for women entrepreneurs, we’ve actually seen a decrease.”
In 2020, the disproportionate impact of the pandemic on women in the workplace spurred Lucas and others to launch VEST, a membership organization that helps women business owners to network. The venture fund grew naturally out of the networking effort, as Lucas heard again and again about the challenges women founders face when trying to raise capital.
After Lucas spoke on a panel of investors of color at FemHealth Accelerator last month, she was approached by a woman founder who told her that all of the feedback Lucas had provided was different from what she had heard from investors in her home city.
“This female founder said she had been coached to pitch like a white cis-male, to go as fast as she can to describe a procedure,” Lucas said. “It was catered to a very particular type of investor and a very particular type of founder. It made her feel often inadequate because she didn’t fit that [profile], but she tried to be something she was not in order to get in front of investors.”
During the panel, Lucas explained that VEST Her has “an open solicit [system] so you don’t need to be introduced to us by our friends or family. You just fill in a form [online]. And we do that intentionally so nobody feels like just because they don’t have a network, they can’t access us.”
Many male investors don’t understand the problems that start-ups addressing the care economy are trying to solve, said Lucas. Lots of limited partners have told her they don’t believe the problem is big enough to invest in.
“Actually, the care economy is bigger than the pharmaceutical industry,” she said. “The problem is that a lot of the investors are males and they’ve had a support system at home where they didn’t have to think about some of the solutions to some of these problems.”
There’s also a misconception that the care economy is focused solely on childcare when in reality “it’s caring for loved ones from the time they’re born to their last breath,” she said. It encompasses tutoring, home-based care, elder care and much of the infrastructure needed to support caregivers.
For example, VEST Her portfolio company Apiari offers back-office support “enabling [home care providers] to book multiple clients, to charge multiple clients and to know how to build a business around their caregiving practice.”
One imperative for VEST Her is building awareness and educating entrepreneurs and investors about the kinds of challenges the care economy is facing so they know what types of companies are needed to support a care infrastructure.
Future of work
Under the future of work theme, VEST Her is backing companies developing products and services geared to helping employers better recruit, upskill and retain workers. “Right now in the United States we have 11 million jobs that we can’t fill, particularly in the middle of the country. And we know that number is going to increase to 30 million in the next five years,” Lucas said. “We need to be developing workforce development solutions, particularly for areas where we struggle to find talent and to upskill and retain talent.”
Lucas also sees a need to empower employees who want to build more inclusive workplaces. “In order to meet that 30 million-workforce demand, we need to be more inclusive, primarily because workforces weren’t designed with women [or people from different backgrounds] in mind.”
The reasons for such a high number of unfilled jobs are varied and complex, said Lucas. It’s not only finding people with the right skills for jobs, but also insufficient labor in certain geographic regions and the failure by some employers to design systems to improve recruitment and retention in those regions.
One company focused on this theme is Edlyft, which helps employers including Salesforce and Google to better recruit, onboard, upskill and retain workers, especially computer science talent. VEST Her participated in Edlyft’s seed extension round last November for an undisclosed amount. The San Francisco-based start-up also has a free Intern Development program that matches college students with industry mentors at leading companies.
“They also focus on and are very intentional about helping companies hire diverse talent,” Lucas noted.