Friday Letter: New Astia fund aims to close the diversity funding gap

As it raises a $100m to back companies that include women in founding or executive roles, fund managing director Sharon Vosmek says 'Venture investors need to hold each other accountable for having more women in business.'

Over the years, and even during a pandemic, we’ve seen a lot of attention being paid to diversity in venture, whether it’s focusing on the number of fund managers who are women or people of color or venture firms backing more diverse start-up teams.

On the venture community’s best days, there are many positives to point to, such as anecdotal examples of women-led companies raising significant rounds or a venture-backed company going public that is led by a female CEO.

Although the problems related to diversity are sticky, the solutions are not. That’s what I learned from talking, this week, with Sharon Vosmek, chief executive of Astia, the nonprofit that turned 20 last year and which supports and invests in women-owned companies.

Vosmek and I chatted about the state of venture capital and its diversity issue, and how investing is still very much a reflection of the old model of men sitting around a table, relying on their biased networks for information, and selecting which companies to invest in.

Astia takes a different approach, using what it calls its Astia Expert Sift. Simply put, the process involves having Astia’s network of 5,000 experts (made up of executives, founders and advisors) worldwide to screen the companies without gender, racial, age nor geographic bias. In the past several years, Astia has used its angel investing fund to deploy $27 million into nearly 60 companies via this process, and these companies have gone on to raise more than $450 million. Portfolio companies have included nVision Medical, founded by Surbhi Sarna.

Last month, Astia announced it has held a first close on a $100 million fund, featuring Mastercard as lead investor. Other backers include individuals Priya Mathur, former board president of CalPERS, and Jim O’Neill former, chief economist and former chairman of Asset Management at Goldman Sachs, as well as Farvatn Venture, Portola Creek Capital, Tides Foundation and others.

The sector-agnostic fund backs companies that include women in founding or executive roles. As managing director of the Astia Fund, Vosmek is joined on the investment team by Victoria Pettibone, Evie Mulberry and Omar Ali.

Vosmek said the fund will back 10 to 15 companies, investing at the Series A and B stages, with Astia leading some of the deals. Already, the fund has invested in two companies, which are undisclosed, including a marketplace company in the agtech sector and a biomedical company that is led by a Black founder and chief executive. (On a side note, Vosmek said she is seeing an abundance of women in color leading start-ups.)

The angel fund will continue for Astia, but Vosmek noted that there is a funding gap. With all the talk about more venture firms backing diverse founders, she said she is definitely seeing a lot of seed investment activity along those lines. But she said there is a funding gap at the growth stage as the women-led companies try to commercialize their product. She’s hoping that the Astia Fund will help solve that.

“Things are changing and there are more women in positions of power,” Vosmek said.

Meanwhile, she pointed out the numbers remain low for women-led start-ups that receive money from VCs. Only 9 percent of venture capital was invested into companies that included women anywhere in the founding or leadership team, she said and less than 2 percent was invested into women CEOs.

For those figures to change, she noted that the venture industry moves by peer pressure. “Venture investors need to hold each other accountable for having more women in business on an equal footing as men,” she said.

Seeking nominations for Women in VC

Meanwhile, I’d be remiss if I didn’t point out that we at PEI Media, publisher of Venture Capital Journal, are asking for nominations for our inaugural Women of Influence in Private Markets list, which celebrates trailblazing women in alternative assets.

The list will include women from the venture community and will be published in July.

You can learn more about the nomination process by clicking here for our story.

On the subject of diversity, let me know what you think. You can drop me a note at agoldfisher@buyoutsinsider.com