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P&G’s femtech deal: Donations to women and Fusion Fund’s exit

In early February, Procter & Gamble spun the VC world around when it paid a reported $100 million for This Is L, the mission-driven producer of personal-care products for women.

The deal for the upstart femtech, which donates products to underserved markets, was surprising for at least a couple of key reasons: It was founded by a non-techie entrepreneur and it had attracted little venture capital.

This Is L raised $120,000 in funding from Y Combinator. Investor Lu Zhang, founder and managing partner of Fusion Fund, said her firm was one of the earliest seed backers of the San Francisco company.

In total, she said, This Is L raised less than $2 million from her and other investors.

“It was a very good exit,” said Zhang, who’s currently investing out of the firm’s $100 million second fund, raised in 2017.

This Is L was founded in 2015 by Talia Frenkel, a photojournalist who worked for the Red Cross and United Nations.

After she’d documented humanitarian crises worldwide, her coverage of women’s lack of reproductive rights and the effects of HIV/AIDS on young girls inspired her to launch the company.

The ecommerce site sells organic women’s personal-care products, made without pesticides, chlorine, fragrances or dyes. The company also sells in such stores as Target and CVS.

This Is L’s offerings take advantage of growing consumer demand for products in the naturals segment. Products include tampons, pads, liners and wipes made with organic cotton and natural ingredients.

In that regard the company is similar to Honest Co, founded by the actress Jessica Alba, which markets household products made with ethical consumerism in mind.

Honest Co has raised more than $500 million since it launched in 2012.

For every product This Is L sells, it promises to donate one to a woman or girl in the U.S. or internationally. It’s akin to the one-for-one model that TOMS also uses to give shoes to children in need.

A ticker on This Is L’s website said that as of March 4 it had sold more than 242 million products.

P&G, the consumer-products giant, said in its statement about the deal that This Is L was a strategic complement to its Tampax and Always brands.

But it also said This Is L’s approach increases “local access to products by working with partners that provide tools such as pad manufacturing machines.”

The approach makes these products “available to those who need them but also [fuels] women’s entrepreneurship,” P&G said.

Frenkel said in that statement that the company is working with women in more than 20 countries.

“Our support has ranged from partnering with organizations to send period products to Native communities in South Dakota, to supplying pad-making machines to a women-led business in Tamil Nadu,” she said.

Zhang says she came across the company at Y Combinator’s Demo Day in New York, where the company got started.

She says the California-born Frenkel later came to the Fusion Fund office in Palo Alto, California, and made a pitch for startup capital.

“She had a very clear determination and was well-presented,” Zhang recalls. “She should’ve gotten more traction and could’ve gotten more venture funding, but it all worked out in the end for her.”

Consumer-focused This Is L is not a typical investment for the firm, which has made early-stage bets in such tech companies as autonomous trucking solutions provider Locomation, DNA sequencing company Loop Dynamics, and neural interface tech provider Paradromics.

Zhang says Fusion Fund, formerly NewGen Capital, backed This Is L not because it is a consumer company but because it uses organic materials and because of founder Frenkel’s vision of providing healthcare products to millions of women who need them.

“The company’s growth and success and exit to P&G shows that you don’t have to have a tech background to succeed as a tech company,” Zhang said.

“She locked in on a growing market, put together a team around here and used tech to innovate.”