Portfolia’s FemTech Fund: Women investing in women’s health

It’s rare to see money flow at parties. Even in investment-laden Silicon Valley, potential fund investors don’t normally mingle socially while writing checks to their hosts over cocktails and hors d’oeuvres.

But at an early-September party in Woodside, that’s exactly what happened.

Portfolia Funds, which operates a platform through which accredited individuals can invest in small venture funds, held an invitation-only event at its headquarters, a few miles down the highway from Sand Hill Road.

The event promoted FemTech Fund, which invests in emerging technologies, products and services that improve women’s health and wellness.

FemTech, announced in June, is one of several small funds managed by Portfolia, which was founded in 2014 by CEO Trish Costello.

She told VCJ the fund is approaching $4 million in size to invest nationwide and across various stages in technologies that focus on women’s healthcare.

Costello, co-founder and CEO emeritus of the Kauffman Fellows Program, is targeting Portfolia funds at markets that the venture community typically overlooks, such as aging and women’s health. In addition to FemTech, the other funds Portfolia manages are called Rising Tide, Consumer, Enterprise and Active Aging.

Costello said Portfolia is looking to launch more funds, such as an Inclusion fund that will concentrate on people of color, as well as others that focus on the LGTBQ community, fashion and agtech.

Portfolia also aims to open investment opportunities for women investors. Its LP base is made up largely of individual women, whom Portfolia calls members.

Which brings us back to the Portfolia get-together, attended mostly by women entrepreneurs and investors. That night the firm signed up 30 new members, who each wrote a check of at least $10,000 for FemTech Fund.

“The event was palpable to see how much women are interested in investing in a growing market,” Costello said. She also referenced a 2015 report from the BMO Wealth Institute that found that U.S. women currently control 51 percent, or $14 trillion, of personal wealth in the nation and are expected to control $22 trillion by 2020.

Women are “vocal in their intent to make investments that have an impact and see returns,” Costello said in a statement announcing the fund. “FemTech Fund is a natural fit for this growing market.”

Among the investing members that night was Lauren Wilmot, president of MoodClue, producer of a liquid chalk marker. She started the company with her mother, Elizabeth Wilmot.

“I’m really excited about this fund,” the younger Wilmot said. “As a female entrepreneur, I’m excited to invest in other female-run companies, specifically aimed at female health.”

FemTech Fund is taking advantage of a new rule that addresses angel funds and the so-called 99-investor problem.

Simply put, since the passage of the Investment Company Act of 1940, an angel fund, or any venture, PE and hedge fund, must have fewer than 100 beneficial investors. And the fund must not publicly fundraise.

But in May, the Economic Growth, Regulatory Relief and Consumer Protection Act went into effect. It solved the 99-investor problem by raising the limit in a small fund to fewer than 250 investors, provided certain requirements are met.

The new law is ideal for angel funds since it specifies that no more than $10 million is raised by that many qualified investors. If a fund wants to raise more than $10 million, the investor limit remains 99.

As of mid-October, FemTech Fund is nearing the 249 limit and Portfolia hopes to soon wrap fundraising.

The fund launches as Frost & Sullivan calls the femtech field the next significant factor in the women’s healthcare market. The market researcher predicts the sector will reach $50 billion by 2025.

FemTech Fund has already invested in one company, San Francisco-based Future Family, a provider of fertility care services. FemTech Fund joined the company’s $10 million Series A round, which was led by Aspect Ventures and also included iNovia Capital, BBG Ventures, LaunchCapital and Ulu Ventures.

Future Family, founded in 2016, provides a monthly payment service for such fertility services as egg freezing, in vitro fertilization and concierge care.

Portfolia’s family of funds operate with two-and-20 compensation structures, and Costello said the funds will make follow-on investments in companies, with each fund lasting five to seven years.

Portfolia’s Rising Tide Fund has already achieved an exit when OtoSense, a developer of AI-powered sound-processing technology, sold earlier this year to Analog Devices.

Other Portfolia investments include Juvo, a provider of financial identity services, which raised a $40 million Series B round in 2017 from New Enterprise Associates and Wing Venture Capital.

Each of the Portfolia funds is led and advised by a team of investors. They identify top companies, perform due diligence, and recommend investments for the fund. The members are not involved in the investment decisions, but they can follow along the process.

VCJ Venture Femtech
Photo (left to right): Trish Costello, founder and CEO of Portfolia, raising a glass with FemTech Fund lead advisers Faz Bashi, Darshana Zavera and Nola Masterson, at a Portfolia event in Woodside, California. Sept. 6, 2018. Photo courtesy of Portfolia.

FemTech Fund lead advisers include Faz Bashi, an angel investor and member of Life Science Angels; Nola Masterson, a biotech executive, venture investor and onetime consultant at Kleiner Perkins Caufield & Byers and other firms; and Darshana Zavera, a partner at Catalyst Health Ventures.

Bashi said that through the partners’ networks, FemTech Fund has seen “amazing deal flow” in Series A, B, and C companies. Having known Costello for some time, he said he joined the network since she “has a vision for a more inclusive and more powerful model of venture investing” he found appealing.

Referencing the expanded 249-investor limit, Costello frequently says she’d like to see Portfolia grow to include 100,000 members, or investors, by 2022.

She noted that since Portfolia launched in 2014, 70 percent of existing members have re-upped in other funds.

“This is a scalable model and we’re just at the beginning stages,” Costello said.

Action Item: For more info about FemTech fund: www.portfolia.co/portfolia-femtech-fund/.