Peanut has launched a microfund called StartHER to invest in early-stage startups
Peanut has launched a microfund called StartHER to invest in early-stage startups
Peanut, the creator of a female-focused social networking app, has entered the investing space with the launch of a microfund called StartHER today. As the name implies, the new fund will invest in women and historically marginalized founders "of all ages, life stages, ethnicities, and sexual orientations," according to the company. StartHER is particularly interested in addressing the difficulties that certain groups face when raising their initial capital — a process commonly referred to as the "friends and family round."
Peanut argues that there is inherent bias in assuming that every startup founder has access to wealthy friends or family members willing to contribute some startup capital. These rounds typically range in size from $10,000 to $150,000 or more, and can make a significant difference in terms of getting a new business off the ground.
“The premise that founders should have networks capable of investing in their businesses establishes an unjust starting point for the majority of groups. If we do not remove barriers to initial funding through capital access, how can we hope to see a changing founder profile as we progress through the fundraising funnel? ” Peanut CEO Michelle Kennedy stated in a press release announcing the fund's launch. “Peanut's StartHER fund provides access to early-stage capital to female entrepreneurs. This is our chance to level the playing field once and for all. We want to be the family to whom these founders can turn, extending our professional networks to them as well.”
During the Pandemic
Female founders' lack of access to capital may have gotten worse during the pandemic. According to Crunchbase data, female-founded startups received 27% less funding globally in 2020 than in 2019. The pandemic eliminated opportunities for in-person networking and disproportionately impacted female family caregivers, as schools, daycares, and other childcare assistance businesses closed their doors. These changes may have played a role in the decline, though their precise effect is difficult to determine.
However, even in the absence of pandemic effects, women are underrepresented in venture capital — including on the firm's management team. Women account for only 13% of decision-makers at venture capital firms, which has an effect on which startups receive funding.
“It is a well-known fact that those with privilege and lucrative connections dominate the venture capital industry. As a founding partner of Female Founders Fund, I'm honored to join StartHER's investment committee in order to assist these entrepreneurs who have not received adequate recognition in the venture capital community in growing their networks in the venture capital community,” said Anu Duggal, Founding Partner of Female Founders Fund, who joined SheHER's investment committee.
StartHER says it intends to fill that void by making small investments in early-stage, pre-seed businesses that aim to improve society, healthcare, or the environment. StartHER will write checks between $25,000 and $50,000, according to its online application — likely one of the first checks received by a new startup. The fund's total capitalization is $300,000, and it will make three to four investments in 2021. Peanut will make no equity investments in the businesses in which it makes investments.
“Going forward, we will consider additional factors such as deal flow to inform our investment strategy and the companies in which we invest,” Kennedy explains. We place a premium on making the best investments possible rather than chasing returns. Our objective at StartHER is not to make a certain number of investments at a certain rate of return, but to diversify the venture capital funnel by acting as an entry point for underrepresented founders,” she explains.
Along with Duggal and Kennedy, the fund's investment committee includes journalist and angel investor Bérénice Magistretti; Vanessa Kingori MBE, Chief Business Officer of Conde Nast Britain; Shilpa Yarlagadda, Founder of Shiffon Co. and Startup Girl Foundation; and Elizabeth Uviebinene, author, columnist, and brand strategist.
Applications are accepted on a rolling basis, and the fund's selection committee meets every six months to review submitted proposals. Apart from the investment, startups receiving SheHER funds will have access to the committee members' networks and office hours, according to the website.
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