On 9 July, Rethink Impact, an impact venture firm in the US dedicated to investing in female tech entrepreneurs closed its Fund II at 182 Million Dollars, bringing its total assets under management (AUM) to $300 million.
Rethink Impact was founded by Jenny Abramson in 2016 as an Impact venture firm with a focus on investing in female tech entrepreneurs. Within the space of four years, it has become the largest impact venture fund in the US solely dedicated to investing in female tech entrepreneurs.
Backed by companies that focus on solving the greatest challenges in the world through gender diverse teams, Rethink Capital has 65% female backers from around 40 states, including Melinda Gates’ Pivotal Ventures, the Ford Foundation and the WK Kellogg Foundation. Having invested in 25 companies since its inception, the firm focuses on diversification of the venture capital industry.
Effects of COVID-19 on investment in Female Entrepreneurs
COVID-19 had a grave effect on the diversification efforts of firms like Rethink Impact. As reported by Pitchbook, Q1 of 2020 witnessed a massive 40% year-on-year decline in the percentage of female-led funding deals. Founder Jenny Abramson commented on the impact. “an unfortunate side effect of the COVID-19 pandemic has been the decline of diversity efforts in the venture industry”.
While there is greater diversity in the industry today, the VC industry is still nowhere near where it ought to be in terms of diversification and allocation. As per reports published by Pitchbook and Project Diane respectively, only 2.7% of VC money went to female founders in 2019 while a peanut sized amount of 0.06% went to startups led by black women.
Heidi Patel, the Managing Partner at Rethink Impact, stresses that the situation demands change. “There is much to be done, and the investment community – and society as a whole – are missing out by not incorporating broader points of view into which ideas get funded, which problems get solved, and which communities benefit (or don’t).”
Watch: The Dividends of Investing in Diversity
“Impact” of ReThink Impact
Rethink Impact mostly invests in Series A and Series B funding rounds. The firm has invested in companies such as Guild Education helmed by Rachel Carlson, which is the first female impact unicorn to achieve $1B in valuation through upskilling frontline workers.
Only recently, Rethink Impact funded Icon Savings Plan, which raised $3.2 Million in a seed round with a vision to develop a portable retirement account. Similarly, in June, Rethink Impact participated in Series A funding of Care-Academy which raised $9.5 Million in a bid to provide internet training programs for senior care professionals with a vision to improve quality and efficiency in this $103 Billion industry.
Towards an optimistic future
While there is much work to be done when it comes to diversifying the Venture Capital Industry, Rethink Impact is expected to continue its extraordinary journey of transformation. Having the full support of firms like Pivotal Ventures, Ford Foundation and UBS Global Wealth Management, amongst others, Rethink Impact is sure to work successfully towards their goals.
Roy Swan, Director of Mission Investments at Ford Foundation, describes their partnership with Rethink Impact in positive terms. “We are thrilled to partner with Rethink Impact in supporting women-led impact entrepreneurs, for too long, female entrepreneurs have been overlooked by traditional venture capital firms, starving the world of the innovation that comes from their diversity of thought. Equitable access to capital is an essential building block to an inclusive economy and a just society. Rethink Impact’s focus on high-impact female entrepreneurs brings us one step closer to that goal.” This firm has a clear way forward to bring about positive changes in the industry.