Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Kerry Rupp was recorded in October 2018.
Kerry Rupp, Partner at True Wealth Ventures, discusses their women-focused investment thesis.
Sramana Mitra: Let’s get you introduced to our audience. Tell us about your investing focus. What is the size of the fund? What sized checks are you writing?
Kerry Rupp: True Wealth Ventures fund one is approximately $20 million. We’re typically focused on women-led companies, which we define as companies with, at least, one woman in senior leadership. It doesn’t have to be the CEO, but it needs to be one of the core team members. Given that we’re investing at the early stage, that tends to be one of the three founders or one of the few executives on the team.
We believe that we actually get a higher return by focusing on gender-diverse teams because we’ve seen a lot of data from McKinsey and American Express that when there is more gender diversity in senior leadership, those companies outperform financially. In the McKinsey study for example, it showed 40% higher return on equity and 56% higher EBITDA. It’s a pretty substantial financial performance. Yet, very little venture capital goes to women.
Only about 2% to 3% of venture dollars go to companies with women CEOs despite financial outperformance. The first layer of our thesis is just to take advantage of that arbitrage opportunity. We also want to be more strategic about leveraging those women on the executive team. We’re also focused vertically in specific markets where we see women as the primary decision makers. Therefore, we think it’s very important to have a woman on the executive team in order to understand those customers.
With women controlling about 85% of consumer purchases in the US and 80% of healthcare decisions, there should be at least one woman on the executive team in markets that are heavily driven by consumer purchase decisions and women decision makers. Again the data shows that that’s not true. 83% of venture-backed companies don’t have a woman on the executive team. Our focus areas are sustainable consumer and consumer health. They’re things that improve human environmental health where the consumer is involved in the buying.
On the sustainable consumer side, it’s anything to do with the home that’s more sustainably sourced, toxin-free, and better for the world. That can range from eco-friendly appliances to sustainable building materials – furniture, fashion, food, and beauty products that are more sustainably produced. It’s not just the CPG products on the shelf that can be the platform or supply chain that brings those products to market if we believe that the consumer is going to pull them through and make their decisions based on that cleaner and greener technology that’s bringing those products to market.
On the consumer health side, we invest in companies focusing on the consumer who is involved in the buying or adoption decision. We’re less concerned about who’s paying as the customer. It could be that your insurance, employer, or healthcare provider is paying for the technology. Essentially, the consumer is deciding whether to use it or change behavior.
It’s everything from health tech, wearables, to light medical devices but not anything that the consumer is not involved with like a prescribed pharmaceutical or an implantable medical device that happens during the surgery. It’s definitely not software in between the enterprises. It’s things that the consumer participates in such as health and wellness focused on prevention.
Sramana Mitra: You like teams that have a woman on the founding team.
Kerry Rupp: That’s mission critical for us.
Sramana Mitra: Number two is, you want to invest in B2C companies where there is a woman decision maker in either consumer or consumer health.
Kerry Rupp: Yes, although it can be B2B2C. On the pure consumer side, there does have to be an environmental health or human health impact because we’re a certified impact fund. It’s not all consumer but things that improve human or environmental health.