INSUBCONTINENT EXCLUSIVE:
This is part of an ongoing series on revenue-based investing VC that will hit on:A new wave of revenue-based investors are emerging who are
none have a particular focus on women or underrepresented founders
financing, distinct from the preferred equity structure most VCs use
RBI normally requires founders to pay back their investors with a fixed percentage of revenue until they have finished providing the
investor with a fixed return on capital, which they agree upon in advance
This includes companies that would meet most institutional definitions for impact investing (women, minority, and veteran owned/run
While we do lots of work in these areas due to the attractive opportunity set, we are not an impact investor, and impact qualification is
not a criterion that we use in evaluating or funding companies
On an organic basis, 13% of our portfolio companies are women-owned or run businesses, while 19% of the companies we work with are
When you look at the composition of the entire founding or executive teams, the number of companies with either a woman or minority in
less mature ecosystems.According to Derek Manuge, CEO of Corl, in the past 12 months, 500+ companies have applied to Corl for funding
color; 20% military veterans; and 71% located in low/moderate income areas
85% of their companies have under $1m in annual revenues
facility commitment from a major institutional impact investor
This positions F1stcp to be the largest revenue-based investor platform addressing the funding gap for service-based, small businesses led
founders have received only 4.4% of venture capital deals
Those companies have garnered only about 2% of all capital invested
This would be easy to detect: among their portfolio companies, do startups with female founders outperform those without?A couple months
ago, one VC firm (almost certainly unintentionally) published a study showing bias of this type
Getty Images / runeerWhy are RBI investors investing disproportionately in women - underrepresented founders, and vice versa: why do these
structurally against some women and underrepresented founders.The Boston Consulting Group and MassChallenge, a US-based global network of
Through their analysis and interviews, BCG identified three primary reasons why female founders are less likely to receive VC funds.The
study used multivariate regression analysis to control for education levels and pitch quality to conclude that gender was a statistically
I argue that these 3 reasons are much less applicable for RBI investors than for conventional VCs.Less need for a belief in breakthrough
For example, more women report being asked during their presentations to establish that they understand basic technical knowledge
profitability are less likely to require an investor to believe in complex, hard-to-predict new technology which is hard to diligence
Instead, the company can pitch itself based on a credible financial projection.Realistic projections
need to promise a valuation of $1 billion within 5 years
consumer/branded products startups
However, RBI investors report that they see a lot of proposals for ecommerce and consumer packaged goods geared to mothers
Rather, I would imagine that one explanation of women garnering rev-share modes of financing is the prevalence of women-led companies in the
consumer/branded goods field, which systemically is more tangible and revenue driven
The founders of such companies inherently are taking financial risk, reputational risk, and career risk.Paul Graham, co-founder of Y
runs were privileged: male, cisgender, well-educated, from affluent families, etc
Think Bill Gates and Mark Zuckerberg .That privilege makes it easier for them to take very high risk
The average person, worried about students loans and long term employability, quite rationally is less likely to take the huge risk of
Both RBI investors and the founders they back will hopefully benefit from this pattern.Note that none of the lawyers quoted or I are
rendering legal advice in this article, and you should not rely on our counsel herein for your own decisions
Thanks to the experts quoted for their thoughtful feedback
