UBS Raises $110 Million Fund to Invest in Woman-Led Firms

  • Venture capital focuses on health, education, environment
  • Women get 3% of VC investments but bring in better returns

UBS Group AG’s American wealth management unit has helped raise $110 million for a U.S. venture capital fund that will invest in companies in the health, education and environmental areas that are led by or co-managed by women.

The fund is managed by Rethink Impact, a venture capital firm that invests in companies with a technological bent. Jenny Abramson, Rethink founder and managing partner, said women-led companies get just 3 percent of venture funding, even though a study by First Round Capital showed that companies with a female founder performed 63 percent better than those founded by men.

"We see this as a market opportunity," Abramson said. The fund aims for returns in line with those of other venture capital funds, she said. U.S. venture capital funds returned about 15 percent over the past five years, according to data compiled by Cambridge Associates. UBS clients invested more than half the money for the fund, while Rethink Impact raised the rest.

There are a handful of venture funds that specifically target startups founded by women, the most prominent being one at Intel Corp. However, the gender gap in U.S. venture fundraising is wide. About 7 percent of founders at companies raising venture capital in recent years were women, according to data compiled by Bloomberg in 2016.

No ‘Subsidy’

Rethink is backing companies that seek to transform society either through social and environmental change or economic empowerment. The fund has invested in about eight companies, including Change.org, the petition platform, and Everfi, a digital education company.

The impetus for the fund came from clients’ increasing interest in such investing, said John Amore, managing director and head of wealth management advice at UBS in New York. The firm last year raised $471 million for a cancer-drug fund that will give part of its profits to research and health care in emerging markets.

"We don’t see this as a subsidy for female entrepreneurs," said Amore. "We’re looking at companies that have historically been overlooked by many of the traditional venture capital firms."

About 60 percent of investors are institutions while the remainder are high net worth individuals, a disproportionate number of them women, Amore said. UBS declined to disclose fees.

"Our industry hasn’t always been the best at building relationships with women," Amore said. "But women are building wealth as fast as -- if not faster than -- men. Connecting with them was one of our goals."

Women will hold two thirds of the country’s wealth by 2030, Abramson said. And 70 percent of women consider impact investing important.

UBS had 976 billion ($963 billion) Swiss francs of sustainable investments as of Dec. 31, representing a third of the firm’s total invested assets.

Investors in venture funds typically can reap returns after about a decade from any companies in a portfolio that go public or get acquired at a premium.

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