Updated: May 6, 2020
What size fund is HWI raising?
○ HWI is raising a $10,000,000 fund. The SEC allows for up to 249 investors in a fund under $10M. We are taking advantage of this fund structure for How Women Invest Fund I
○ This size fund will allow us to invest in 10-12 high growth companies and demonstrate a first-fund track record (principals in the fund have venture experience, but as a team, we do not)
○ With a successful Fund I launch and execution, we will be able to raise future funds to continue our mission of disrupting the current VC landscape
○ We will source the investors for this initial fund from our network and make it possible for people to invest with lower than typical fund investment minimums. Future funds may be larger in size
What if you raise more money than $10M?
○ We are committed to having additional Funds within a few years, so we will cap this fund at $10M
○ We will keep those investors warm and consider launching additional funds when the time is right
There are many women-centric VC funds, what is How Women Invest Point of
○ YOU, the leverage and support of the committed How Women Lead community of deep experts, operators and leaders;
○ The decision-making body of the investment council comprised of significant investors who are very experienced portfolio managers
○ We are investing in each deal at larger levels than most gendered funds with a significant focus on follow-on capital allocation, staying engaged with the founder and adding strategic value
In what types of companies does HWI Fund I invest?
○ US companies with some revenue; can be pre-seed to series B, and; tech-enabled companies led by a woman founder or CEO with a strong interest in ethnically diverse leadership teams. HWI is industry- agnostic but does not invest in companies that are capital intensive (e.g. bricks and mortar) or that have FDA or other regulatory risk. Our preference is to invest in companies that have B2B commercialization as a function of their Go-To-Market and scaling profile.
If a woman is on the founding team, does that count?
○ We are committed to addressing the inequity experienced by women founders who are the majority decision maker - research shows these women founders only receive 2.2% of venture funding.
What stage of company does HWI Fund?
○ HWI invests in seed through series B rounds
○ HWI does not invest in pre-revenue or proof-of-concept stage companies. Companies should be beyond MVP-stage and have achieved some initial revenue that demonstrates product market fit.
○ HWI is interested in helping companies through the “traction gap” or the period between a startup's initial product release and the product's ability to generate traction in the market (achieving successive value inflection points including Minimum Viable Repeatability (MVR) and Minimum Viable Traction (MVT) as they prepare to scale.
How did we come up with the focus on seed/Series A stage investing?
○ The Gap: Funding and growth transition gaps occur at various stages of a growth company’s evolution. However, the greatest gaps occur in securing final seed rounds and early stage rounds. According to Pitchbook and The Wing, the number of seed companies achieving Series A rounds has declined, however the number of seed stage companies growing their revenue base has increased.
○ Our Value: Leveraging our network for advisory and go-to-market support is where we can provide enhanced value to the founders to ensure higher probability of success.
○ Playing Big: We are committed to a different type of gendered fund, we want to play big and bridge the ecosystem to make a true disruption: an average initial investment of $250k, with the risk protection of follow-on investing and connections to other investors.
Will HWI invest in B-Corps?
○ Yes, although the process of becoming a B-Corp is intensive and we wouldn’t expect that many of our prospects are, yet B-Corporation certified.
○ Separately, HWI is focused on companies that are structured as with issuance of qualified small business stock, C corporations, to take advantage of federal gains tax exemptions.
Are there certain industries that you would target?
○ We are open to all tech enabled industries however avoiding companies relying on significant brick and mortar and those with long approvals such as FDA
○ We have deep GP/LP expertise in fintech, legaltech, blockchain, consumer product and other industries. We will rely on our network of up to 249 LP’s for due diligence, advising and go-to-market advisory support
Does your network reflect expertise in those industries?
○ Absolutely! Our network is comprised of 13,000 senior women leaders who can help founders execute their plans post-investment. We can pair founders with senior operating executives who have helped companies successfully scale
Will your fund be focused on specific geographies?
○ Fund I is focused on a US-geographically diverse portfolio
Who are target LPs you are interested in?
○ HWL network of sophisticated, accredited women investors who may not necessarily have access or experience in venture investing. We are a trusted organization for their first foray into the exciting world of investing in high- growth potential companies
What investment amount is being sought from investors?
○ We seek an average of $40K per investment in order to meet our goal of $10M. We will allow for a minimum investment amount of $25,000
When will I see returns?
○ The term of the fund is 10 years
○ We cannot promise returns or a timeline for portfolio liquidity events.
○ However, we seek investments that will have a liquidity event (recapitalization, sale, IPO, etc) within 10 years
○ Our aim is to build a portfolio with a mix of businesses, some of which will scale more quickly than others
What regular fund performance information will I receive as an investor?
○ Investor relations will include quarterly and annual fund letters, email blasts for notable events, LP event gatherings
What are the Fund’s expectations of entreprenuers who receive investment?
○ Quarterly - Written investor update of key accomplishments, risks and opportunities
○ Annual - Financial Statements and forward projections
○ Partnership/Commercial contract notifications
○ Please note that HWI expects to have some form of board representation - voting, advisory board, or observer to the board
How will Fund Investors be involved?
○ The GPs and Investment Council make the final investment decision, but there are many places that the LPs can add value
• Join in community if you can, we will have gatherings for LPs
• Be an amplifier
• Identify great deals to build our pipeline
• Champion the entrepreneurs - help them grow their company with ideas and resources and market opportunities
• Share industry expertise via participation in due diligence process
• Follow leadership of GP in diligence process, providing timely and constructive feedback
What are your preferred terms? Can I see an example of a term sheet?
○ Terms will vary based on stage of capital raise. Our baseline of terms will be to use the NVCA model documents and then to work with our attorneys in defining and negotiating appropriate terms
249 LPs is quite a few, what is your plan for LP management?
○ Quarterly calls
○ Regular written updates
○ LP cocktail parties
○ Education and training through the How Women Invest vertical of the non- profit. We are targeting six training events and 10 webinars on how to be an angel investor
○ Invite LPs to support go-to-market for invested companies