Historically, the majority of all venture capitalists have been white and male. Even today, according to the latest Rock Health report, only 12.6% of partners at digital health venture funds are women, and only 14% of digital health startup deals were closed by women in 2019.
Maria Velissaris, managing partner of Steel Sky Ventures, is an investor looking to help change this paradigm. She got a taste for the startup world in college when she founded a shipping company that was later acquired by U-Haul. After working in consulting and at VC-backed health startups, she got the bug for digital health. But she needed to learn the skills for investing.
“I wanted to learn how to invest, so I joined Pipeline Angles so I could learn about the strategic approach to investing. That was great experience. I was in a cohort of 40 other female executives who were learning how to invest.
Pipeline Angles is an angel investment network that invests in women and femmes. It also helps to train its members about the world of investing. While there she teamed up with a fellow Pipeline Angle member and founded a fund together. The pair had found a blind spot in investing – women’s health companies.
“We invested in about seven companies, and five were in women’s health, and we were getting into these fields with amazing teams, with really good market opportunities and not a lot of competition. We were like, 'Why is this the case? This shouldn’t be the case.'”
Since then, Velissaris has continued to look at the world of femtech. Her investments have included the likes of digital health company Mahmee, and tech-enabled infant-swaddling device TheraB.
“Currently there is a lot of pattern-matching, and people like to invest in people that look like them, and maybe went to their schools, and have the same social networks. But I think women and minorities are left out of the equation because they don’t fit that pattern for most of the investors,” she told MobiHealthNews.
“By having a more diverse investment base of women and people of color you are going to see different kinds of companies getting funded. I think that is going to completely change the ecosystem, when you start putting money in the hands of people who have more openness to invest in others who don’t look like them and don’t come from where they came from.”
She noted that changing the world of digital health, also means changing its investors. A woman of color, today she’s in the minority of VC partners.
“Being outsiders, we are more ... likely to put dollars in other people’s hands. I think that will completely change the landscape. The hard thing is getting money in the hands of people [who can] do that ... because a lot of the barriers to entry in VC are high and expensive. It’s very expensive to start your own fund, and it’s hard to get a job in PE or venture unless you’ve worked in it before. So, it’s kind of this interesting chicken-and-egg people have to contend with.”
Velissaris said that there are times where women and people of color may have particular hurdles that the traditional venture space does not recognize.
“A lot of times VCs will say you have to be working on your business full-time ...[to show] you are committed,” she said. “But a woman of color who is a single mom doesn’t have the luxury of working on their business full-time. Sometimes they do have to start working on it full-time, and they ... need capital before they can quit their full-time job.”
Recently we’ve seen a surge in funds labeled “diversity funds.” Velissaris urges said there are possible pitfalls with these funds.
“I also think that they're sometimes competing for less dollars. While it’s nice that in this time people have spun up diversity funds, it’s just a smaller bucket of money. You shouldn’t need a diversity fund if you can invest out of your real fund. Then they have access to the same types of investment that other people have.”
For now, Velissaris is putting her bets on investing in femtech, and looking to include diverse voices – aiming to reach a larger audience.
“I think enabling diverse founders to create tools for their own communities can be very, very powerful. It’s something that we haven’t given them the fuel to do through investment dollars. I think if we start giving Latinx people funding to deal with mental health in their community, or giving Black female founders [funding] so they can deal with maternal mortality – then we will start to find more solutions and access to care for those communities.”
Editor's note: Some of the language has been update and quotes cut for clarity in the story.