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Gina: Hi, I’m Gina Luna and this is HXTV, championing Houston’s innovators and entrepreneurs. Our guests today are the founders of The Artemis Fund: Diana Murakhovskaya, Leslie Goldman, and Stephanie Campbell. Welcome, we’re happy to have you on HXTV.
Stephanie: Thank you, Gina
Diana: Thank you for having us.
Leslie: Thank you.
Gina: So, let’s talk about what is The Artemis Fund?
Diana: Yeah, so The Artemis Fund is the first women-led, women-focused fund in Houston. We launched a fund and are raising $20 million to invest in startups where women make the decisions in the C-suite level.
Gina: Tell me what that means, women-led business.
Diana: Yeah, so for us it’s women-led, not women only. We do look for diverse teams, but where women are in the decision-making power in the C-suite with significant equity.
Gina: Great. And is it hard for you to find those?
Diana: We get this question a lot and I can promise you it is not a pipeline issue. We look at thousands of companies at a time and they come from all over. All of them are extremely venture backable.
Gina: So, you’re in the fundraising process now. Tell me about your investor base, or prospective investor base, and I’m sure you’re getting a tremendous receptivity given your mission.
Stephanie: The reception has just been fantastic in Houston. Most of our investor base thus far is from our networks; high net worth individuals in the Houston area as well as in New York and LA. We will be sourcing both investments and companies from all over the country.
Gina: That is fantastic. So, how long have you been at this?
Leslie: We officially launched early in April. So, we are right now in our first round trying to close a first round, looking at companies at the same time, and we are going strong.
Gina: Are there other women-focused funds around the country, or around the world?
Leslie: Yes, there are indeed. There are some in New York, in California, there are some that are national, there is one in Austin, so there are more and more sprouting up daily.
Gina: And having a good track record of success, I would expect?
Diana: And there’s also, just to add to that, a lot of really great initiatives, like All Raise, that are nationally trying to put women into decision making roles at VCs, because they only make up about 9% of decision makers in VCs nationally.
Leslie: And there’s an initiative called The Billion Dollar Fund whereby the founders of that organization are getting pledges, trying to get a billion dollars of pledges to focus on female founders. They’re up to about $750 million so far. They’re including companies like Launch, Goldman’s Launch, but then we pledged to at least deploy a portion of the fund this year. They do it year by year, so they want to do it by 2020.
Gina: And that’s investment capital?
Leslie: Investment dollars, exactly. It’s, so far, 45 funds have pledged some investment dollars, and they’re not all exclusively women focused but they do have a gender lens.
Gina: So, when you think about your portfolio companies, and clearly, the first component is women decision makers, but is there a sweet spot beyond that in terms of where the company is in its life cycle or industry? Tell me more about what you’re looking for.
Diana: All of the companies are tech enabled and scalable, going after really big markets and big ideas. Think billion dollar plus market sizes. They’re all post-ideation stage where they have a product, they have customers, real traction, and are looking to scale and grow and hire on other teammates. In terms of where we’re investing, we’re pretty vertical agnostic, but our sweet spots are fintech, consumer, energy tech infrastructure, and what I call life tech, which is sort of that silver tech down to baby tech, how you take care of your life from your child to your aging parents.
Gina: Sliver tech to baby tech. I haven’t heard that, I like it.
Diana: You heard it here first.
Leslie: That’s right. Exactly.
Gina: So, I’m sure when you announced the fund you have probably received a lot of interest from women entrepreneurs who are so excited that you exist and that you’re doing this.
Leslie: Absolutely. They’re actually finding us from all parts of the country because I think women entrepreneurs are drawn to the idea that we are focused on them, and sometimes it’s hard to get a focus on them from, largely, the male VC community. We’re finding ourselves being asked to be lead investors on deals that have limited—that are going to take a limited amount of money. And so, it’s pretty exciting because we can pull along some other VCs or sort of decide which other VCs we would like to pull into the deal.
Gina: And have you found, from the investor universe, so your potential limited partners, that they understand and appreciate the need for a fund, particularly focused on women and the value proposition of that?
Diana: Yes, for sure. There’s sort of the two camps: the side that really understands the value proposition and understands the different types of businesses these women are creating and the fact that there is really a lack of funding for them, and then there’s the side of investors who are more professional, who just don’t have access to these types of companies because of their networks. A lot of, as you kind of mentioned, a lot of it is really network focused, and so if you only look inside of your network you tend to get the same types of deals. Historically, data shows that actually looking outside that network is a much better investment play.
Gina: Well, over and over again you see part of the challenge for early stage companies is that the capital raising is so anecdotal. I mean, it’s who you know or who happens to see your deal vs. who might be the best fit. So you all have put up a big sign that helps people find you in terms of potentially being the best fit and really understanding what they’re trying to do. I think it’s exciting.
Stephanie: And just to add to what Diana said, we get the question very frequently, “are you just raising money from women?” And that’s not the case. In fact, some of our earliest LPs have been men who really believe in this mission and want to see their portfolios be diversified and see the value.
Gina: That’s terrific. That’s great to hear. I think we’re going to see more and more funds like yours, and thus, more and more visibility on successful women entrepreneurs. I mean, they’re clearly out there and have in some ways struggled to be adequately capitalized, in many cases. I think the work you’re doing is fantastic. So, let’s fast forward five years. HX will have worked itself out of a job, we’ll have a thriving ecosystem in Houston, but where will The Artemis Fund be in five years?
Leslie: On fund two.
Diana: We’ll likely be raising fund two and investing in more women-led companies and working towards a future where The Artemis Fund is out of its own job because we no longer need to designate a female-led or a male-led fund.
Gina: That’s right. And you’ll have spurned some incredibly successful exits out of your first portfolio.
Leslie: The timing is always a question, but we definitely will have spurned some successful going concerns that won’t be leading to exits, if not exited, yeah. That’s our goal.
Gina: I’m curious to know how you all got together and your decision to form the fund. Give me the background.
Leslie: We all came at it from different angles. I had been investing for a long time, for a little over four and a half years, and I had personally invested in over 40 companies, and I started focusing on women. As I joined groups that were mostly men or only men and saw that there was a lack of funding and funders that were funding for women, and funders that were women, and people focused on women. I joined the Houston Angel Network and Stephanie asked me to be on the board, and that’s how I met Stephanie and Diana. And they can tell you how they met each other.
Stephanie: As Leslie mentioned, I run the Houston Angel Network. I came to Houston to get my MBA and just fell in love with Houston and entrepreneurship through the MBA program at Rice. I participated in a Hackathon that Diana put on specifically for women with one of my classmates. I met her, she also joined the Houston Angel Network, and we got to know each other. I’ve been involved with many initiatives that are focused on empowering women, from my time in Washington D.C. to running a women’s MBA program at Rice. When we got together and started talking about real ways to improve women’s standing, wealth is one of the most important things to me and so this really spoke to me.
Gina: And you’re going to continue to lead HAN.
Stephanie: That’s correct. I will continue as the Managing Director. At the Houston Angel Network, we are very excited about other funds and investment groups in the community so that more investment can go into early stage companies.
Gina: What is it that you think is particularly special or valuable about Houston, both in terms of entrepreneurs, but also in as you’re raising your fund and looking for companies to invest in.
Leslie: Having just come from Silicon Valley last week, I realized that Houston has so much more excitement about innovation and entrepreneurship. In Silicon Valley, every third person you meet is a VC, and it’s almost like, their eyes glaze over, the valuations are so out of reach, people just talk differently. In Houston, there is passion and it feels real, and it feels more intimate. The connections are much more real. It’s not just, oh, you’re another VC. It’s very much a small town feel in a huge city.
Gina: I agree. It’s a small world and so many people wanting to help each other, I think.
Gina: So many people that sit here, that’s what they talk about is the people and the whole notion that we all succeed together, which I think is terrific. What about you, Diana?
Diana: Yeah, it’s super collaborative here. What’s great is that because it’s this new ecosystem with all of these different initiatives happening, we have a really good chance to build it from the ground up and make it a lot more equitable across different genders and races and age groups vs. having to plug into an existing ecosystem. I think we have this ability, and this kind of wind behind us to really drive a change here and start it in a very different way.
Gina: Well, and you’ve touched on something that’s a real priority for HX in terms of how do we think about building the ecosystem in Houston, and it is just that, to make sure that it benefits, broadly, the community, and it’s a rising tide that lifts all boats. And to your point, we’re all working in that direction. So, Stephanie, you said you fell in love with Houston. What is it about Houston that you fell in love with?
Stephanie: Definitely the people. I came from a very mature ecosystem in D.C. where it’s all about sort of who you know, where you’ve been. The first question you get asked is, what do you do? In Houston, I just felt like it really didn’t matter where you came from or who you are. What you have to bring to the table to help our ecosystem is really what people are asking you. And that just, this is a place where you can thrive.
Gina: You all clearly have a lot to bring to our ecosystem and we’re thrilled you’re here and appreciative of all you’re doing for Houston and for our entrepreneurs, and it’s very exciting. Thank you all for being with us today.
Leslie: Thank you for having us.
Stephanie and Diana: Thank you.
Gina: And that wraps up my conversation with the founders of The Artemis Fund. I’m Gina Luna, and this is HXTV.
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