Prominent investor and entrepreneur Sarah Kunst just closed a $3.5 million fund targeted at making women a larger part of the decision-making process in venture capital.
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Her firm Cleo Capital will invest in female scouts, who will independently seek deal flow. For those who don’t know, scouts help large venture capital firms find the next dorm-room-dreamt startup. Sequoia Capital, for example, sources scout to help its firm find undercover deals – and has been doing so for over a decade.
Kunst is specifically targeting female scouts because of their lack of representation in the venture capital room. As Axios once reported, 91 percent of decision-makers in the industry are male.
Beyond investing in scouts, Kunst said the fund will be used to invest in follow-on rounds that flow from scout investments and her own personal choice to invest in certain companies.
That said, Cleo Capital is not specifying any target verticals or requiring the new women scouts to only invest in female-founded companies. Kunst said this frees up the scouts to focus on finding the best deals.
“I’m not going to put a bunch of random restrictions on you, you’re brilliant, you’re smart and I’m going to trust you with that,” Kunst told Crunchbase News, of her scouts. “They can invest in whoever they want.”
With her fund, she expects each scout to make around five investments each. That number may change as some industries are more capital intensive than others, Kunst noted.
Kunst declined to explain how much money each scout will have to invest with, or how many scouts she has already locked down. That said, she has secured a “literal rocket scientist” and the co-founder of Birchbox, Mollie Chen. She is also recruiting scouts in Denver, Detroit, and other locations going forward.
Andrea Walne, a partner at Manhattan Venture Partners, told me last month about how she’s noticing a growing class of female venture capitalists. No longer are we in a world where venture capitalists have to come from a male-dominated semiconductor and computer chip industry, she said. Walne herself came into venture capital from an “untraditional” path, coming from a job as a director at Carta, which helps startups manage equity for employees.
“There’s a new subset of venture capitalists,” she said, referring to a rising class of female venture capitalists.
That said, Walne said “there’s no one better suited than Sarah to utilize the network effects of the strongest females in the Valley to identify untapped, female-led opportunities.”
“She understands that there are so few women who have built recognizable startups that when they spot a good opportunity they know exactly which characteristics make them attractive investment opportunities,” she added.
Kunst noted that companies she’s looked at have raised more than her entire fund in a single round. As Axios reported, Cleo Capital was aiming toward $10 million – but ended up raising $3.5 million.
This is the second largest fund closed by a black, female venture capitalist in America, Kunst added.
“Super happy to be that number two,” Kunst said. “And I hope I get replaced soon with someone who has raised a much bigger one.
Illustration: Li-Anne Dias