Business

Family office seeks co-investors for female-backed business deals

A US family office is on a mission to invest in women-owned businesses struggling to raise capital and scale up, and it is hoping to bring other family offices along on its investment journey. 

DRA Family Office, located in San Francisco and overseen by Jon Taber, has created a fund that it will use to seek out and support female entrepreneurs. 

Women venture capitalists go to traditional sources of capital and get turned down for any one of a number of reasons. But I think family capital is more flexible, more fluid and can be more open to partnering

Rose Vitale is a managing member at the family office focused on lower and mid-market private equity and late-stage venture capital. “We will source deals from different angel groups, incubators, VC companies and private equity firms,” she told Family Capital. She said companies “must be women-led or owned, post revenue and the founders must have a clear exit strategy”. 

Vitale adds: “DRA Family Office is aiming to change the state of funding for women business owners with our first fund, and we know there will be follow-on funds. Women face significant challenges accessing the capital they need to take their businesses to the next level.” Five sectors will be prioritised: fintech, retail, real estate, healthcare and education.

Jon Taber, managing partner of DRA Family Office, has an eclectic range of interests. He is chief executive of PureBeing and BG Acquisitions. At the turn of the century, he worked at Blue Pie Productions, a digital music record label and media company, before leaving in 2013. He become an adviser with Tech Angels in San Francisco’s Bay area and co-founded Street Smart Insights, a consulting and coaching business for entrepreneurs.

Charlotte Thorne is a founding partner at Capital Generation Partners, an investment firm that manages a range of large capital commitments for family offices, endowments and individuals. 

She says: “When I think about which businesses we look after that our clients have invested indirectly, a disproportionate number are actually female-led businesses, compared to what you might see in a private equity fund.” 

She believes family capital is able to fill a gap the financial services sector has left open: “Women venture capitalists go to traditional sources of capital and get turned down for any one of a number of reasons. But I think family capital is more flexible, more fluid and can be more open to partnering.”

“We know there are others out there interested in backing women-owned business,” said Vitale. “We look forward to meeting them and working with them. We have great sources for deal flow.” 

A survey by Family Capital last year found that 20% of senior investment positions in family offices were held by women, against 14% of the broader asset management community, as defined by Morningstar. Only 4% of family offices have women as principals, nearly as low as the wider corporate world but this could partly reflect the fact that business formation has traditionally been a male preserve.

Elsewhere, investors are looking for more diversity on the boards of companies they invest in, both in the public and private market and reflect the societies in which they operate. In his last investor letter, David Swensen, the CIO of Yale University Endowment wrote: “Our goal is a level of diversity in investment management firms that reflects the diversity in the world in which we live.” 

Some are looking to address this lack of diversity quicker than others. Last year, the Nasdaq stock exchange won approval from the Securities and Exchange Commission to require all of its listed companies to report on board level diversity. 

More has been achieved in the UK, where 49% of FTSE 100 board directors are women and 16% are ethnically diverse. But the number of women filling executive positions is lower, again reflecting the inferior role of women in creating companies.

As the Harvard Business Review pointed out, opponents argue that reform could result in boards taking a reductive “and potentially tokenistic approach”. 

Diversity Equity and Inclusion (DEI) programmes are becoming a more ubiquitous feature, particularly in private equity firms, but it’s a slow process. In a collaboration involving Him For Her with Crunchbase and Kellogg School of Management, a three-year study was published last year that focused on board diversity in the most heavily funded private companies. 

It found that only 3% of all directors are women of colour, while 78% of boards do not contain a single woman of colour 

Crypto which has gone stratospheric in recent years and looks set to continue as Web3 ushers in a whole new ecosystem, is the latest manifestation of female under-representation. 

Gemini, a cryptocurrency exchange and custodian, recently reported that women only account for 26% of Web3 investors and less than 15% of bitcoin investors. New initiatives such as the SuperBabesNFT club are trying to address this imbalance but any real chance to effect change needs to be driven top-down.

The US government has taken some ownership of the issue. Last July, President Biden signed an executive order to advance DEI in the Federal workforce. 

This may, or may not, create a trickle-down effect as large corporates extend their DEI programmes, and ultimately lead to more support at the grassroots level for US female entrepreneurs. But, even now, perhaps we shouldn’t hold our collective breath.

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