Jenny Abramson and Heidi Patel have signed investors including Melinda French Gates and UBS for their third Rethink Impact Fund, growing assets under management to more than $500 million.
by Maggie McGrathForbes Staff
JAnya Abramson was a sophomore at Stanford University when her mother, Patti, started the Women’s Growth Capital Fund in 1997. At the time, she was surrounded by “a million amazing women” at school and didn’t really understand why female founders needed a dedicated venture capital firm, her daughter recalls.
27 years later, Jenny Abramson has not only figured it out, but has raised another $250 million for Rethink Impact, solidifying its position as the largest venture capital firm dedicated to funding female CEOs. This is the third and largest fund that Abramson and her co-managing partner, Heidi Patel, have raised since 2017, nearly doubling their assets under management.
What stands out about the round, which closed today and is first reported here, isn’t just its size and participation: It comes amid what is shaping up to be the worst year for venture fundraising in a decade, according to Pitchbook, and at a time when efforts to promote diversity, equity, and inclusion are under attack both in the courts and at corporate America.
Though the average time it takes venture firms to close a new fund has stretched to 15 months in recent quarters, Abramson and Patel raised Fund III in just one summer. Limited partners include Melinda French Gates’ investment firm, Pivotal Ventures, and a number of institutional investors. “To get to this scale, we needed to get into institutional limited partners, and we’ve done that,” Patel says. “We have over 10 university endowments and foundations, and we also have limited partners from big financial institutions like UBS and Cambridge Associates.”
The late Patti Abramson’s dreams were shattered by the 2000 tech bubble collapse. In the end, she returned the money to her investors with no loss or gain. Still, her daughter had no intention of taking up the cause. Jenny Abramson graduated from Stanford, was a Fulbright scholar at the London School of Economics, got an MBA from Harvard, and worked as an executive at The Washington Post for eight years. But when she became CEO of a tech startup in 2013, she saw firsthand what her mother was trying to change: only 2% of venture capital funding goes to female founders, a situation that remains today. “Especially as someone with two daughters who are now in their teens, I felt that this had to change once and for all,” Abramson says.
After launching Rethink in 2015, Abramson began looking for a partner with impact investing experience. Through his Stanford University network, he connected with Patel, a pioneer of impact investing who now teaches a course on the subject at Stanford. The pair launched their first $112 million fund in 2017, then invested in Sallie Krawcheck’s robo-advisor Elevest, Rachel Romer’s software company Guild Education and April Koh’s Spring Health. These were smart moves. Spring Health, which provides mental health care through employer-sponsored plans, was valued at $3.3 billion earlier this summer. Guild Education, which provides a career education platform for employers, was valued at $4.4 billion in 2022. Elevest now manages $2 billion.
That track record paved the way for Fund II, which was oversubscribed in 2020 (the duo sought to raise $150 million but ended up raising $182 million from LPs). Now, just four years later, Abramson, 47, and Patel, 48, have added $250 million in dry powder. Erin Harkless Moore, managing director of investments at Pivotal, an LP in Rethink’s Fund II and the new fund, attributes the recent rapid fundraising success to “Jenny and Heidi’s passion, grit, determination and the way they build relationships.” But, she adds, “I don’t think they would have been successful without the strength of their track record… And I think what’s true, at least for us at Pivotal, is their belief that that’s the differentiator and that allows them to bring value to us.”
“In the wake of #MeToo, some may have thought investing in women was a passing fad,” Abramson says, “but this moment makes it clear that investing in and influencing women matters.” [funds] It’s good business.”
But not everyone is convinced about the wisdom, or legality, of such targeted funds. In June, the U.S. Court of Appeals for the Eleventh Circuit issued a preliminary injunction blocking the Fearless Fund from awarding grants exclusively to black women entrepreneurs, which is the fund’s mission. The suit, now back in district court, was brought by the American Equal Rights Union, led by Edward Blum, the conservative activist who filed the case that led the Supreme Court to ban racial preferences in college admissions last year. Blum argues that focusing exclusively on women (or women of color) is a form of reverse discrimination and not a way to redress past discrimination.
Some investors and academics argue that concentrating on a narrower segment of the market means missing out on benefits that can be gained by investing in male-led startups or companies that aren’t mission-driven. “When we talk about limiting investments to only sustainable practices or only women-owned companies, we’re certainly limiting our financial gains,” says Jim Wolf, an entrepreneur and professor at George Mason University’s Costello College of Business. “But we might be getting some positive externalities,” he continues. In other words, there might be additional benefits to society but not to the investor.
Abramson and Patel don’t think they’re sacrificing returns, especially if they can find promising companies that male-dominated venture capitalists miss. “Rethink looks at 700 deals a year, but we only have to pick four or five to invest in, and we often have less capital to put toward those deals,” Abramson says. Abramson points out that most venture funds limit the number of deals as part of a strategy to back startups at a certain stage of development, in a certain industry, or in a certain geographic area. The narrow focus “strengthens deal flow because people know what to send, and it’s also a key aspect of differentiation,” Abramson says.
Patel argues that Rethink’s mission also helps avoid venture capital bubbles. “Venture capital bubbles grow because investors are all chasing the same deals, the same types of deals. That drives valuations to incredible numbers, but they’re not sustainable and inevitably pop over time. We’re just playing a different game,” she says. “Women start 40% of tech companies and they start startups at twice the rate of men. So we feel like the opportunity is huge and completely untapped.”
“They [Abramson and Patel] “This is definitely not charity, this is not a concession,” Pivotal’s Harkless Moore said.
Investors and founders alike have found that Abramson and Patel bring something more to the table than just business acumen: solid networking. While the Harkless-Moore team meets with fund managers nearly 400 times a year, Abramson and Patel stand out for the hands-on way they help their portfolio founders and limited partners make valuable connections, he says. Abramson is based in Washington, D.C., and Patel in San Francisco, and they’re close to both policymakers and Silicon Valley tech founders. For example, he met privately with several portfolio CEOs after Commerce Secretary Gina Raimondo spoke at Rethink’s annual conference in Washington last year.
Diana Heldofon, 2024 Forbes The 30 Under 30 list and founder of Parallel Learning (whose software connects special education teachers and therapists with more than 100 school districts across the U.S.) wasn’t actively raising money for her startup when she first met Abramson in January 2023. But they stayed in touch over the next six months, and by the end of that summer, Parallel had received “opportunistic capital” from Rethink.
“The reason we’re a portfolio company, and the reason she didn’t need cash when she became an investor in Parallel, is because Jenny is literally the most persuasive person I’ve ever met,” Heldfond says. “And by the way, Jenny worked the whole month of August,” she adds. “You know that rumor that, ‘Oh, VCs take a break in August,’ it was the most productive August of my life.”
Laurel Taylor, founder and CEO of Candidly (named to the Forbes Fintech 50 in 2023), gives a specific example of how Abramson’s connections helped the company grow. Taylor, who had nearly $200,000 in student loan debt herself, launched Candidly in 2016 with the goal of building a platform to help borrowers pay off their loans faster. In 2019, Rethink raised $11 million in Candidly’s Series A round, and Abramson joined the company’s board of directors. That year, Abramson introduced Taylor to a Rethink limited partner, who introduced her to Tom Naratil, former head of the Americas at UBS. By 2020, UBS had rolled out the Candidly platform internally as an employee benefit within the bank and externally to its own clients through Workplace Wealth Solutions. “As we’ve progressed through every stage of our business, we’ve had a consistent relationship with Jenny – the introductions she’s made, the calls she’s made and our ability to acquire new commercial relationships and new capital,” Taylor says.
Congress has also helped Candidly: In 2022, Congress passed the Secure 2.0 Act, allowing employers to treat employees’ student loan repayments as 401(k) contributions and match employer contributions. Candidly has expanded its platform to facilitate these payments.
That works well for many of the 40 companies in Rethink’s portfolio because they are B2B-oriented: They have large market potential without the big marketing costs of consumer acquisition.
In addition to making a profit for their investors, Abramson and Patel aim to change the course of funding for female founders and CEOs. “We believe we’ll see gender parity in our lifetime,” Abramson says optimistically. “I think we’re finally at a point where we have the data to show that women’s companies grow faster, have higher valuation gains, and exit earlier. After all, time is money.”
“This is our life’s work,” Patel adds. “It takes more than a year or two to completely reshape an industry, but I think we’ve made great progress. And the fact that we’re now on our third fund and managing $500 million across three funds is a huge step in the right direction.”
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