A lack of capital or credit is one of the most common barriers against entrepreneurship in the United States and Europe. While poor credit access affects people across the economy, females are consistently denied funding from venture capitalists.
The problem of credit access may be related to the decline in entrepreneurship and firm turnover since the 1980s. Economists like Tyler Cowen and Alex Tabarrok argue that entrepreneurs and the process of creative destruction are necessary for healthy economic growth. Correcting the bias against women in business could be good for the whole economy.
The Bias Against Female Founders
Female entrepreneurs are disproportionately denied funding opportunities. In 2017, female founders received just 2 percent of total venture capital dollars. This was not an isolated case. For each year between 2006 and 2017, the percentage of venture capital dollars offered to women never exceeded 5 percent. The situation is worse for females belonging to minority groups. In 2017, just 0.2 percent of venture capital funds were offered to black female entrepreneurs.
The debates about the causes of the bias against female founders are numerous. While people struggle to figure out the causes of discrimination by the venture capital community, Whitney Wolfe Herd is leading the charge to redirect some venture capital dollars to promising female entrepreneurs.
The Team Behind Bumble Fund
Whitney Wolfe Herd, the founder of dating and networking app Bumble, is using the resources of her massive company to launch the Bumble Fund. The Bumble Fund is a venture capital fund that aims to support female entrepreneurs during their companies’ formative stages.
Bumble Fund will be led by Sarah Jones Simmer, the COO of Bumble. The investment strategies of the venture capital fund will be developed by Sarah Kunst. Sarah Kunst is the Senior Advisor of Bumble who helps oversee the daily financial operations of the company.
The all-female team is accustomed to making difficult decisions in male-dominated industries. Wolfe Herd, Simmer, and Kunst will use their experiences to offer financial and leadership support to female entrepreneurs who will face doubt and discrimination from the traditional financial sector. The leaders of Bumble are successful businesspeople, so they will also offer support with creating business plans and developing marketing strategies.
The Leadership of Whitney Wolfe Herd
Whitney Wolfe Herd is uniquely prepared to support the entrepreneurs who receive funding through the Bumble Fund. She is a co-founder of Tinder, the famous dating app company that developed a toxic corporate culture towards women. Instead of tolerating limited opportunities and sexism, Herd decided to disrupt the market by forming a dating app that treated women with respect.
Bumble is an indicator of Herd’s ingenuity. Instead of being a simple knock-off product of dating app Tinder, Bumble uses its networking infrastructure for a wide range of purposes. Consider the example of a woman moving from rural Iowa to Chicago. The woman is in a new place with no connections. She tries to make friends, but the fast-paced nature of the city is not conducive to meaningful conversations. She learns about Bumble. Through Bumble, she meets female friends. She eventually uses the app for affairs like dating and business networking. Bumble is the all-in-one networking app. It is suitable for the modern woman.
Bumble is a great product because of Herd’s empathy and leadership. Herd understood the struggles that women face in today’s world. She will use a similar approach to guide female founders who receive funding from the Bumble Fund.
Bumble Fund Has Impressive Early Commitments
The team behind Bumble Fund is not pulling any punches during its first round of investments. Bumble Fund is investing in Sofia Los Angeles, a winner of Bumble’s Bizz Pitch competition.
Bizz Pitch was a competition used by Bumble to find deserving female entrepreneurs with impactful and profitable business ideas. Sofia Los Angeles, a past winner, is a swimwear company founded by Anasofia Gomez.
Bumble Fund will also provide financial and advisory support to the founder of Mahmee, a platform for healthcare services aimed prenatal and postpartum needs.
While Bumble has declined to comment on the size of their first round investments, Forbes reported that the company has already committed over $1 million in venture capital dollars. The size of each investment ranges from $5,000 to $250,000. All capital investments will be targeted at female entrepreneurs and companies with missions that positively impact women.
Bumble’s Strategy to Find New Founders
Bumble is using its strengths to gain a foothold in the venture capital industry. The team has used the Bumble infrastructure to launch a new network known as Bumble Bizz. Bumble Bizz operates like a dating app, but it matches founders with venture capitalists.
Bumble Bizz also functions like Linkedin Jobs and ZipRecruiter. Job-seekers can complete a profile to be matched with relevant career prospects.
Bumble Bizz has recently been used to close the digital divide between female entrepreneurs. In June, Bumble Bizz hosted Pitch Perfect, a professional networking event in Nashville, TN. Entrepreneurs drank wine, pitched business ideas, and shared contact information with venture capitalists in several rounds of speed-dating.
The app also hosts competitions like the Fearless Mogul contest. The winners of these competitions receive seed money and guidance to pursue their entrepreneurship goals.
These methods of finding founders are unconventional, but they are proving to be useful for finding clever women who may be intimidated or discouraged by the traditional investing community. Entrepreneurship mixers and dating-style networking apps are how Bumble taps into hidden talent.
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Could Bumble Cause a Broader Movement?
Whitney Wolfe Herd and her team at Bumble have created an effective way of encouraging female entrepreneurship. While the venture capital community likely requires a broad cultural shift to end the bias against women, these efforts by Bumble are a good start.
With women in important roles at large companies, norms about who succeeds in business can be more inclusive for women. Perhaps Bumble will inspire other large companies to affect social change for women with impact investing.