Lisa Calhoun
Welcome to the Atlanta Startup Podcast. I’m Lisa Calhoun, Managing General Partner at Valor Ventures. And today, we have a couple of power GPs joining us from Texas, The Artemis Fund. Stephanie and Diana, welcome to the program.
Stephanie Campbell
Thank you, Lisa. We’re super excited to be here.
Diana Murakhovskaya
Yeah, thank you for having me.
Lisa Calhoun
It’s a pleasure to have you. Well, the Artemis fund. I remember when we met a year ago or so today, a beautiful evening in Austin, we’re in a Kauffman Fellows event. And I needed to share the story of Artemis and I would love for you to share the fun value proposition with our listeners.
Stephanie Campbell
It’s funny, Lisa, how much has changed in the last year. I missed those times. We got to mingle in person over a nice glass of wine, often sunset, but hopefully soon again in Atlanta. The Artemis Fund, as you mentioned, is based in Houston, Texas. It’s myself, Diana Murakhovskaya, and Leslie Goldman. We are a power GP team of three ladies who are passionate about finding the best female founders throughout the United States. We lead seed rounds in tech-enabled businesses. We really set out to start the Artemis Fund because in all of our past experiences, Diana ran an accelerator in New York on Monarq, Leslie’s a prolific angel in 40 deals and 12 funds, and I led one of the most active angel networks in the United States, the Houston Angel network. We simply didn’t see enough female investors in the VC world. We didn’t see the types of companies led by women, which we knew were solving huge market and societal problems, and making an impact. We had that network and we wanted to help them get funded, bring their ideas, and an impact on the world.
Lisa Calhoun
When a founder reaches out to you, they’re getting an entire network of primarily women investors behind them?
Stephanie Campbell
Well, actually, it’s about 50/50. We have convinced both men and women that this is a need and that they really believe it. And they’ve seen it, the proof is in the pudding. We’ve invested in six deals so far, two of which have had really significant markup. But no, it’s both. We have a really strong network of FinTech advisors and LPs in our network that they get access to.
Lisa Calhoun
Fantastic. It’s interesting to me, I share your experience, that there are not a lot of women investors. And like you, having become one, that continues to surprise me more and more. Because I really feel that women are naturally strong investors for a lot of reasons, including relationship orientation, long-term thinkers, and are generally managing finances from a fairly young age now that families and households tend to be run by the woman as a kind of the family’s COO. Why do you think women aren’t as involved in startup investing, as that would appear to be?
Diana Murakhovskaya
You’re completely right, Lisa. As you mentioned, women control 89% of consumer spending. Two-thirds of personal wealth and 90% are more likely to go out of their way to buy from a business led by a woman. But when Stephanie and I first met about five years ago, that was the first problem we identified was that we couldn’t find women investors or female investors here in Houston and in Texas. And so we sought out to understand why and started doing events and dinners around my dining room table inviting these women, asking them why they’re not investing. So many raised their hand saying they’ve always wanted to but either couldn’t find a place that they felt like they belonged, or a cause that they believed in, or just didn’t know how their networks were doing it. I think that’s why the importance of funds that have a diverse lens will lead to a lot more diverse investors getting activated.
Lisa Calhoun
Really interesting. You know, one of the things we share is that about half of Valor’s investors are women, too. For a lot of the individuals, it’s their first foray into startup investing, and they write a significant check to do that. It’s interesting, what you talked about. Maybe it’s the network, maybe it’s the access, or the entree, setting the table, literally. It’s really exciting to hear that you’re bringing more women into investing. Now when you look for startups, do you invest only in female-led companies?
Stephanie Campbell
We look for female founders or co-founders. We will invest in a co-ed team. But what’s really important to us is that we’re moving the needle on equity on the cap table. So the female founder must have a founder level. We see very often a woman kind of thrown in as marketing chief, she doesn’t have any equity but called a co-founder, that doesn’t fly with us. We are looking for businesses that are being driven by women. It’s really important.
Lisa Calhoun
In terms of what they do, do you have a focus on what the business does as a tech-enabled solution? Definitely heard that. but are there particular verticals that you’re really focused on?
Diana Murakhovskaya
We come across a more thematic perspective. But we really like high-growth, early-stage tech companies that help people build wealth and take care of their families and communities in a more sustainable way. Some of the themes or verticals that can fall under that are FinTech focused on wealth creation, wealth education, sustainable consumer goods with a tech component, a plant-based milk company that comes in a proprietary format, that’s an example. A lot of companies around the care economy and care tech that help families stay in the workforce, build wealth in that way while still taking care of their families.
Lisa Calhoun
Tough question, how do you feel about romantically involved founding teams?
Stephanie Campbell
Oh, that’s a good question. Lisa. We haven’t invested in a husband and wife team. I think it takes a unique, definitely a unique relationship. Bringing on an investor and a co-founder is a lot like getting married, probably even more serious. So far, we haven’t done it. I think it would depend. We’d want to look at their track record the same way we look at any founder track record. Have they been there, have they done that, have they made it through ups and downs, and still together and strong? We would talk to any female founders, no matter who they’re married to, but I think we would take an extra second look, make sure that this relationship will not in any way impact the business. Sometimes you just need a break from your founder and co-founder. If you can’t get away, it can compound the stress.
Diana Murakhovskaya
We do have companies where the significant other is working for the company but in a different capacity. We’re not exactly opposed to it. We’ve looked at plenty of related teams, whether it’s mother-daughter, husband-wife, etc.
Lisa Calhoun
Well, that is unusual for a VC, for sure. It’s great to hear your position on that, that you’re open to. Of course, you’re going to due diligence, but you’re open to co-founders who are in a relationship that distinguishes you from most seed investors right there.
Stephanie Campbell
Sorry to interrupt you. One thing I love to just make a point here, though, is we do find out really early, that husband or maybe the wife may say, “Well, he owns half of everything that I own anyway.” It doesn’t mean he owns half the business so don’t make that decision too early in terms of equity split.
Lisa Calhoun
I heard that. What advice would you give our women founder listeners on their husband and the cap table from your experience?
Stephanie Campbell
First of all, any partner, make sure that they vest. If it doesn’t work out, they can’t walk away from day one with half the equity. That’s probably the biggest thing that I would say is, you know, in any case, whether it’s a family member, or a spouse, make sure that you really understand the terms. And if it is equity, make sure that you vest, and that you have the option to change things if things don’t go as well as you thought in the beginning.
Lisa Calhoun
Got it. Tell me a little bit more about some of the themes that you’re really excited about investing in in the year ahead. We’re coming off of the pandemic, the economy is starting to wake up again, and I’m sure you all are looking at this opportunity with a lot of semantic lenses. Could you share one or two that you’re excited about?
Diana Murakhovskaya
Yeah, happy to. We’ve seen an incredible acceleration of certain trends in eCommerce and digitization of a lot of things. One area that we’re looking at is definitely in the mental health space, and how it relates to keeping employees happier, more engaged in a variety of different ways, and both mental health and well-being. We’re looking at companies, and everything from alcohol dependency to women’s health, and how they sell into some of these corporations and make it so that coming back to work is a more engaging and pleasant experience.
Lisa Calhoun
Are you concerned at all about some of the stats that women have really dropped out of the workforce recently because of the pandemic?
Stephanie Campbell
They’ve dropped out of the workforce, they hit an all-time low in terms of venture capital funding they received. COVID really impacted women, especially underserved communities. I think that’s why it’s really important that groups like ours exist, to make sure that we don’t lose those gains permanently in our economic power and economic position. I think that a lot of work had to be done. We saw even with COVID how there’s a disproportionate impact on the haves and the have nots and so any kind of solutions that empowers women to stay in the workforce, underserved communities to build wealth, and generational wealth is really important to us. That helps bridge the equity gap. We’re looking for those types of solutions and we just raised our first fund. We’re excited to deploy that capital and the solutions that are going to change the way we build capital and really take care of our families for the future.
Lisa Calhoun
Well, I know there’s gonna be a lot of founders in Atlanta that want to pitch you when they hear that. So let’s talk a little bit about do’s and don’ts when pitching with The Artemis Fund. First, based on experience, I know you’re going to be taking pitches every day, what are some of you “Absolutely do share, we love to hear about, make sure you hit on this.”
Diana Murakhovskaya
I think it’s a great question. To generalize, founders looking for any kind of funding, really understand who you’re pitching and what they’re looking for. And so for us, we really look at early-stage pre-seed and seed stage female-founded companies in the verticals we talked about, which usually means that if it is a really later stage or doesn’t fit team size, then it’s not something that we’re looking for. I find that a lot of times, founders in general spin their wheels about who they’re pitching and are not always pitching the right types of investors for them. We really look for highly scalable tech-enabled businesses and while other types of businesses can be great, and profitable, it might not be something that needs to be venture backed.
Lisa Calhoun
The idea of a lead versus a nonlead investor, could you share a little bit more about how Artemis looks at that?
Stephanie Campbell
At the Artemis fund, we do lead. I know, from running an angel group and I think this has been an issue for female founders for quite a while, as you come back when you have a lead, no one’s really willing to take the risk, right? Push it off until later, we’re definitely one of the firms that we’re not trying to elbow into some of the hottest, crazy valuation deals. We’re really making the deal, we’ll spend the time to nurture founders that we believe are promising and those that have a product built with markets in resonance with revenues, and maybe have bootstrapped and don’t exactly set the seed categorization and take the time to get them ready to introduce to other co-investors. But we really liked the lead and building strong relationships with the founders of our companies. We really see ourselves as value-added venture firms that will not roll up our sleeves helping you find co-investors, recruit talent, and get your governance house in order. We prefer to lead, and I would say, back to Diana’s point, whether you talk to a lead or the following fund first, it doesn’t matter. Sometimes we’re really excited when a founder comes to us and says, “I’m really looking for a lead, I think you’re the perfect fit. And I’ve got X amount of foster hold already.” That shows us that they’re tenacious and that they’re able to raise money on their own as well.
Lisa Calhoun
Awesome. So what are some of the don’ts? I know, that’s a little bit prescriptive but basically, what are some of the mistakes founders pitching you can tend to make? Once you’ve already covered it, they don’t do enough research. They don’t know what you invested in from a stage perspective and that’s a really big flaw. Are there any other things that you see a lot of that you wish you saw less of?
Diana Murakhovskaya
I think one other area, and I find we see this a lot more with female-founded companies is underselling and under explaining the big opportunity that they have. They tend to come and say, “Here are my projections, here’s what the business is going to do.” And then when we push back and say, “This business could be bigger, why isn’t it we often hear back?” “Well, those aren’t my real productions, I just wanted to give you the conservative ones.” I would tell founders not to diminish what they think the potential is because investors already do that for them. It just sets them up for a disservice for what could be.
Lisa Calhoun
That’s really great advice. Before we leave that point, anything else?
Stephanie Campbell
One of the things I don’t also like to see is a rush or not willing to take the time. I’m not one of those investors, who gets a lot of FOMO. If you try to create a lot of FOMO, for me, I’m just not going to take the time. Because, as I mentioned, Artemis Fund likes the lead. We want to really get to know the founder and we want to make sure that we want to get into this marriage with them, or it could be 10 years. But be respectful to all the investors that you meet, because you never know when they may come in the next round, or when they could be helpful with their connections. I think just generally, I think it definitely slipped were for a long time, it was a VC market. Sometimes it can be a founders market and these hot deals but just be respectful in everything you do, but mostly when you’re talking to investors.
Diana Murakhovskaya
If you are part of a co-founded team, one of the big things is the co-founder relationship you have. Because such a big piece of starting and growing a company is the ability to galvanize people to work with you, invest in you, hire well. And so for us, a lot of times if we do have calls, and sometimes it’s more than one or more meetings with founders, and there’s a tension between the co-founders, that’s probably a pretty big red flag for us if they’re not respectful of each other.
Lisa Calhoun
That’s an excellent point. Well, thank you for sharing those. I want to switch gears and talk a little bit about the southeast region. This is the Atlanta Startup Podcast and I know the Artemis Fund is a national investor but do you have any themes around the southeastern perspectives on this region in particular?
Stephanie Campbell
I think there’s a lot of really great themes, for example, with Valor. That really strong FinTech community, consumer tech, the future of retail, so we’re definitely looking. We’ve looked at a couple of FinTech companies in Atlanta already and also looking at a couple of consumer tech companies as well. We’re really excited about that. Diana, do you have any other areas?
Diana Murakhovskaya
I would say just more broadly, we’re really excited about underrepresented areas around the country. We try to look for strong ecosystems like Atlanta has. Maryland, DC, Los Angeles, where female founders can thrive. We find that those companies have a lot of great infrastructure from the universities that exist to the corporations that they can tap into as customers and are maybe at better valuations and values to us.
Lisa Calhoun
If we look across your pipeline today, what percentage of it is coming from the southeast, broadly speaking?
Stephanie Campbell
That’s a great question. I would say, if you count Texas in that, quite a bit. And if you count DC, down to Georgia, I would say quite a bit of the portfolio of our pipeline comes from underrepresented communities. So probably more than half would you say, Diana?
Diana Murakhovskaya
Definitely, if you count Texas in the southeast, it’s around half.
Lisa Calhoun
Well, naturally, Texas is its own country, we will give you that.
Diana Murakhovskaya
Texas is its own region.
Stephanie Campbell
But I’m from your neighborhood state, born and raised in Alabama, Lisa, so I have a special place in my heart for the southeast. When I moved to Texas, I said, you know, Texas is in the south of Texas.
Lisa Calhoun
I know. I was raised in Georgia and went to a college in Texas. I quickly learned that while it is the south, it has its own flavor. It’s really a wonderful place. You come from the same place as Tim Cook, the CEO of Apple, very good to know, Stephanie.
Stephanie Campbell
Good things come out of Alabama sometimes.
Lisa Calhoun
Indeed. So regarding the general situation around fundraising from the southeast certainly is challenging. On the other hand, 40% of the US population is in this region, speaking of the broader region, like we just were. So that’s a large number of founders, But to your point about the underrepresented, greatest density of underrepresented founders in the country, I think that’s why companies are moving to Austin, moving to Atlanta, so rapidly now, partly because they’re looking for that diversity in their workforce. It’s just unattainable in some of the regions of the country. So listen, as we’re closing, I always like to ask people who have made a big impact on them. I would love to hear from either review of mentors or people who have influenced your career trajectories in a positive way. There are so few women investors, even though there are a couple hundred that we know, it’s very different as there are thousands of males. How do you see your career having been impacted by different people and are there a couple of folks that you could share a story around?
Stephanie Campbell
Good question, Lisa. Maybe I’ll start. Someone that you know, exactly on the vein that we were just talking about. I had a mentor. Early in my career, I moved from Alabama to DC, an intern for Northrop Grumman, and this person took me under my wing. She’s actually from the great state of Georgia. Her name is Sherri Powell. She is the founder of a company or actually a group called The Rural Chamber of Commerce, which is trying to help entrepreneurs in rural communities, access capital, and the things that they need so that they can stay and help their communities thrive. And so there’s just so many parallels and what I’ve seen in her path, and what we’re doing in arguments, trying to find the tech to find the resources that empower more communities, a broader community. Democratized prosperity for more She played a huge role in my life. I was thinking about going to law school. And she said, “I don’t think that’s right for you. I really think you should try business school, Stephanie.” And that’s where I met Diana. I kind of owe her my whole path, I guess. But yeah. Diana?
Diana Murakhovskaya
I think for me, it’s not any one person. But I’m really inspired by all of the venture funds that are being started by women, like yourself, Lisa, Valor, and others. The majority of female-led venture funds, I think it’s something like 73, or 75% of women have started in the last five years. I think it’s because we see a system that is broken, and an opportunity that is greater than others have realized. We often get asked if we’re in competition with other funds, or if we have to. I actually find it refreshing and encouraging to see more funds started because there’s such a great opportunity for everyone to invest in some great companies.
Lisa Calhoun
I do, too. One of the things I think is so funny is there can be this presumption in our culture that women are competitive but guys, they aren’t. And it’s really something else. Because in seed investing, since the beginning of the industry, seed investors have worked together to build some to get to build rounds. The same is true in angel investing. So it’s always been true of the early stage that it’s innately collaborative, so women start a fund in the same country, and it’s like,” Oh, you’re competing with her?” Are you kidding me? We’re doing deals together like we are with Artemis. It’s an interesting perception in our culture for sure around how competitive the seed stage and more specifically, if there’s more than one fund investing in women or people of color, does that destroy the market? Absolutely not. I mean, the market under 40 is already the inherently non-white majority. And last time I checked women were 51% of the population.
Stephanie Campbell
I believe we’re making the market, right?
Lisa Calhoun
Yeah, that is happening. Absolutely. Well, thank you so much for taking the time out to share with us. If a founder wanted to get in touch with you, what is the best way for them to reach out to the Artemis Fund?
Stephanie Campbell
The best way to reach out is just to email us. We’re always open to founder outreaches. We want to talk to every female founder with a caveat with what you heard today in what we’re investing in. You’re welcome to email me at stephanie@theartemisfund.com. I always talk to a female founder.
Lisa Calhoun
Thank you so much. I appreciate your time today.
Stephanie Campbell and Diana Murakhovskaya
Thank you, Lisa.
Lisa
Thank you for listening to the Atlanta Startup Podcast. You know, we’re not just a podcast, we’re a community, and we’d love to see you at one of our digital or physical events, go to valor.VC and sign up for an event that makes sense for you. We have events for founders and the investors who back them. Another event you might enjoy is Startup Runway. The Startup Runway Foundation is a Valor organization that provides $10,000 grants to founders who are women or people of color building next-generation software products. Applications are free and we’d love to hear from you at startuprunway.org. And as always, thank you so much to the organizations that make this podcast possible. Not only Valor Ventures, but also Write2Market, a tech marketing and PR agency in Atlanta, Georgia, and the Startup Runway Foundation and Atlanta Tech Park Valley’s headquarters, and also headquarters for over 100 local entrepreneurs, building global businesses. See you next week. Please bookmark the podcast and join us.
