Venture: Bumble's VC Fund To Invest In Female-Owned Businesses
In an age where online dating platforms such as Hinge, OkCupid and Tinder are becoming more popular every year, Bumble is unique as it requires women to make the first move when it comes to initiating a conversation by using a "swipe left/right" feature similar to Tinder. LGBTQ+ individuals of either gender are able to make the first move. Bumble encourages frequent dates while helping women avoid unsolicited messages they would commonly get on most dating platforms.
Bumble was created in 2014 by Whitney Wolfe, who was also the co-founder of Tinder, with the purpose of changing the gender dynamics of dating and romance by having women be in control of who they want to interact with, even with those they want to have platonic friendships and professional acquaintanceships. Wolfe has had battles with Tinder over the past few years since the founding of Bumble, especially when it came to her suing co-founder (and ex-partner) Justin Mateen, Sean Rad, the Tinder organization and the holding conglomerate, IAC, for sexual harassment that she encountered during and after her time as Tinder cofounder.
Another milestone in Wolfe's career was her arrival in the venture capital industry as she announced the creation of her own fund called the "Bumble Fund," designed to assist women-owned businesses. Wolfe's new venture capital fund will be headed by Bumble's COO, Sarah Jones Simmer, who will head its investment strategy, and the fund will have its own advisor in Sarah Kunst, who's also the managing director of Cleo Capital.
Bumble, known for having a workforce that's 85 percent female, created the Bumble Fund because the company believes women-owned businesses aren't getting a lot of venture capital funding. According to Bumble's "The Beehive" blog post, among the Bumble Fund's early-stage investments so far are BeautyCon, Mahmee, Sofia Los Angeles, Female Founders Fund and Bumble Fund's advisor Sarah Kunst's Cleo Capital venture fund.
Bumble has announced it has already committed more than $1 million into the Bumble Fund so far and that it will invest in checks of $5,000 to $250,000 in primarily women-owned companies, especially those who are of ethnic backgrounds. The years of experience that the Bumble executives have will be beneficial for those business owners who want to gain financial support for their businesses in their day-to-day operations.
The creation of the Bumble Fund had already strengthened what looks like the company's successful period so far as in 2017, Bumble was expected to make more than $100 million in revenue. However, in the same year, Bumble had also turned down a $450 million acquisition offer from Match Group, the parent company of Tinder, OkCupid and Match.com, as the offer would see Bumble be undervalued in the near future.
Venture capital funding for women, though it's slowly rising every year, is still remarkably low as only 2.2 percent of venture capital funding went to women-owned companies, especially since females still make up 11.3 percent of venture capital partners in the United States. According to a datagraphic on Pitchbook, the percentage of global venture capital deals conducted by companies with at least one female founder was 16.8 percent, especially those who are founders in the consumer goods and recreation, pharmaceuticals and technology, and media industries, the top three industries that completed the most VC deals.
One problem that had been a factor of discouragement for women-owned companies to receive venture capital funding is the existence of the 'gender investment gap'. This gap states that women tend to not invest as much as men and not a lot of women save up for their potential retirement.
Although women receive $1 million less than men after they pitch their ideas to investors for early-stage capital, women-owned businesses delivered more than twice the revenue than male-owned businesses. According to a post from the World Economic Forum, a joint study conducted by Mass Challenge and the Boston Consulting Group found that although $2.1 million gets invested in male-owned companies compared to $935,000 invested in female-owned companies, the female-owned companies, over a five-year period, still generated $730,000 in revenue compared to male-owned companies generating $662,000 over the same period.
Bumble's experiences with investment didn't start with the creation of Bumble Fund but with Russian investor Andrey Andreev, founder of European dating platform, Badoo, as his company owns a 79 percent stake in Bumble whereas Wolfe, who's still the co-founder of the $1 billion-valued Bumble, only has a 21 percent stake. Since 2016, Badoo has been the majority owner of Bumble as the Andreev-Wolfe partnership had begun when Andreev invested in Bumble through Badoo Trading Ltd., Badoo's UK-registered operator.
The rise of women in the venture capital industry can enhance the growth of women-led venture capital firms, as well as increased investment in these firms as it is shown in First Round Capital's review of its holdings that companies with at least a female founder performed 63 percent better than companies that are all owned by men in regards to creating value for investors. Well-known examples of VC firms with more female partners who have invested in successful women-led companies include the Perkins Fund, which has invested in Goldieblox, a toy company that aims to instill a spirit of feminine strength in young girls, and Aspect Ventures.
Bumble Fund's creation can also inspire the next generation of female venture capitalists who are of Black, Latinx, and other minority backgrounds. Although black women are the most educated group in the U.S. and are the fastest-growing group of entrepreneurs, black women still got only 0.2 percent of venture capital funding, especially with lenders and investors being reluctant to offer funds to their companies due to racial bias.
The Bumble Fund will inspire a next generation of female venture capitalists to support (and fund) the growing number of women-owned companies as the gender gap between companies owned by males and those owned by females are bridging closely than ever. Just as Bumble's purpose is to help women find the perfect match based on how and who they want to react, the Bumble Fund's goal is to ensure that women-owned companies are getting the help that they need to prosper, generate more revenue, and to guide more women who want to succeed in venture capital.