A fo­cus on fe­male founders

Fund looks to take ad­van­tage of an un­tapped mar­ket

Stamford Advocate (Sunday) - - Sunday Business - By Ma­caela J. Ben­nett

A young ven­ture cap­i­tal firm based in Green­wich be­lieves it has a big com­pet­i­tive ad­van­tage.

Founded in 2016 and launched last year, 1843 Cap­i­tal — led by Tracy Chad­well and Ali­son Andrews Reyes — spe­cial­izes in tech­nol­ogy star­tups, but dif­fer­en­ti­ates it­self pri­mar­ily by in­vest­ing in com­pa­nies with “di­verse lead­er­ship teams that in­clude at least one woman,” Chad­well said.

A grow­ing pile of re­cent stud­ies in­di­cate both women’s significance in help­ing star­tups suc­ceed and the broad gap be­tween the ven­ture cap­i­tal dol­lars given to men ver­sus women. Yet 1843 Cap­i­tal is one of the few firms tak­ing ad­van­tage of that dis­par­ity, ac­cord­ing to Matt McCooe, CEO of Con­necti­cut In­no­va­tions, the state-backed ven­ture fund.

“There’s fairly com­pelling ev­i­dence that women make great CEOs and more di­verse teams are more likely to have bet­ter out­comes,” McCooe said. “I’ve only heard of maybe three funds that are fe­male­fo­cused, and at the end of the day, those funds are emerg­ing be­cause they get bet­ter re­turns than they would oth­er­wise. They’re cap­i­tal­iz­ing on a mar­ket op­por­tu­nity. Tracy is set up to be suc­cess­ful.”

Dou­ble bot­tom line

Though 1843 is in its in­fancy, it is al­ready gain­ing recog­ni­tion. Found­ing part­ner Chad­well ac­cepted the Women’s Busi­ness Ad­vo­cate award last week at Moffly

“We’re go­ing af­ter fe­male-founded tech com­pa­nies be­cause there’s a mar­ket in­ef­fi­ciency. We have a pref­er­ence for at least one fe­male founder, be­cause that’s a suc­cess in­di­ca­tor. ... We feel like we have a unique ca­pa­bil­ity with our ex­pe­ri­ence and net­works.”

Ali­son Andrews Reyes , 1843’s gen­eral part­ner

Me­dia’s an­nual Women in Busi­ness con­fer­ence and fre­quently speaks at events about her work with 1843 and judg­ing startup com­pe­ti­tions.

It was six years ago that Chad­well be­gan tak­ing ad­van­tage of the un­tapped op­por­tu­nity to tar­get wom­en­led star­tups. She launched a pre­cur­sor to 1843 called Coy­ote Cap­i­tal in 2015. Over the next two years, she brought on busi­ness part­ners and changed the name to 1843, which was in­spired by Ada Lovelace, a 19th-cen­tury math­e­ma­ti­cian who has been called the first computer pro­gram­mer. In 1843, Lovelace pub­lished a tran­script that some have dubbed the first computer pro­gram.

The nu­mer­i­cal name also pushes Chad­well’s firm to the top of al­pha­bet­ized lists, she said.

Chad­well likes to de­scribe her busi­ness strat­egy as achiev­ing a “dou­ble bot­tom line,” be­cause of the prof­itable deals she makes while fos­ter­ing “mean­ing­ful change.”

“There was a con­flu­ence of data val­i­dat­ing my de­ci­sion,” she said in an in­ter­view.

At speak­ing events, Chad­well opens her pre­sen­ta­tions with stud­ies, in­clud­ing those pub­lished by PitchBook and First Round Cap­i­tal, that found women-led com­pa­nies re­ceived be­tween 2 and 3 per­cent of ven­ture cap­i­tal dol­lars in 2017, while star­tups with

at least one fe­male founder per­form 63 per­cent bet­ter than those with only men.

“We’re go­ing af­ter fe­male-founded tech com­pa­nies be­cause there’s a mar­ket in­ef­fi­ciency,” said Andrews Reyes, 1843’s gen­eral part­ner. “We have a pref­er­ence for at least one fe­male founder, be­cause that’s a suc­cess in­di­ca­tor. Women need to be part of that found­ing team. We’re OK if peo­ple want to look at the data and still choose to look in the op­po­site di­rec­tion. In the mean­time, we’ll zig while they zag. We feel like we have a unique ca­pa­bil­ity with our ex­pe­ri­ence and net­works.”

‘We need more Tra­cys’

Chad­well pro­vides the ven­ture cap­i­tal ex­pe­ri­ence, while Andrews Reyes con­trib­utes a ca­reer spent in en­gi­neer­ing as well as build­ing busi­nesses. In 2013, she sold a cy­ber­se­cu­rity com­pany she had grown for seven years called Vig­i­lant to Deloitte be­fore found­ing Dezignable.com, which she has handed over to her part­ner while re­main­ing on its lead­er­ship board.

To­gether, the pair con­sid­ers mul­ti­ple busi­ness pitches every day, mostly in the realms of cy­ber­se­cu­rity and what they call “sil­vertech,” or tech­nol­ogy for peo­ple 50 or older. Andrews Reyes’ deep back­ground in cy­ber­se­cu­rity and e-com­merce give her an edge in eval­u­at­ing the po­ten­tial of star­tups, she said. “Cy­ber­crime is in the news day in and day out, but to in­vest in the space, you have to un­der­stand the real value

of tech com­pa­nies and what they’re putting forth,” she said. “There’s so many com­pa­nies out there, so there’s a lot of over­lap in what they’re do­ing.”

Even when they choose against in­vest­ing in com­pa­nies, which is most of the time, Chad­well said she tries to help founders by giv­ing advice or point­ing them to­ward an­other ven­ture cap­i­tal firm.

Chad­well’s en­thu­si­asm and con­sis­tent help­ful­ness played a role in con­vinc­ing Wendi Burkhardt, the CEO of one of 1843’s in­vest­ments, that she wanted to work with Chad­well, Burkhardt said.

“Even two years ago, there wasn’t a lot of con­ver­sa­tion about tech­nol­ogy for the ag­ing. I teamed up with Tracy be­cause I was grate­ful that she un­der­stood the land­scape and re­al­ized what a huge mar­ket this is.”

In 2015, Burkhardt co-founded Sil­vernest, a room­mate-match­ing plat­form for older peo­ple. The Den­ver­based startup closed a seed fundrais­ing round in 2017 that to­taled more than $1 mil­lion. Among its in­vestors was 1843 Cap­i­tal.

“Fundrais­ing is a sales process; you’re sell­ing,” Burkhardt said. “What we need is more Tra­cys. We need more women in the ecosys­tem, be­cause you buy from peo­ple who look like you. To date, she’s been one of our most mean­ing­ful in­vestors.”

Tyler Size­more / Hearst Con­necti­cut Me­dia

1843 Cap­i­tal Gen­eral Part­ner Ali­son Andrews Reyes, left, Found­ing Part­ner Tracy Chad­well, cen­ter, and Chief Fi­nan­cial Of­fi­cer Gwen Weiss at the Moffly Me­dia Women in Busi­ness Lun­cheon at Green­wich Coun­try Club ear­lier this month.

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