Only a handful of VCs sought out women entrepreneurs when AOL media execs Susan Lyne and Nisha Dua launched BBG Ventures in 2014 to exclusively back female founders. Ten years later, the seed stage fund has raised a new $60 million fund and is moving beyond just backing female founders to any entrepreneur from a diverse background.
“This is not about abandoning women, but expanding our mandate to back a diverse founding team,” Lyne told Business Insider.
Founders from diverse backgrounds have taken a hit amid the funding slump in venture capital. In the first half of 2024, Black-founded US startups received $228 million in funding — or about .3% of the nearly $79 billion that went to U.S.-based startups, according to Crunchbase data. The dollar total is a 60% drop from the first half of 2023.
Lyne and Dua teamed up at AOL in 2014 to create a $10 million fund, BBG, to back female founders and invested early in Spring Health, which was mostly recently valued at $3.3 billion, and toy brand KiwiCo.
When Verizon bought AOL in 2015, BBG Ventures separated and raised a new $50 million fund. For the first time, it raised capital from institutional investors, including the State of Michigan Retirement Services and Illumen Capital. Investments include genAI startup Topline Pro and skincare company Starface.
Dua said that these LPs returned to back their newest fund and also increased their commitments. New investors in the fun include Fairview Capital, Pivotal Ventures, California Endowment, and Mizuho. Previous investors Nordstrom, Verizon, and Bank of America also invested in the $60 million fund.
Dua explained that the decision to move beyond exclusively backing just female founders reflects the duo’s shift in thesis around innovation. “There are underrepresented groups around not just gender but also race, age, and income,” said Dua.
She emphasized that female founders are still a huge focus area but that the firm is excited to back strong, underrepresented founders in healthcare, fintech, and the investment area nearly all VCs clamoring to back: AI. The new fund has already backed an AI recruiting startup for hourly workers, UpWage.
BBG isn’t becoming an AI-focused firm anytime soon though, Dua cautioned. “Some funds are building a portfolio of just AI companies,” she said. “That’s not us.” She highlighted a recent investment out of the new fund in Nara, a startup that has created an FDA-approved, certified organic whole milk formula. “It’s important for us to be circumspect where AI can drive growth in certain startups,” added Dua.
For Dua and Lyne, being an emerging fund manager and raising a new fund is “not easy.” “The vast majority of VC funding this year goes to a very small pool of funds, and sub-$100 million funds have a tougher time raising,” said Lyne. She added because of the competition to raise funds from LPs, many funds are taking longer to make decisions and waiting to see what returns a fund makes before investing again.
“Many of our LPs believe in impact and trying to broaden access to capital,” said Lyne. “We raised more than our last fund, and I think it’s validation of our thesis.”
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