WOODSIDE, Calif. — There’s a house situated on a wooded hillside in this wealthy Bay Area town, its entryway shaded by a pergola covered in vines, the mountains framed by wood-trimmed windows, stones paving a sweeping garden.
But it isn’t your typical multimillion-dollar Bay Area home. Instead of a couch and a television, the living room is dotted with desks. Instead of T-ball trophies and family photos, the gallery wall in the hallway is plastered with prints about startups working on men’s fertility tests, subscription plans for egg freezing, and catheters for chemotherapy. (The kitchen, however, is still stocked with snacks.)
The home is the headquarters of Portfolia, an investing platform built from the ground up with the goal of getting more women and underrepresented groups involved in investing. To Trish Costello, a venture capitalist who founded the platform in 2014, doing so is the key to changing the kinds of companies that draw venture capital dollars, such as women’s health startups.
“If women want specific companies in the world that address their needs, the only way to do that is for women to become the investors,” said Costello.
Costello’s long career in venture capital has given her a clear vision for Portfolia. She spent more than a decade at the helm of the prestigious Kauffman Fellowship, a career development program that has trained hundreds of top venture capitalists.
With Portfolia, Costello is hoping to create change. Just over 2% of the total capital invested in venture-backed startups last year went to companies founded solely by women, according to data from PitchBook. Just 11% of decision-makers at U.S.-based venture capital firms managing more than $25 million are women, according to All Raise, an organization that supports women in the startup and venture capital worlds. At many companies, there’s just one woman investor. At others, there are no women at all.
Costello launched Portfolia with the goal of bringing 100,000 investors on board by 2022. More than 10,000 people have signed up for the platform so far, investing anywhere between $10,000 and $100,000.
Portfolia has thrown a big chunk of that cash into health care. Last year, the company launched the first-ever fund dedicated to FemTech, or tools tailored to women’s health. It has an “active aging” fund that backs companies working on menopause, medication reminders, and other tools that promise to “change the way we age.” Its FirstStep Fund, designed for somewhat new investors, recently announced its first investment: Prime Genomics, which is working on a potential way to detect breast cancer in saliva. And later this year, the company will launch a longevity tech fund.
“Health care is such a perfect place for women to play. Women are the biggest buyers of health care,” Costello said.
STAT spoke with Costello at Portfolia’s headquarters about the firm, harnessing the investing power of women, and her vision for change in venture capital. This conversation has been edited and condensed for clarity.
What made you want to launch Portfolia?
“I’ve always had dual interests: entrepreneurship and women’s business,” Costello said.
Costello herself was venture-backed in her 20s, when she led a medical training program for physicians. And in her role at the Kauffman Fellowship, she coached hundreds of fellows that now lead top venture capital firms, corporate investment teams, and startups. About one-third of the fellows were women during her tenure, according to Costello. But she didn’t feel like change was happening quickly enough.
“Even though I put some of the top women venture capitalists in the business, we didn’t really move the needle. And we still haven’t moved the needle in venture. And what I realized is that if we really want to change venture capital, if we really want to enhance the kind of companies that get funded, and if women want specific companies in the world that address their needs, the only way to do that is for women to become the investors,” she said.
So Costello took her expertise and her mental Rolodex of investors and ventured out on her own. She wanted to design a platform around how she and her friends who are women would want to invest their money. She set up shop just up the street from Sand Hill Road, the strip studded with so many venture capital firms that its name has become synonymous with Silicon Valley funding. Costello believes that platforms like Portfolia can help to change the culture around investing — and be successful in the process.
“Women are the buyers of everything out there. We’re the early adopters on almost everything venture capitalist-backed. And [men] often make some really silly mistakes, because they’re not the ones that are the marketplace. … They often back teams that don’t know what they’re doing, and they just have to put so much more money in to fix it. That’s the difference between blowing $20 million before you can figure out what the customer wants, versus backing someone who understands the customer and doing it for $5 million,” Costello added.
How do those differences play out specifically in health care investing?
“[Women] buy health care and services and products for themselves, their children, their husbands, their sons. … It really doesn’t matter if it’s male or a male or female problem. Women are usually the buyers,” Costello said.
But for years, women entrepreneurs have recounted anecdote after anecdote of running into challenges in getting investors who are men to back their products. One of the companies Portfolia has backed, called Joy Lux, developed devices to address the bladder control issues and other pelvic floor problems that are particularly common among women who’ve had a vaginal birth. But when its founders started scouting out funding, they hit a roadblock. Men weren’t familiar with it, Costello said.
“They were all up and down Sand Hill Road. [The founder] told me that every time she pitched on Sand Hill Road, it was all male VCs. And they would say, ‘Well, my, my wife doesn’t have that problem.’ And she said, ‘Statistically, it is not possible that none of their wives have a bladder control problem,’” Costello recalled.
It’s hard for some investors to understand women’s health products. Costello doesn’t necessarily see that as a problem — “if you don’t understand the product, you shouldn’t invest in it,” she said.
“But thank goodness for other places like Portfolia, because we do understand the problem. And we are investing.”
Earlier, you mentioned that if women want companies founded and funded to address their specific needs, women have to be the investors. Does it make you mad that that’s the case?
At times, yes — very much so, Costello said. For years, she helped launch the careers of women in venture capital. But she realized that wasn’t the best way to go about creating change.
“What I realized is that these old systems weren’t really built by women. You can’t put one woman into a firm [where she’s one of many investors] and think she’s going to make a difference. She comes in as the youngest, and not the founder. It’ll take women [decades] to get any kind of equal footing in venture capital,” she said.
That’s why Costello wanted to build a new system from the ground up. She’s confident that once the firm has a handful of big successes, Portfolia will be able to prove “what women’s financial and investment power is.”
“And then you can change it all. You don’t have to fight to get a woman in a specific venture fund. You just have to activate our money and show that we’re going to make more money than they do.”
Why do you think the needle hasn’t moved on women in venture capital?
This is a question Costello has been thinking about for years. One issue, she said, is that hiring just one woman or two at a firm isn’t likely to make a big impact. But another, she said, is the way in which ups and downs in the economy impact venture capital.
“You have the ups and downs. When you’re at the high, all of a sudden, all of these funds are hiring. And that’s when they get religion and they start hiring women. So they hire women at the top of this cycle. And then when there’s a downturn, those women are the most junior, their investments are young, and so they’re most likely to fail. So what happens? They need to retrench. Then these younger women that came on last, they’re usually the first ones to leave.”
Costello said it still remains all too rare for women to get a true position of power within venture capital firms — with exceptions, of course.
“If I’ve heard it once, I’ve heard 40 women say it. ‘All those years, when I was the only woman in the venture firm, I had to talk like the guys. I had to think like the guys. Rarely would I bring a woman in front of them to pitch, because they would question whether or not it was really a good deal.’”
Costello has mentored dozens of women in venture capital. Often, she said, the pressure of being successful when you’re the only woman in a firm can make it difficult to take the kind of risks that other investors who are men can take.
“That’s what happens when you’re the one woman partner. You don’t actually get that agency. We celebrate it, and we’re excited about it. But you have to follow the norms and the culture. … When you’re the only one there, and you’re the trailblazer at that firm, you have to be really careful. That’s why I love the funds that are founded by women or have been taken over by women.”
When it comes to investing in health companies, how do you evaluate the science?
“For FemTech, there’s so many companies. We probably looked at 600 companies [for our fund] and winnowed it down. The five lead investors will review 120 or so of those. And then 20 or 30 of those will actually pitch. One of the lead investors will have really researched it, and she will ask all the questions. … And at least one lead has to agree to move it forward into diligence.”
That pitching process happens on a call with all of the investors in a given fund, no matter how much they’ve chipped in. They can send in questions through a chat system. And when it comes to the health funds, the investors are active — often, because they know the area well. About one-third of the people invested in the FemTech fund work in health care. The fund includes anesthesiologists, nurse practitioners, and OB-GYNs, Costello said.
In some cases, Portfolia is among the first to write a check for a business. That’s critical as a company tries to get off the ground, Costello said.
“Not only do you need that money at the beginning to really get in and investigate the opportunity, but you also need it as a signal. … People look to [some of our investors] as the early smart money, and so it will often bring other dollars behind it.”