A Cincinnati woman-run venture capital firm has closed on half of its second investment fund and identified a large institutional investor along with its first two investments from the fund.
Hyde Park-based H Venture Partners has wrapped up raising $10 million of the $20 million it’s targeting in its second fund, Managing Partner Elizabeth Edwards told me. It was able to raise that money in large part through an investment from the Chicago Teachers’ Pension Fund.
H Venture Partners continues to raise money but has been able to start investing the first $10 million of the fund.
“Fund two has been hugely validating,” she said. “We successfully raised $10 million and we had major participation from a public pension. That’s unheard of.”
Edwards said she’s eyeing foundations and endowments that are looking to make an impact as well as a return to raise the rest of the fund.
“We’ve gotten some great interest from foundations that do impact investing,” Edwards said. “So we’ve kept it open, driven by some of those conversations.”
Skin care focused startups among second fund's early investments
Edwards launched H Venture Partners in 2017 and began fundraising a couple of years later. The firm wrapped up raising its first fund, totaling $10 million, in summer 2021.
“Just to be able to raise $10 million as a brand new fund, that’s a tough thing to do,” Edwards said.
H Venture Partners began raising the second fund last year. It’s needed because H Venture Partners has completely invested the first fund, splitting the $10 million between 12 companies, Edwards said.
The venture capital firm will be investing the newly raised $10 million at a time when valuations are down a bit.
“The best time to buy is when prices are low,” Edwards said. “That’s right now, so we’re happy to be putting $10 million of dry powder to work in this environment.”
It has already invested money from the second fund in two companies.
One is Mad Rabbit Tattoo, a tattoo skincare brand founded by two Miami University alumni, Selom Agbitor and Oliver Zak. They’ve pitched the company on ABC’s “Shark Tank” and count billionaire investor Mark Cuban and wide receiver Stefon Diggs among their backers.
“Mad Rabbit has identified a really interesting white space in the skin care market,” Edwards said. “They have been incredibly capital efficient and we’re particularly excited about their channel strategy, which is wholly unique. They’re from Cleveland and this is our first Ohio investment. We’re really excited about that.”
It also invested in a Los Angeles-based startup that Edwards declined to identify. That’s a skin care company that sells a clinically proven solution to hyperpigmentation. It recently published results of a successful clinical trial in the Journal of the American Academy of Dermatology. The product is a derivative of a naturally occurring component of the human microbiome.
“This company is harnessing the power of Mother Nature to reverse one of the top concerns in skin care,” Edwards said.
Why H Venture Partners is a rarity among investors
H Venture Partners aims to not only make the best risk-adjusted returns on its investments but to make a “measurable positive impact with our capital,” Edwards said.
Its investments from the first fund impacted the environment, diversity, human health and employment. Those results included:
- All its investments have been made in diverse founding teams
- Six tons of ocean waste plastic have been harvested from the ocean, which equates to 300,000 water bottles
- More than $200 million in follow-on investments in 12 companies led by underrepresented founders
- Creating 380 jobs, with 89% of those filled by female, Black, Hispanic and LGBT employees.
As a female-run venture capital firm, H Venture Partners is a rarity. While less than 2% of all venture capital dollars are invested in women- and minority-run companies, less than 1% of all VC money is invested in female venture capital managers.
“That’s a pretty steep hill to climb,” she said.
