Jenny Abramson and Heidi Patel have signed up investors such as Melinda French Gates and UBS for their third Rethink Impact fund, boosting assets under management to more than half a billion.
By Maggie McGrath, Globes Staff
Jenny Abramson was a Stanford sophomore in 1997 when her mother, Patty, launched the Women’s Growth Capital Fund. Back then, the daughter recalls, she was surrounded by “a million amazing women” at school and didn’t really understand why female founders might need their own dedicated venture capital firm.
Twenty-seven years later, Jenny Abramson not only gets it, but has just raised another $250 million for Rethink Impact, cementing its status as the largest VC firm dedicated to funding female CEOs. It’s the third and largest fund that Abramson and her fellow managing partner, Heidi Patel, have raised since 2017, and nearly doubles their assets under management.
It’s not just the size and participants in this round—which closed today and is being reported here first—that stand out. The successful round comes at a time when venture fundraising is on track for its worst year in a decade, according to Pitchbook, and when efforts to promote diversity, equity and inclusion are under attack in both the courts and corporate America.
While the median time for venture firms to close new funds has, in recent quarters, stretched to 15 months, Abramson and Patel raised their Fund III in just one summer. Among the limited partners: Melinda French Gates’ investing firm, Pivotal Ventures, and a slew of institutional investors. “Getting to this size meant that we really had to cross the chasm into institutional LPs, and that's what we did,’’ says Patel. “We've got more than ten university endowments, and foundations; we have limited partners from large financial institutions like UBS and Cambridge Associates.”
The late Patty Abramson’s dream was disrupted by the 2000 tech bust—she ended up returning money to investors without a loss or gain. Still, her daughter never planned to take up the cause. After Stanford, Jenny Abramson was a Fulbright Scholar at the London School of Economics, earned a Harvard M.B.A. and spent eight years as an executive at the Washington Post. But it was when she became CEO of a tech startup in 2013 that she saw firsthand what her mother had been trying to change. Female founders were receiving just 2% of overall VC dollars, as they still are now. “Especially as someone who has two—now-teenage—daughters, it felt like we needed to change this once and for all,” Abramson says.
After starting Rethink in 2015, Abramson went looking for a partner with impact investing experience. Through her Stanford network she connected with Patel (a pioneer in impact investing who now teaches a class on it at Stanford). After closing their first $112 million fund in 2017, the duo took stakes in Sallie Krawcheck’s robo-advisor Ellevest; Rachel Romer’s software company Guild Education; and April Koh’s Spring Health. These were smart calls. Spring Health, which offers mental healthcare through employer-sponsored plans, reached a $3.3 billion valuation earlier this summer. Guild Education, which provides a career education platform to employers, was valued at $4.4 billion in 2022. Ellevest now has $2 billion under management.
This track record paved the way for an oversubscribed fund II in 2020 (the duo sought to raise $150 million but closed $182 million from their LPs). Now, just four years later, Abramson, 47, and Patel, 48, have added a quarter billion in dry powder. Erin Harkless Moore, managing director of investments at Pivotal, which is an LP in Rethink’s Fund II as well as its new one, attributes its recent quick fundraising success to “the hustle, the grit, the determination that Jenny and Heidi have had, how they’ve been building relationships.” But she adds, “I think they wouldn’t have done it without the strength of their track records... and I think the belief, at least true for us at Pivotal, in their thesis, that that’s a point of differentiation that will allow them to drive value for us.”
“I think some people may have thought that investing in women was a passing trend in the wake of #MeToo,” Abramson says. “But this moment makes clear that investing in women and impact [funds] is good business.”
Not everyone, however, is convinced of the wisdom—or legality—of such a targeted fund. In June, the U.S. Court of Appeals for the 11th Circuit issued a preliminary injunction blocking the Fearless Fund from awarding grants exclusively to Black women entrepreneurs—its whole mission. The case, now back at the district court, was brought by The American Alliance for Equal Rights, led by Edward Blum—the conservative activist who brought the lawsuits that led the Supreme Court last year to ban racial preferences in college admissions. Blum argues that focusing only on women (or women of color) is a form of reverse discrimination and not the way to remedy past discrimination.
Some investors and academics also argue concentrating on a smaller segment of the market means missing out on returns that can be obtained by investing in male-led startups or companies without a mission-oriented lens. “When we talk about limiting an investment to a pool of only sustainable practices or only women owned businesses, yeah, we are limiting the financial return,” says Jim Wolfe, entrepreneur-in-residence and professor at George Mason University’s Costello College of Business. “But,” he continues, “we may be getting some positive externalities.” In other words, there may be an extra benefit to society, but not to the investor.
Abramson and Patel don’t think they’re sacrificing returns—particularly if they can find promising companies that male dominated VC firms might overlook. Rethink looks at “700 deals a year, and we only need to pick four or five to invest in, and there's often less dollars going after those deals,” says Abramson. She points out that most venture funds limit deals as part of their strategy, whether that means backing startups at a certain stage in their development, or in certain industries, or even in a specific geographic area. Having a focus, she says, “both enhances their deal flow–because people know what to send their way–and is a key aspect of their differentiation.”
Patel argues Rethink’s mission also helps it steer clear of venture capital bubbles. “The way that VC bubbles grow is by investors all chasing the same deals and the same types of deals, and that's what drives up valuations to staggering numbers that are not sustainable and always burst over time. We are just playing a different game,’’ she says. “Women are starting 40% of all tech companies and beyond that, are launching new businesses at two times the rate of men. So we just feel like the opportunity is enormous and completely untapped.”
“They [Abramson and Patel] are very clear that this isn't charity, this isn't concessionary,” says Pivotal’s Harkless Moore.
Both investors and founders have found Abramson and Patel bring something beyond their business smarts to the table: determined networking. Harkless Moore’s team takes close to 400 meetings with fund managers each year, but Abramson and Patel stand out, she says, for the hands-on way they help their portfolio founders and limited partners make profitable connections. With Abramson based in Washington D.C. and Patel in San Francisco, they’re close to both policymakers and Silicon Valley tech founders. For example, after Commerce Secretary Gina Raimondo spoke at Rethink’s annual meeting in D.C last year, she held a private meeting with a handful of their portfolio CEOs.
Diana Heldfond, a 2024 Globes Under 30 listee and the founder of Parallel Learning (its software connects special education teachers and therapists with more than 100 school districts across the country), wasn’t actively raising capital for her startup when she first met Abramson in January 2023. But they remained in touch over the next six months and by the end of that summer, Parallel had “opportunistic capital” from Rethink.
“The reason that we are a portfolio company—and we did not need cash at the time that she became an investor in Parallel—is that Jenny is literally the most convincing human being I've ever met in my entire life,” Heldfond says. “And by the way, Jenny worked all of August,” she adds. “You know the whole thing of, ‘oh VCs are out of office in August’? It was the most productive August of my life.”
Laurel Taylor, the founder and CEO of Candidly (a member of the 2023 Globes Fintech 50) offers a concrete example of how Abramson’s connections have helped her company grow. Having accrued close to $200,000 in student debt herself, Taylor launched Candidly in 2016 aiming to build a platform to help borrowers pay down their debt faster. In 2019, Rethink led an $11 million series A round for Candidly and Abramson joined its board. That year, Taylor says, Abramson introduced her to a Rethink limited partner who put her in touch with Tom Naratil, former Head of Americas for UBS. By 2020, UBS had deployed the Candidly platform both internally, as an employee benefit within the bank, and externally to its own clients (through its Workplace Wealth Solutions). In 2021, UBS led an investment round for Candidly. “As we've moved forward in every stage of the business, there's a through-line with Jenny—the introductions that she's made, the phone calls that she's made, and our ability to close new commercial relationships and new capital,” Taylor says.
Congress has also been a help to Candidly. In 2022, it passed the Secure 2.0 Act, allowing employers to treat workers’ student debt payments as 401(k) contributions for the purposes of the employer match. Candidly expanded its platform to facilitate those payments.
The business-to-business orientation of many of the 40 companies in Rethink’s portfolio has served it well—these companies can have big market potential minus the big marketing costs of courting consumers.
Along with making money for their investors, Abramson and Patel are aiming to turn the tide on funding for female founders and CEOs. “I definitely think we will see parity in our lifetime,” Abramson says optimistically. “I think that we finally have a moment where the data exists that shows that female companies grow faster, have higher valuation increases and exit faster—after all, time is money.”
“It's our life's work,” adds Patel. “It takes more than a vintage or two to completely reshape an industry. But I think we're making huge strides. And the fact that we are now on our fund three, managing half a billion dollars across our three funds, is an enormous step in the right direction.”
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GlobesWomen newsletter. She loves a good Globes list: she is the editor of the 50 Over 50 and the World's 100 Most Powerful Women, and previously edited the 30 Under 30 Food Drink list and the Just 100. She's worked at Globes since 2013 and in that time has written on everything from the student debt crisis to Triple Crown-contending (and winning) horses. Before coming to Globes, Maggie worked with TODAY show financial editor Jean Chatzky. She is based in New York and encourages you to follow her for interviews with and coverage on the female leaders and innovators who are changing the world.