Sofia Fund is a venture firm that invests in and grows exceptional women-led companies – those with strong leaders and highly compelling business models that are scalable and meet a market need – to maximize returns for investors. Pulse 2.0 interviewed Sofia Fund partner Joy Lindsay to learn more.
Joy Lindsay’s Background
Lindsay started her career in technology/software development (as a PL/1 mainframe programmer) and worked in the corporate world for 19 years.
“In 1998, needing to try something new and continue to grow my career, I started a private venture fund, StarTec Investments, with my former boss, Tom McLeod,” said Lindsay. “We invested in early-stage technology companies based in Minnesota. I love working with entrepreneurs who are creative, bold, and smart. Working in venture capital is an opportunity to learn about new ideas, inventions, and methods daily. There isn’t a better job.”
Formation Of Sofia Fund
How did the idea behind Sofia Fund come together? “The Sofia Fund started in 1998 as an informal group of women in Minnesota who realized there weren’t enough women active in venture capital and not enough support for women entrepreneurs. Cathy Connett and Chris Mahai started the group called W2W (Women-to-Women),” Lindsay shared. “I joined them, and we would meet in the evening to hear women entrepreneurs’ pitches and then decide whether to invest as angel investors to support the startups we were seeing. The group expanded, and in 2006, we decided to organize more formally into an angel fund with 30 women investors committing capital and time. That was the first Sofia Angel Fund. Once the angel fund was fully funded, we knew there was still work to be done. In 2015, we raised a second fund, increasing the amount of capital and organizing like a micro-VC fund with four managing partners and a larger number of limited partners.”
Evolution Of Sofia Fund’s Thesis
How has Sofia Fund’s thesis evolved since launching? Lindsay replied:
“Our investment thesis has always been to invest in high-growth women-led companies. Our first fund focused on companies based in Minnesota. Our current fund invests in companies anywhere in the U.S. We’ve also narrowed our investment focus to areas where we know we can add value through contacts, resources, and expertise. The name Sofia comes from the Greek goddess of wisdom because we want to add more than just capital to our portfolio companies.”
Challenges Faced
What challenges did Lindsay face in building Sofia Fund, and has the current macroeconomic climate affected the company? “The biggest challenge, regardless of the macroeconomic climate, has been getting more investment dollars to women-led companies. According to the latest industry research from the National Venture Capital Association and Pitchbook, start-ups with women-led teams received only 2.2 percent of the $240 billion in venture capital invested in 2022. That is such an embarrassing data point. Even though research shows that diverse teams perform better, VCs can’t seem to get beyond gender biases,” Lindsay acknowledged. “The current macroeconomic conditions are more likely to impact all early-stage funds in general, not just the Sofia Fund. Many portfolio companies are moving from a stage of finding product-market fit to a high-growth stage, and they need additional capital. But VCs that normally invest in later-stage rounds have pulled back their capital for a variety of reasons. They are holding money for their existing portfolio companies, they are slowing their investment pace to stretch out their fund life, there is a lack of M&A activity, and the limited IPO market limits exit opportunities, and valuations are dropping… so VCs can hold out to see how low they might go when companies become desperate.”
Favorite Memory
What has been your favorite memory working for Sofia Fund? “The most positive memories are around the women I’ve had the opportunity to work with. We have seen some amazingly talented female entrepreneurs, and I have been very impressed with the quality of our limited partner investors who have been willing to take a leap of faith to help innovation reach the market and open their own networks, and share experiences to help entrepreneurs. And I couldn’t be more appreciative of the other three Managing Partners of the Sofia Fund: Cathy Connett, Dee Thibodeau, and Lisa Crump,” Lindsay reflected. “Together, we have over a century of experience as entrepreneurs and investors and are committed to growing the capital women-led companies receive.”
Investment Success Stories
Upon asking Lindsay about investment success stories, she revealed:
“Kidizen is a success story. Sofia not only invested in Kidizen from the beginning, helped the female founders with establishing a board of directors and company governance.”
“Also, Rebiotix, based in Minnesota, is a success story for the Sofia Fund. One of the 30 members of our first Sofia Fund, Lee Jones, is a successful entrepreneur. She had sold a prior company and was one of those women who was always willing to mentor, advise, and fund other women entrepreneurs, so she joined the Sofia Fund. In 2011, Lee co-founded and became CEO of Rebiotix. The company was a pioneer in the human microbiome space. In 2012, when the company was raising its first round of funding, the first Sofia Fund was happy to participate.”
“In 2017, Sofia Fund II also had an opportunity to invest in Rebiotix, when the company was raising more money. After we completed our due diligence, we decided to move forward and invest. Eight months after our investment, the company was acquired by Ferring Pharmaceuticals. Both Sofia funds had a strong exit.”
Industry Focus
What are some of the industries that Sofia Fund is focused on? Lindsay pointed out:
“We have a broad range of industries in our current portfolio. While our primary goal is a strong financial return for our investors, we are proud of the diverse types of companies we’ve funded and the impact they are making. Kidizen is a great example of a company that is run by two strong female entrepreneurs and their product, a resale marketplace for parents to buy and sell kids’ pre-loved fashion, has empowered thousands of families by allowing them to generate income and promote sustainability. Other Sofia Fund portfolio companies include Cognition Therapeutics, a drug development company that has developed a novel approach to treating Alzheimer’s disease; TilT, which helps companies provide a positive work-leave experience for everyone; Oculogica, which developed the first FDA-cleared concussion assessment that doesn’t require a baseline test; and Kenzen, a company focused on continuous safety monitoring solution to track the health of workers and keep them safe in the heat. These companies are innovative and impactful.”
Differentiation From Other Firms
What differentiates Sofia Fund from other firms? “Two things make the Sofia Fund different. First is the number of years we’ve been focusing on investing in women-led companies. Back in the mid-to late-90s, there weren’t many people investing in start-ups, so few companies got funding. And, of those that got funding, very few had a female founder. The group of Sofia women knew that the lack of diversity was having a negative impact on innovation and decided to do something about it,” Lindsay observed. “The second thing that makes us different is our two-sided focus. In addition to funding more women-led companies, we wanted more women investors. Data has shown that, if there are women investors at the table, they are more likely to fund a women-led company. So many women investors have talent and networks that can help small companies, in addition to the capital they can provide. The more involved we can get them to be, the more likely the companies they’ve invested in will be successful.”
Sofia Fund’s Future Goals
What are some of Sofia Fund’s future goals? “We’d like to see the percent of women getting venture funding exceed 50 percent of the total pool! Just think of the innovation and progress we could make if more women could get funding for their ideas,” Lindsay concluded.
