Trends Watch: VC Investing in Women Wellness Brands

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Rachel Hirsch, Managing Partner, Wellness Growth Ventures.

What is your outlook for VC investing in women-led wellness brands?

I’m optimistic about the opportunities and future landscape of women-led wellness brands. We view wellness as a Venn diagram, with one circle representing traditional health care and the other better-for-you consumer packed goods (“CPG”). As investors grow wary of the consumer space and the uncertain future of the economy and consumer spending, the better-for-you CPG side of wellness has faced some skepticism. However, wellness is becoming a higher priority among consumers of all generations, and spending within the wellness category is growing at an outsized pace. This growth and next wave of innovation create immense opportunities for VC investing.

As consumers prioritize wellness more than ever before, their spending in this sector continues to increase. Combined with the M&A activity and interest, we’ve observed at much earlier stages within wellness, the sector becomes even more attractive for VC. However, women-led businesses in this space receive a smaller proportion of funding, leading to smaller raises and depressed valuations. This gap presents a unique opportunity for venture capital to achieve outsized returns in a rapidly growing sector. Investing in, supporting, and building women-led wellness brands offers an incredibly lucrative opportunity for VC.

Where do you see the greatest opportunities and why?

The greatest opportunities are twofold. As more investors pull out of the consumer space, it creates a significant opening for those of us continuing to deploy capital there. This market has made us smarter and sharper, compelling us to utilize all available resources and become better investors. The opportunities within the better-for-you consumer space are more exciting than ever. With the days of bloated valuations behind us, we are curating better deals with better companies to generate more capital for our LPs.

Another incredibly exciting area is women's health. Historically underfunded, understudied, and generally underserved, women's health is finally gaining traction. There is vast whitespace in this sector. According to McKinsey, the estimated polycystic ovary syndrome (“PCOS”) market is comparable to the erectile dysfunction (“ED”) market, yet it lacks the multitude of accessible solutions available for ED. With no clear solutions to massive women's health issues like PCOS, there are numerous significant opportunities in this space.

What are the greatest challenges you face and why?

The greatest challenges I face include the current fundraising landscape, the limited partner (“LP”) outlook on consumer investments, and the historically smaller amounts of capital raised by solo female general partners (“GPs”). The venture capital fundraising environment is particularly difficult right now due to factors like the numerator and denominator effect and high interest rates. This is compounded by the bearish outlook that many LPs have on consumer investing and the historical data showing that solo female GPs raise significantly less capital than their male counterparts. Despite these challenges, Wellness Growth Ventures is committed for the long-term. We will continue to build the firm, confident that the tides will inevitably change, and we will overcome these hurdles.

What keeps you up at night?

What keeps me up at night is the excitement for what's to come. My days are filled with diligencing companies, researching the space, and assessing trends, and there's always more to do, more to learn, and countless ways to improve. But I don't spend my nights worrying. Instead, I am committed to dedicating all my efforts and resources to ensuring the success of our portfolio companies and generating the highest returns for our investors.

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.