Aster recently announced the close of their $2.4M re-seed round led by Cake Ventures and Cornerstone VC, with participation from Zeal Capital Partners, Octopus Ventures, Everywhere Ventures, and others, alongside a number of healthcare angels.

Our relationship with Aster started from a cold email from Monique to the founders. As part of our focus on demographic changes that fuel transformative technology, Cake Ventures has been investing in companies that touch the future of deskless work, including vertical software that has the power to transform legacy industries like healthcare and deliver much-needed innovation to the frontline workers in these industries.

Aster builds clinic enablement software that creates the technology and operational stack for physicians, midwives, and women’s health clinicians who want to remain independent in a healthcare industry that has become increasingly complex due to the demands of providing value-based care and increasingly competitive due to clinic consolidation.

Private equity firms have been aggressive in buying and consolidating healthcare clinics of all types and have become increasingly active in women’s health, moving clinics from independently-owned private practices to PE-backed healthcare practices. Many clinicians would prefer to remain independent, but don’t have the tools to do so. Managing the backoffice and operations of a clinic alongside providing quality care is a challenge for practice owners and one of the factors that often lead private practices to sell to PE firms. This PE-ification of healthcare has led to the rise of management services organizations (MSOs) in several healthcare verticals to allow non-physicians to manage complex clinic business functions.

Aster gives private healthcare practices the tools to achieve operational efficiency and the freedom to focus on care delivery.

Starting with the fragmented world of maternal health, Aster is first tackling the constellation of OB/GYNs, midwives, nurse practitioners, doulas, maternal-fetal medicine (MFM) specialists, and lactation consultants. While providers like doulas and lactation consultants often work outside of insurance-covered services, they play an important role in maternal care models. Developing more professional supports for these healthcare providers is vital as their presence in the maternal health journey is linked to better birth outcomes, including lower C-section rates and fewer pre-term births.

Today, healthcare providers often find themselves using stitched-together systems that are not purpose-built to effectively manage patient scheduling, billing, telehealth, charting or other documentation, and early issue detection.

The frontline workers of maternal health have the willpower and expertise but not the technology to provide healthcare that identifies potential risks earlier and more frequently identifies when a patient should receive escalated care and monitoring.

The maternal mortality rate in the United States is the worst of any high-earning nation in the world and women of color and women in rural healthcare deserts are especially vulnerable. But 84% of pregnancy-related deaths are thought to be preventable.¹

Women have healthier pregnancies when clinics have better technology and some aspects of care can safely be moved down to lower and cheaper licensed healthcare professionals like nurse practitioners and doulas.

Aster co-founder, Dr. Lailah Kara-Newton had the first-hand experience of life-threatening pregnancy complications. Even as a medical professional, she didn’t receive the prenatal care she deserved, resulting in pre-eclampsia, an emergency C-section, and a baby born at 4 lbs who required time in the neonatal intensive care unit. (Read Lailah’s birth story)

Aster CEO, Fifi Kara, is a former Y Combinator founder (YC S19) and worked with co-founder, Andrew Q. Tran at Meta on software for health and fitness devices. This team is the combination of personal experience, clinical expertise, and healthcare innovation that tackling a problem this entrenched will require.

Fifi, Lailah, and Andrew are currently hiring mission-driven team members who want to help clinicians deliver better healthcare through clinic enablement software, keep private practices independent, and deliver on their ultimate mission to reduce the maternal mortality rate.

Aster is rolling out their beta platform to healthcare providers and practices across the United States. If you’re a healthcare provider interested in securing an onboarding date — reach out to fifi [at] astercare.com.

Today, I’m officially announcing Cake Ventures Fund I, a $17M seed and pre-seed fund to invest in founders building companies and products for the inevitable demographic change happening today.

Cake Fund I will invest in ~20 companies and write checks from $250K-$500K. We have already invested in 12 companies, some of which you can find on our website. We invest in the US & Canada, and while Cake is based in San Francisco, thus far 66% of our investments have been outside Silicon Valley.

Cake Ventures is a thesis-driven fund investing in the ‘layers’ of demographic change that are fueling transformative technology.

Demographic transition is one of the most important changes to technology because it represents a sea change in the technology users.
And when users change, technology must follow suit.

These are the demographic opportunities that make up the layers of the Cake thesis and reflect how we think about the world:

Aging and longevity: By 2034, Americans over 65 will outnumber those under 18. This large and economically powerful demographic group increasingly has the expectation that they will use technology and innovation to address the unique challenges of late life. Today’s aging consumers will use software to help them age in place, access healthcare, manage finances, or find work and purpose beyond retirement.

The billion-dollar female economy: Women are the original influencers and they’ve become the consumers that drive growth. Women wield influence over the many ways they connect online, shop, and access products and services for both themselves and their families. Female consumers are driving companies to multi-billion-dollar outcomes in categories like women’s health, e-commerce, the care economy, and more.

The shift to majority-minority: The rising New Majority are early technology adopters who drive internet culture. Shifting demographics have made Asian, Black, and Latino people the fastest-growing and most lucrative consumer groups in the U.S. and beyond. America’s shift to a majority-minority nation has unlocked opportunities for technology and software companies that address the unsolved problems and unmet needs of these consumers: improved healthcare outcomes, more inclusive financial products, and culture-driven consumer technology.

While Cake Ventures is one of the only venture funds that has clearly articulated a thesis around demographic change in this way, companies that touch demographic change are hiding in plain sight. They are already achieving billion-dollar valuations and successful IPOs.

A few examples of well-known companies that you might have heard of: Klarna, a fintech company that allows you to split payments and pay later as you shop; CityBlock Health, a healthcare provider for underserved communities; and Weee!, grocery delivery for Asian and Latino foods.

In Cake’s own portfolio, we have invested in companies like Most Days, a behavioral health platform that helps people create healthy habits that extend quality and length of life; Guaranteed, a company using technology to reimagine hospice care and end of life; and Bright, AI-powered immersive training and skills development for an evolving workforce.

The companies I look for are ones that tap into a deep-seated user need or behavior and rarely ones that are ‘artificially gated’ to a surface-level user type.

The limited partners who backed this fund are some of the best in the industry. Many of them saw my vision early and backed Cake Ventures with conviction that they were at the beginning of something special. We received support from limited partners that include Cendana Capital, Foundry Group, First Close Partners, Bank of America, Plexo Capital, Insight Partners, Screendoor, and Pivotal Ventures (a Melinda French Gates company).

In addition to these foundational LPs, over 25% of the LP dollars in this fund were contributed by female LPs, many of whom are women of color, including Bernadette Aulestia, Wayee Chu, Bulbul Gupta, Arlan Hamilton, Kimberly Marshall, and more.

Women have been underrepresented in the financial opportunity created by venture capital — both as equity holders on cap tables and as limited partners at venture funds and I am especially incentivized to deliver financial wins for these women who have trusted me with their capital.

In spite of this stellar list of LPs, raising Fund I is never easy. Institutional LPs are often reluctant to take a risk on an unproven fund manager — even with prior investing experience.

But first funds are like classic hip-hop albums — they outperform.

Reasonable doubt

But until then lately, I’m the one who’s crazy?
’Cause that’s the way you’re making me feel
I’m just trying to get mine, I don’t have the time
To knock the hustle for real
Jay-Z — Can’t Knock the Hustle feat. Mary J. Blige, Reasonable Doubt (1996)

As of Q3 2022, $223.6B was invested in venture funds¹, but despite the record numbers of new funds being launched, the majority of this capital was invested in well-established, brand-name funds with long track records and collectively, billions of assets under management.

Yet, emerging managers and smaller funds deliver outsized returns. Cambridge Associates found that new and developing firms are consistently among the top 10 performers in the venture capital asset class, accounting for 72% of the top returning firms between 2004–2016.² Similarly, Greenspring Associates found that across 180 partnerships, their investments in emerging managers “outperformed relative to their established counterparts”, delivering net IRR 0.87% above established managers.³ Investing in emerging funds, many of which are led by diverse fund managers, also unlocks additional alpha as diverse fund managers outperformed the median performer in 11 of the 14 years studied.⁴

In spite of the data in favor of investing in emerging managers, when faced with first funds, some LPs have reasonable doubt. Smaller fund sizes, unproven firms, new teams, and solo capitalists all represent the untenable questions that come with a first fund.

Even in my own fundraise, I fielded questions like: “why don’t you join up with another (usually male) VC?”, “why isn’t this fund focused exclusively on diversity?”, “what do you know about aging?”, “why are you in my office raising money when you could be at a big venture firm making more money?” as if the vision and ambition were not enough. And as eye-roll-inducing as they are, some of these are the exact right questions to ask. Reasonable doubt.

But just like Jay-Z’s first album, first funds are classics.

500 Global’s (formerly 500 Startups) first global flagship fund (2010 vintage) is a top decile performer reporting a net TVPI of 11x⁵ and a portfolio that includes Twilio, The RealReal, and Sendgrid. Union Square Ventures debut fund (2004 vintage) returned 15x on invested capital and has a portfolio that included Twitter, Etsy, and Zynga.⁶ Chris Sacca, the OG of solo capitalists, may have the best-performing first fund of all time, with Lowercase Capital Fund I reportedly returning 250x on an $8M fund⁷ courtesy of portfolio companies like Twitter, Uber, and Docker.

I fully expect Cake Ventures to be one of the next generation of great venture firms.

At Cake, we want to live just slightly ahead of where everyone else is looking and continually translate these demographic changes and how they impact your business for entrepreneurs. If you’re building something revolutionary and think it might fit for Cake Ventures, connect with us.

To celebrate Cake Fund I (aka Reasonable Doubt), I made y’all a playlist of (mostly) first hip-hop albums that are all classics, no skips. You’re welcome to argue with me about the definition of a classic @moniquewoodard.

If you prefer less explicit language, here is a clean version (minus a few songs).

¹ https://pitchbook.com/news/reports/q3-2022-global-private-market-fundraising-report
² https://www.forbes.com/sites/heatherhartnett1/2022/09/12/when-public-markets-experience-volatility-experts-say-to-invest-in-emerging-managers/
³ https://blog.greenspringassociates.com/venturecapitalsaccessmyth
⁴ https://www.cambridgeassociates.com/insight/should-clients-consider-diversity-when-making-investment-decisions/
⁵ https://www.bloomberg.com/press-releases/2021-09-15/500-startups-closes-largest-fund-raised-to-date-announces-rebrand-to-500-global
⁶ https://gothamgal.com/2022/12/usvs-first-fund-closes/
⁷ https://techcrunch.com/2021/03/31/cendana-has-raised-a-30-million-fund-of-funds-for-vcs-managing-15-million-or-less/

But today’s female consumers are markedly different. Women have been the majority of college students since 1979 and today, pursue and complete post-secondary education at higher rates than ever before — higher even than their male peers. This increase in education has resulted in more women in high-paying careers and increased economic power — all of this, in spite of a persistent wage gap. Today, women are much more likely to be in control of their own finances and even more likely to be head of household.

As our social and shopping activity accelerated online, women became a bellwether for growth in those categories. Social networks like TikTok, Pinterest, and Snapchat grew around the activity of their disproportionately young and female user base. In 2021, TikTok’s global user base was 59% female and in the US, 61% of users identified as female. Women also became the consumers that upended traditional retail and drove the success of direct-to-consumer brands like Shein and Glossier.

Technology is now imprinting on categories like healthcare and finance where women are either already acting as significant consumers or will be as their burgeoning economic power drives new consumption patterns.

Women are the original influencers and they’ve become the consumers that drive market growth.

Despite this market-making influence, women were often treated as a niche market whose needs could be met by “shrinking and pinking” products originally designed for men.

Women are a growth market

By 2028, women will control 80% of the discretionary spend and are already responsible for over $30 trillion in yearly consumer spending. The opportunities presented by a consumer group that makes up nearly half of the world’s population is nothing close to a niche market.

Women are the biggest consumers of healthcare based on both their reproductive health needs as well as their role as primary healthcare decision-makers for their children, making women’s health and family health the big and obvious opportunity. The women’s health market is projected to reach $41.05B by 2027 and ‘femtech’ technology companies like Maven Health, hers (by hims), Tia Health, and Carrot Fertility have grown out of the increased control female consumers expect to exercise on their own health and wellness needs.

But opportunities exist well beyond women’s health. Women wield influence over the many ways they connect online, shop, and access products and services for themselves and their families. This role as super consumer should bring into closer reach products that take into account the many different ways that women save, spend, and invest money and how those change over time based on their life stage, career choices, marital status, or whether or not they have children.

The opportunity for female-focused products or those where women make up a significant part of the user base are not just pinked versions of products designed for the masses, they’re products that speak to the specific and nuanced needs of female consumers. Building toward the needs of women does not mean that every product should be gendered. In fact, most products should not be unnecessarily gendered, but speak to the real needs, problems, and desires that women want you to solve.

Billion dollar companies of the female economy

Companies who grow based on the velocity of the female consumer have already proven themselves to be outliers and they are hiding in plain sight — but many of them are non-obvious.

Most people would easily place beauty and fashion companies like Skims, Glossier, and Fenty into this category. Others, like Cerebral make our list because women are the primary consumers of telehealth. A B2B marketplace like Faire shows up both because of the number of women-led brands and resellers as well as the end consumer that these businesses target.

The opportunities for the female economy are vast and wide.

The female funding gap

We can’t talk about the opportunity for women as economically influential customers and consumers without acknowledging the funding gap for female founders.

The good news is that investment in companies led by women has steadily increased with female founders receiving more funding across almost every funding stage. In 2021, companies with one or more female founders raised a record $55.99 billion in venture capital. Still, only 17% of venture capital went to companies with at least one female founder and all-women teams received only 2% of venture capital. The funding gap for women of color is even wider, with Black women and Latinas raising less than 1% of venture capital combined.

Underfunding women comes at a cost. Female-founded startups have been found to be more capital efficient, generate more revenue, and exit faster than companies led by all-male teams. Female CEOs of public companies outperformed the stock price of male CEOs by 20%. Even with less access to capital, there were 39 female-founded private companies valued at $1 billion or more in 2021 and companies with at least one female founder created over $774 billion in exit value [x].

The lack of venture capital investment in women is both inefficient and irrational. While women do not exclusively start companies built toward a female consumer, the problems female founders build companies to solve often speak to the needs of a very different consumer and attract a more diverse user base, which then leads to improved performance.

The ‘yes, and’ of the female economy

Many investors think about the opportunity to invest in women exclusively from the lens of female founders, but there is a parallel opportunity in the female economy — investing in the problems and needs of female consumers.

Our full-length report, Finding Alpha: Women and the Consumer Economy, explores how the consumer activity of women creates outlier companies and where we see current high performers and emerging opportunities for growth. Click here to be notified when it is released.

Our focus on female consumers does not exclude non-binary people and folx who have similar experiences but do not identify as women.

Cake Ventures is a seed and pre-seed fund investing in companies that are creating technology products that meet the needs of tomorrow’s internet users. We are thesis-driven generalists who invest across sectors into companies that reflect changing demographics, including: an aging population, the spending power of women, and the shift to majority-minority.

Research Fellow: Zia MacWilliams
Investment Insights: Monique Woodard