Waterloo-based Profound Impact has closed its first round of financing with over CDN$2.2 million in seed funding. The money is part of a total $3-million round the company plans to close in August 2023. The round is primarily led by women investors, including many first-time women angel investors.
One of the investors – Claudette McGowan, co-founder of the women-in-tech investment network called The Firehood – said that while many women want to invest in startups, they are often not sure what the first steps are.
“Connecting female investors to female entrepreneurs helps empower women across the tech industry to find success,” McGowan said in a news release. “I was pleased to support Profound Impact in this funding round and will follow along closely as their company continues to grow.”
Profound Impact’s platform helps academic and industry researchers quickly find the right funding for their projects. The company’s customers include top North American research institutions, universities and industry partners, including the University of Waterloo, Wilfrid Laurier University and the Perimeter Institute.
CEO and founder Sherry Shannon-Vanstone said her company will use the funding to expand its machine learning and artificial intelligence teams and for its expansion into the U.S.
“These applications can be hundreds of pages long, so we need better algorithms to ingest that data and automate our processes more,” she said. “It’ll mean faster, more efficient and better matches.”
Fundraising is a challenging task, especially for women-led startups. According to data from PitchBook, women-led startups in the U.S. received only 1.9% of venture capital investments in 2022. Shannon-Vanstone said that the old ways of fundraising are not working for women founders, and that needs to change.
“If we keep doing the same things that we've been doing all these years and expect different results, then like Einstein said, that's the definition of insanity. We need to do something different.”
Creating change means looking for untapped sources of new investors. Shannon-Vanstone said her conversations with other women founders inspired her to bring angel investing to one of these untapped sources – women of wealth.
“These are women who understand philanthropy, but they don't understand anything about angel investing,” she said. “What if we could help them understand that angel investment is another way of having an impact that also generates a return? This is an opportunity to educate and an opportunity to make a difference because women want to help other women succeed.”
Funding models like this exist today, but they primarily focus on interest-free loans with a return of five to ten years. Shannon-Vanstone is adapting and expanding the model to create angel investment opportunities that provide women investors with philanthropic and financial returns.
“I believe that this is an untapped area,” she said. “There are numbers out there that talk about the trillions of dollars that women have in their portfolios. A lot of philanthropic organizations tap into that. But as entrepreneurs, we don’t. We can help provide education on how to angel invest safely and create this pocket of investors for women-led startups.”
“Let's help educate women who've never invested before,” she added. “Let’s help them invest in women-led startups. Maybe this will start a movement.”