Finding Alpha: Women and the Consumer Economy (Excerpt)
Women have been targeted as consumers since the earliest days of American consumerism. From Ford advertising a Model T as “an ideal car for women’s personal use” in the 1920s to ads featuring housewives enjoying the convenience of TV dinners in the 1950s, the technology of the day was often marketed to women.
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
