This women-led VC firm wants to address ‘a huge gap’ in funding for women’s health startups

Startups focusing on women’s health are underfunded. That’s the premise behind SteelSky Ventures, a women-run venture firm that recently announced an inaugural $72 million fund for women’s health, backed by a list of big healthcare names, such as the American Hospital Association and pharma giant Eli Lilly.

The fund has already provided early-stage investments to 13 companies in the medical device, consumer health, digital health, e-pharmacy and retail therapeutics sectors. The firm says the new fund is world’s largest focused on women’s healthcare.

SteelSky is based in Atlanta, the home of founder and general partner Maria Velissaris. But the firm also has a presence in the Pacific Northwest. Fund analyst Georgia Cavanaugh is based in Seattle and managing partner Buffy Alegria is a Northwest native with a background in banking who lives in Yakima, Wash.

GeekWire interviewed Alegria about what inspired her to start the fund with Velissaris and the need for an investment vehicle focused on women’s health.

Women make the vast majority of healthcare decisions and on average spend much more than men on healthcare, Alegria said. Yet companies that specifically address women’s needs make up just 5% of all digital health funding since 2011, according to Rock Health. That percentage has been increasing, reaching 7% in the first eight months of 2021.

That shift may continue as more women investors come on board. Women still only make up 15% of general partners at venture capital firms, marking small progress — only 12% of women were general partners in 2019. Alegria and her colleagues are part of the change.

SteelSky’s portfolio includes digital-first company Origin, specializing in pelvic floor health, pregnancy, and postpartum care; AI-powered chronic care management company Lark; and Raydiant Oximetry, which is developing a fetal distress monitor.

“This is just the beginning. We’re seeing the momentum and we’re really excited about it, but there’s a lot left to do.”

Though BlueSky Ventures has not yet backed startups forged in the Pacific Northwest, several of its companies touch the region through their customer base or regional presence. The fund invests mostly in seed and Series A rounds.

Find out more in the interview with Alegria below, edited for clarity and brevity.

GeekWire: How did SteelSky Ventures start and how did you get involved?

Buffy Alegria: I joined a few different angel groups including Pipeline Angels (which supports women founders). That’s where I met my business partner Maria Velissaris. We were investing in similar deals together and noticed that we had both had an affinity for the women’s healthcare space, and also noticed that there was a huge gap in funding. There was a kind of a cliff of funding when it came to raising later seed or series A rounds, because the industry is fairly new, but also traditional VCs invest in people that are similar to them, and look like them, and have problems that they can identify with.

We decided that if we could raise a fund and write bigger checks that we could take board seats and board observer seats and really make more of an impact, and help companies scale and make it to the next level of funding.

How has the pandemic affected your firm?

We ended up forging forward and having our first close in September of 2020 with our first round of investors. We had the idea that we wanted to invest in different delivery models of care and digital health before COVID, but then COVID really sort of cemented-in our thesis and forced the adoption of those digital health solutions. COVID accelerated the growth of digital health and it also really highlighted the disparities in our healthcare system when it comes to access as well as care for women and underserved populations.

Do you look for women founders?

We do feel that if companies are innovating in women’s health space that they should have female representation at the C-suite level and their board, but it’s not a requirement that they be a female founder for us.

What do you think piqued the interest of your partners and investors?

We have a very cohesive round of expertise as well as network connections. We pay a lot of attention to relationships with payers and providers to really understand what the gaps are in their portfolios and what are they looking to see, but we also have the perspective of what women need, what women want, and what’s not out there and what sort of business models might do well. We really try not to turn [companies] away completely, we make sure to provide them with some other direction if it’s not a fit for us.

Can you provide an example of the type of company you invest in?

Cayaba Care is one company. It provides at home maternal health care. They have a hybrid model of care delivered especially to those vulnerable populations that have been historically underserved and have barriers to accessing care. This population usually accesses their prenatal care by going to the emergency department. The company is deploying community clinicians that can go to the home.

How are your companies engaged in the Pacific Northwest?

Many of our companies have a presence in the Pacific Northwest already. One of the companies that we first invested in is Twentyeight Health. Its operations are Medicaid-enabled. They provide virtual telemedicine visits for women who are trying to get contraception and other women’s health prescriptions, and then they deliver them to their door. They can serve all populations, but they are serving what we call contraception deserts. The company is in almost 50 states now.

Another company is ConcertoCare [which offers care to seniors in their home, taking the burden off of caregivers]. They are setting up a complex aging care and hospice program in Washington state. A lot of our companies are working here.

What do you see in the future for SteelSky Ventures?

We’ll probably invest in about 25 original companies out of this fund, and then we do reserve some for follow-on investments in those companies as they raise their next round. This is just the beginning. We’re seeing the momentum and we’re really excited about it, but there’s a lot left to do.

We’ll look to raise probably a $100 million fund later this year and continue on in this great space because we just see so much potential and so many ways that we’ve already been able to affect women’s health. Collectively, our portfolio companies have provided access to essential health care services for over 44 million people already.