New VC Firm Neythri Futures Fund Plans to Tackle Funding Diversity Gap

On Oct 13, 2021

A new VC fund backed almost entirely by South Asian women just raised $10 million.
Neythri Futures Fund, or NFF, aims to invest in underrepresented female founders.
Over 90% of the fund’s 200 limited partners are South Asian women and 70% are first-time investors.

Mythili Sankaran is looking to narrow the diversity gap in venture capital with her new fund, Neythri Futures Fund.

The fund just closed its inaugural fundraise with $10 million, boasting over 200 limited partners. But what’s unique is that 90% of the fund’s backers are South Asian and 70% are first-time investors. Neythri is focused on funding startups with underrepresented founders, with a particular focus on women of South Asian descent.

Sankaran, solo general partner of the fund, tells Insider that the only way to close the funding gap and create meaningful change for underrepresented founders with diverse LPs investing in diverse founders.

She said she was inspired to start Neythri after hosting small groups of eight to 10 women in her backyard in Saratoga, California for chai and snacks in October 2019. During those intimate tea sessions, the women shared common interests and aspirations as female tech founders and investors.

Slowly the group became larger, growing to as many as 50 women per meet-up. That’s when Sankaran knew she needed to build something bigger. About 15 months later, she started on her journey to fundraise for a fund dedicated to South Asian women. In Sanskrit, one of the oldest languages in India, Neythri means female leader.

“Neythri’s mission really is to position south Asian women front and center as key stakeholders in venture,” she said.

Women of color make up just 4% of those at the C-suite level in comparison to white women, who make up 19 percent, according to a McKinsey/LeanIn Women in the Workplace Survey.

Within venture, only 4.9% of US-based VC partners are women and only 0.4% are South Asian women, according to a study released by Women in VC, an online database of over 3,000 women investors,

Sankaran’s initial goal was to allow for a minimum $10,000 investor check to get to $3 million, but she bumped her goal to $10 million after seeing much more interest. Also, new SEC regulations allow for up to 249 investors in a $10 million fund and she wanted to bring on as many South Asian women as possible. The maximum number of investors drops to 99 for a fund over $10 million, she said.

When it comes to investing, she aims to stay funding stage agnostic. She’s also mainly focused on tech-enabled companies with big market demand in areas like fintech, edtech and digital health.

The only rule she has for investing is that each startup must have at least one underrepresented founder or female founder — a woman of South Asian descent or another woman of color. She’s willing to bend the rule a little bit to accommodate startups that have at least one woman founder, a woman on the executive team or board.

“The differentiating factor here is we’re not checking a box,” said Archana Ramamoorthy, a Google director and an LP in the Neythri Futures Fund. “We’re at a moment where we’re trying to teach people how to fish and it makes people like me and several others feel like we can actually be part of this and also take this further.”

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