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Illustration: Lazaro Gamio/Axios

Cleo Capital, led by entrepreneur Sarah Kunst, raised $3.5 million for a debut fund that will invest in female entrepreneurs who act as scouts.

Why it matters: "There's a lot of response about diversity — gender and race — and there's a lot of conferences and panels and dinners celebrating or highlighting women in tech, but there hasn't been a change in where the capital goes," Kunst tells Axios.

Changing the ratio: Along with an abysmally small number of female decision-makers at VC firms (less than 10%), "most scout programs inside of existing firms are overwhelmingly male," says Kunst, who was a scout for Sequoia Capital in 2018.

  • Sequoia tells Axios that more than a third of its current class are women. Spearhead, a joint program run by AngelList and VC firm Accomplice, had 4 women out of its first class of 19.
  • "A lot of the scouts [Kunst] had in place were already people we really respected. ... It appeals to us because of the quality of founders," says Lightspeed Venture Partners' Nicole Quinn, whose firm invested in Cleo.

Along with a persistent wage gap, women also own just 9% of all startup equity, despite making up 33% of founders and employees.

  • "Things won't really change for women unless women become more liquid, and all of our money is tied in our companies," says Rachel Tipograph, founder of MikMak and a Cleo Capital scout. She's already an angel investor but says that scout money makes it possible for her to make bigger investments.
  • And because scouts get to keep much of the upside of the deals they make, Cleo Capital (and all other female scouts) could earn significant new cash if it proves savvy at picking investments.

Kunst initially aimed to raise $10 million, but says that many investors told her they were not backing new funds at the moment or that her fund was too small for their budget.

"The reality is that the bar is sometimes higher for people who try to do things that don't match the patter of what other people are doing," says Bloomberg Beta's Karin Klein, whose fund invested in Cleo.

Go deeper

Justice Department closes Emmett Till murder probe

A faded photograph is attached to the headstone that marks the gravesite of Emmett Till in Burr Oak Cemetery in Chicago, Illinois. Photo: Scott Olson via Getty Images

The family of Emmett Till announced Monday that the Department of Justice has formally closed its second investigation into the 1955 murder of Emmett Till.

Why it matters: The DOJ reopened the probe in 2018 after the white woman at the center of the case reportedly recanted her allegation that Till, a Black 14-year-old, sexually harassed her prior to his murder.

GOP Rep. Devin Nunes to retire, will be CEO of Trump media org

Rep. Devin Nunes. Photo: Dylan Hollingsworth/Bloomberg via Getty Images

Rep. Devin Nunes (R-Calif.), who serves as the top Republican on the House Intelligence Committee, will retire at the end of the year and become CEO of Trump's new media organization.

Why it matters: Nunes, once considered a moderate member of the party, became one of the fiercest defenders of former President Donald Trump throughout both of Trump's impeachments and the Intel committee's Russia investigation.

DOJ cites discrimination in lawsuit against Texas over voting districts

Attorney General Merrick Garland. Photo: Alex Wong/Getty Images

The Department of Justice on Monday filed a lawsuit against Texas, alleging Republican state lawmakers discriminated against Black and Latino voters and has "again diluted the voting strength of minority Texans" when they approved new redistricting maps.

Why it matters: A DOJ assessment of the new districts found that they violate Section 2 of the Voting Rights Act, Attorney General Merrick Garland said at a press conference.

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