Five years ago, entrepreneurs, sisters and Favorite Daughter clothing line co-founders Erin Foster and Sara Foster were helping people find their perfect professional and friend matches while co-leading creative for Bumble Bizz and Bumble BFF. Today, they are channeling that energy into finding the perfect companies to invest in with Oversubscribed Ventures.
The pair, who are also daughters of music producer David Foster, are general partners investing in early-stage consumer technology and all of the tech to support those brands. They are running the firm with Phil Schwarz, a partner at Corazon Capital, who has known the Fosters for over a decade.
“We are constantly looking for investors that can add value to companies in ways that we can’t, and Erin and Sara fit that mold,” Schwarz told TechCrunch. “They have a media platform, a podcast and a show on Netflix. They are co-founders of a company, and not only can they speak to an audience, they want to roll up their sleeves and work closely with companies. That’s a hard combination to find in a world of venture and one that we’ve been looking for.”
In May 2022, Oversubscribed Ventures made its intentions known that it was raising a $20 million fund. That has not yet closed, and the firm declined to disclose any details about the fundraising.
The Fosters are among a number of new emerging fund managers who have started venture capital firms and are raising their first fund, joining Ovni Capital, Emblem, New Fare Partners, Venture Guides, The Family Fund and Phenomenal Ventures.
Oversubscribed Ventures made investments in six companies so far, including bachelorette party planning app Bach, boxed wine company Juliet, home manicure machine 10Beauty, skincare startup Exponent, infant formula company Nara Organics and NFT marketplace OpenSea. They have plans to expand the portfolio throughout 2023.
TechCrunch spoke to Erin Foster, Sara Foster and Phil Schwarz about the firm’s beginnings and what makes them unique investors. The following was lightly edited for length and clarity.
TC: We are curious — what does running creative for a dating app look like?
EF: We also had the same question when we were hired. In 2017, met Whitney Wolfe at a Bumble Hive event in New York. It was supposed to be a one-time thing and we just had really great chemistry. Whitney was growing her business, and she really is a trailblazer. In the real sense of the word where she likes to do things differently without looking around to see what else everybody else is doing. She said she wanted us to work with her at Bumble in a role as creative directors. And she admitted who knows what that means right now. This is 2017 when people from entertainment weren’t really coming over and working with tech companies. We didn’t have any references to use as a path of what it should look like, so we made it up as we went along, touching anything creative at the company, like campaigns, events and creative ways to get people to learn about what Bumble Bizz is or what Bumble BFF.
What got you both thinking of starting Oversubscribed Ventures?
EF: Phil Schwarz, who is running the firm with us, brought us into the workout company Mirror, and with equity in Bumble and that company, we started to grow this little arm of our work life. We really liked it, and it was successful. Both of those companies had really large, splashy exits and acquisitions. Then we started getting a lot of incoming business and a lot of opportunities at really great companies to invest early to get advisory shares. We weren’t able or comfortable writing personal checks that were a big enough size to have real ownership, but we were doing a lot of work for these companies. So we were owning this like tiny, little sliver of something but putting a lot of effort behind it. We realized that we should try to do it on a larger scale with other people’s money because that’s always more fun.
SF: We really wanted to raise money because we had a problem. We were getting real allocations and companies were coming to us asking if we could do for them what we did at Bumble and Mirror. We did start writing $25,000 checks, $50,000 checks and getting advisor shares, but that adds up when we just have very little skin in the game. It was hard to get allocations that we can’t fill, so Oversubscribed was really born out of a need. We really did need money, so we were like all right, let’s just do it.
How are you translating the Bumble and Favorite Daughter experiences into being venture capitalists?
EF: Between our podcast, Favorite Daughter, our investments and a lot of our speaking engagements, we really feel connected to women. That’s really been the through line that has helped us. We didn’t go to business school so we can’t list for you the reasons why we knew that we’d be able to do this or why we are able to do it. It really is based on an instinct of us trying to be really self-aware and pay attention to what women are talking about around us and paying attention to the consumers.
SF: Our sweet spot is we really like to get our hands dirty working with the founders in our portfolio companies. That is where our skill set is most valuable. We’re not valuable to a Series D company, but we are at that seed stage. It’s the same skill set that we use to build Favorite Daughter, which is profitable year two.
What are you looking for in an investment?
EF: It comes down to a feeling, like any relationship. Do we connect with the founder? Do we believe them? Do we trust them? Can we imagine that person going into a room and selling someone on this thing? Can we imagine them being able to handle the pressure about being a founder? It has to be something that we can see ourselves using and that we can tell our audience about. If we can’t speak to our audience about it, it doesn’t make sense. Even if it’s going to be successful, we pass on it because we’re not a huge fund, so we’re there to be strategic.
SF: You catch yourself in these situations where you get an intro to a founder, and it’s through someone you really respect and really exciting people are already on the cap table. However, they have to think we would be an asset and want us there.
To that point, why should founders pick you as their investment partner?
EF: We have a really good track record. We don’t have companies that we’ve worked with that haven’t had success and had great numbers to show for it. We feel confident that, like in anything, the right relationship will land for them and for us. We’re not for everyone, and that’s okay. Not everybody wants an outside-of-the-box concept. Not everyone wants to work with a firm that has two people running it that have an unconventional way of doing things. But if you do, then great.
What kind of technology are you all fascinated by?
EF: We like technology that touches another category that we are familiar with. We invested in a company called 10Beauty, and it’s a robotic manicure system. The tech behind it is really fascinating. It’s a hardware company, but it’s also a software company. We’ve been on a journey with them for more than two years, and it’s something that we really can see infiltrating our friend group and our houses. Post-pandemic, women are going to the nail salon, but you read all these articles about using the UV lights and getting a nail infection. People want to do things at home more and so this, to us, is really innovative and the kind of tech that we really would love to be a part of.
SF: Bach is purely software, and it’s the kind of thing that our audience just understands. If they get it, they want to use it right now. It’s owning the bachelorette party space, and the roadmap is exactly our sweet spot. The goal is for Bach to own group travel. That’s the kind of tech that excites us.
There still aren’t many women-led VC firms. How do you see Oversubscribed making waves here?
EF: Hopefully we make really exciting and cool investments that stand out, and people recognize that we’re new in this space and have a good instinct for it.
SF: Also, we’re not trying to be super loud. It’s really sexy and cool to be a venture investor right now or an investor period. We are kind of trying to keep our heads down, work really closely with our founders and then you’ll see it when it’s successful. We have great relationships with our founders, and it’s the most exciting when they all seem happy. So that makes us happy.
Erin Foster, Sara Foster form Oversubscribed Ventures to invest in consumer brands by Christine Hall originally published on TechCrunch
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