Why Women’s Health, Parenting, and Sports Are the Next Big Bets in Venture ft. Rachel Springate

0:00I remember saying to him, what's Uber? And more importantly, why on earth are they letting you invest? Women are half the population. Just because the consumer is paying for the whole thing, the whole bill, and the whole bill is incredibly expensive. We shouldn't be suffering like this. Why did we have companies like Uber, Instacart, Spotify that existed? Why were these companies not existing in something as important as healthcare? It's like it's going to become a commodity. You're either using it or you're dead. America is not a cash pay country. It works on insurance.

0:37it.

0:58who is one of the founders of Muse Capital. Muse Capital is an early stage venture firm that invests in founders that are shaping the future of how we care, play, and live. Rachel started her career though, in corporate partnerships. We talk about how she got into startups in the first place, the role Troy Carter had on her and her career, and the development of Muse Capital, how she met her co-founder, Asia, and the moment actually that led to them building out their thesis together and underlying mission, and also the expansion to SPVs into sports franchises. But before we get into today's episode, I want to tell you about our sponsor, Glimpse.

1:39Glimpse is an AI-powered end-to-end deductions management service that's focused on recovering revenue from KEHI, UNFI, Amazon, and Target for consumer brands. They centralize deductions with backups. They handle disputing on your behalf, on the brand's behalf, and they streamlined the accounting process. So check out Blinx, link in the show notes. And with all that said, without further ado, here's Rachel. Rachel, thank you so much for joining me here today. How are you? I am wonderful. And thank you for having me. I'm a big fan of the podcast and the incredible guests you've had. So thanks for having me.

2:18Oh my gosh. Well, thank you so much for listening and really excited to dig in on everything that you've built with Muse Capital. But before we get to Muse, I want to start originally with your path. You began in luxury partnerships, then you went on to entertainment, and now you're in venture capital and in the wonderful world of finance. What's the kind of takeaway or earned secret from that journey that most shaped how you invest today? I think the connecting thread across my entire career is relationships. I think that that was what I developed very early. I started my career in brand research.

3:00That's how I actually built relationships with marketing directors of Fortune 500s. Then in my next role, when I was global head of corporate sales for a luxury lifestyle group, I expanded those relationships working with more brands, but also celebrities, sports teams, and even in the transition into startups and venture capital, it was those relationships that even still today allow me to succeed. If that makes sense. Yeah, makes total sense. How, well, I guess first I'll ask about how you met Asia, your co-founder. I know you first connected during the Spotify deal and you were consulting a dub set.

3:52But what did you see in each other? How did the interaction happen that made you think, hey, maybe we should work together? Yeah, it was a defining moment. That's for sure. And that happened probably 12 years ago now. I think in terms of how Astrid and I met. So just to backtrack a minute. So I had all these incredible brand relationships. I'd my expertise was business development I'd been creating these deals between these groups um for a long time and then after doing that I just thought hey there's you know what can I do with these relationships that is not basically making my old bosses like uh you know a lot of money um and so I ended up meeting somebody who kind of opened my eyes to the startup world and kind of how that all worked.

4:47And that person was a guy called Troy Carter, who I'm happy to talk about. And at the time, he was Lady Gaga's manager and she was the biggest pop star in the world. This was 2012, so you'll get my age. And he told me that he'd been spending a lot of time in Silicon Valley. And I'm like, what is a music manager doing in Silicon Valley? and he said he had been talking with a lot of startups and had actually just invested in a company called Uber. And I remember saying to him, what's Uber? And more importantly, why on earth are they letting you invest? And he said, because of my network. You know, I bring my contacts across, you know, entertainment and help these companies grow.

5:38and I remember just being you know really fascinated at the time and said well how do you do that and given my network and my background I'm like how are you how does this work and so he talked me through it and I was extremely inspired in fact so inspired that I remember like thanking him and he said to me listen there's very few people in our world that don't just have the relationships but also the business knowledge to get these deals done at this kind of level and it's definitely something you should think about and sure enough he was the reason that I then pivoted and I ended up creating my own consultancy which is where I would leverage my old network to help startups grow so that's what I started and just to give you some examples I was helping startups do early deals with Disney, do a partnership with the likes of a Selena Gomez.

6:37So it's like taking my old network and then helping get them in front of the founders and structuring these deals. And actually, that is how I met Asia. So the backstory here is in my consultancy, one of my clients was this audio recognition technology. It was around the time of SoundCloud when SoundCloud was just stealing market share from Spotify. I wanted Spotify or one of the other big streaming companies to partner with the company, either partner with or maybe acquire the company. And so the woman that I was introduced to to do that at Spotify was Asia, who is now my partner in the fund.

7:18And her and I met Spotify was just launching in North America. She had moved from Stockholm to L.A. to kind of open up the L.A. office to oversee M &A. and you know I walked in there just in you know another meeting and said hey SoundCloud's stealing market share I have a technology that can help you you know change that let's do this and that was it that was a moment we ended up working against each other on that deal for nearly a year so you get to know someone very well sitting the opposite side of the table and we ended up doing the deal. And after doing that, we just said, hey, we spent our entire careers building other people's companies, yet we have this extremely complementary skill set and network.

8:07And what do we want to build? What's our legacy? So that's how we met. Wow. I'd imagine how much you learned from somebody negotiating against them for one year. So that's amazing. um your your transition i want to talk a little bit about your transition from going from corporate partnerships and connecting particularly connecting brands corporations with celebrities for example and in kind of other areas of course this is also common as well with startups uh where you also have um these types of partnerships happen or even with creators and others some of them have gone really well. Some of them have not gone very well.

8:52And some of the companies don't perform or fail, just like a lot of startups. To talk a little bit about some of the differences first, first, that transition, working at 4500s, then going down to startups. And as well as I'm sure a lot of startups are thinking about how do I land a celebrity or should I even have a partnership with a celebrity? What is your approach when it comes to these matters? This point, having over a decade of experience of doing this. I think you've learned a lot and you've seen a lot. And the market has changed a lot from when I first started doing this, you know, in the consultancy days now to doing it as an investor.

9:32And I think the common thread here is, first of all, the most important thing is that the partnership has to be authentic, right? Gone of the days of somebody, you know, posting for money and equity, there has to be some sort of authentic alignment. Say that talent has suffered a pain point that your product or your, you know, app or technology is actually solving. That is a very important part of this. Do you think the reason for that is because consumers have gotten smarter? Absolutely. I think that the best partnerships are the ones that are authentic and actually a really good signal of it is that even today, I don't even look at trying to do deals with celebrities that want to do it for equity.

10:18They need to have skin in the game. And so the best relationships and the best partnerships are where the celebrity is actually investing into the company and, you know, truly believes in their mission and, you know, can very authentically help push the mission. So authenticity is number one. And then the second thing is definitely timing. So you do not want to go to a talent when you are too early in your journey because, you know, I've learned this the hard way maybe earlier in my career where maybe we'd set up a partnership where the technology just wasn't ready for the inbound, what was about to happen with that talent.

10:59And so timing is really important. You don't want to, you know, go and approach your dream talent and say, you know, come on board and make this push and push this organically to your audience if you're not ready, right? If you're, you know, in our world, we do a lot of investing in women's health and there's a lot of talent that's very passionate about that. But you don't want to, you know, have that happen if you have like one clinic or something, right? Because you don't want to create a big rush. And so timing is really important. um i think they're the two main two main things no that's it that's a great point about when do you kind of put on the gas per se or you know can you have enough when you actually have all that inbound right and all an interest if you can't actually fulfill your obligation or what you're set out to do because you're maybe you're cash strapped maybe you're just not at scale for whatever if it's a physical product business or maybe it's a software business you just don't have the power to do so then i think that first impression goes a long way and so if that happens then you know you might it might be really hard to recover absolutely but then like you said when you get it right it's it's really powerful and we have lots of examples of companies and talent who have got it right.

12:23Totally. So when did you and Asia decide to start a venture capital fund and actually start news? So interesting story. After her and I did the deal between the two groups, we'd had exposure to venture capitalists just through the nature of the work that we were doing. and we could never really understand why they weren't more helpful or able to do the kinds of things that we were able to do as operators, right? For us, we were experts in helping a startup get their very first revenue deal, distribution deal, partnership. And so we just thought it was a real missed opportunity. Like, why aren't there more venture capitalists who can be helpful to those entrepreneurs?

13:13And it felt like if we came in as an investor, you're going to want to take our check versus someone else on the cap table given our operational experience and our network and so the original idea for Muse was you know why don't we combine forces on the consultancy and just start like writing angel checks as well as doing our consultancy work for kind of sweat equity in the companies and as we were literally building this out my partner Asya got diagnosed with breast cancer and I remember when all of that happened the two of us kind of stopped what we were doing at this point you know we were super close and I ended up like moving in with her essentially and helping her through that whole journey and us going through that experience together is actually what helped inform our thesis at Mews And what we experienced through that was we just couldn't understand as elder millennial technologists is what I'd say, is why did we have companies like Uber, Instacart, Spotify that existed when you, why were these companies not existing in something as important as healthcare?

14:25And more importantly, what was happening with women's health? We just, it didn't make sense to us. And so actually through going through that together, we saw the opportunity. And this was over a decade ago now. And it was that very personal experience that led us to found Muse. Wow. That's very, very powerful. When you realize, so when you first, before your partner got diagnosed, in terms of how did you kind of assess opportunities from that standpoint, rather than, and then you kind of realize what your mission was, if that's fair to say. Um, how, how then did you connect the dots and also then build your network when it comes to in, in women's health and, and, and really kind of understand what are, you know, interesting opportunities versus must exist opportunities?

15:22I think, you know, going through that whole breast cancer fighting episode together, it's a six month process and, you know, a lot of things happened. And for the two of us, we were just baffled because we're like, hang on, a lot of this stuff seems so backwards, so broken, can be resolved with, you know, simple technology. You know, first of all, you know, why is it happening? You know, well, there has to be something we can do about it because it doesn't make sense. Women are half the population and we shouldn't be suffering like this. And so what ended up happening, she got through it, you know, six months, double mastectomy, totally, you know, 10 years in remission, thank goodness.

16:02but just going through that after doing the research and kind of looking at kind of health tech in general and looking at the amount of money that was going into women's health it just didn't make sense well how is it that this is half the population um and you know why aren't there more entrepreneurs building and why are they not getting funded and after looking at that we saw the opportunity we're like well none of this makes sense it feels like these kind of sectors should be funded and why shouldn't we be the ones to do it? And I'm sure you can imagine like going out and talking about investing in sectors like women's health 10 years ago, it was a very different place.

16:50Today, I think the market realizes how huge the opportunity is, but back then it was It was a lot harder. Well, what was it like then raising your first fund from LPs in a sector that was quite contrarian, right? I mean, now it seems like women's health, there's a lot more awareness to it. Still not nearly enough awareness that maybe needs to happen in terms of dollars that are actually invested. But I would say there's probably certainly a lot more interest or awareness since 10 years ago. What was it like you and Asia raising your first fund with this thesis? Probably one of the hardest things we've ever done in our respective careers, to be brutally honest, for a couple of reasons.

17:38You know, not coming from the traditional, you know, venture capitalist background, you know, not having the tick boxes that most institutional LPs would look for. but also you know building a thesis about these honestly kind of taboo markets right it's at the end of the day when 95 percent of venture capital dollars are controlled by guys it's like you know when you're going out there and you're trying to raise capital in these very like female specific sectors you know things get lost in translation you know you present the stats and you know we had some really shocking feedback I think when I had an investor that asked us what kind of things in women's health we'd invest in and when we said things like menopause I mean I kid you not this person said well that's for a niche and you're like wow I mean it's just one very like very sad example of the things that we were facing back then but not really that surprising um I think I should also say like women's health is kind of where we started but our thesis of the fund is investing in overlook opportunities across the future of how we care play and live and you know in the care bucket it's like what's an example of a horribly overlooked underfunded sector it's uh women's health um and so you know identifying that back then raising the capital thankfully uh we had our old network that backed us people that you know understood us had worked with us understood our kind of you know superpower and you know they were from our old network they were not institutional lps they were family offices from our old world you know owners of sports teams owners of media companies c levels of fortune 500 you know some talent um just people that really believed in us and our mission um and thank god for them because there's no way we would exist if you know we didn't have those early supporters and that belief um like I said you know making the early best you know 10 years later you're like well we kind of told you so but but honestly like I think if if we look at what our edges is a fund and you know props to my business partner she's definitely very visionary in terms of seeing things 10 years of ahead of everybody else like first with you know Spotify and streaming and then women's sport, which I'm sure we'll talk about, and women's health.

20:12Yeah, like today people understand it. Back then, not so much, but isn't that what makes a good venture capitalist? Totally, absolutely. That is exactly what makes a good venture capitalist. What was the fund structure for Fund One? What was the size of the fund and as well as what was your deployment strategy? So the way that news started, so back in 2017, the two of us started with an angel vehicle. And we just used that angel vehicle to prove that A, we could get access and B, we could deliver on what we said we could in terms of partnerships, et cetera. This episode is brought to you by Glimpse.

20:53Glimpse is an AI-powered end-to-end deductions management service that's focused on recovering revenue from KEHI, UNFI, Amazon, and Target for consumer brands. They centralized deductions with backups. They fully handled disputing on your behalf, the brand's behalf, and streamlined the accounting process. For more information, check out tryglimpse.com and let them know that Mike sent you. That little angel vehicle, we ended up having some great success. We had two exits within 14 months, which typically doesn't happen in venture capital. And so we had this very promising start. and then when we went out to raise our first fund now this was the end of 2018 it was pretty shocking you know like I said you can imagine going out investing in these sectors was kind of depressing but somehow again with the support of our old network we were able to raise a first 13 million dollar fund so that's one three and I just cannot believe like how hard that was but thankfully it happened and uh yeah so we started off with the angel vehicle we kind of proved that we could deploy capital and return capital then we decided to start a dedicated fund went out to the lps in our network were able to cobble together you know that first venture fund and then out of that vehicle we actually we wanted to do a couple of things we wanted to use that first vehicle to prove that we could do what we said we could do right if we're talking about our edge and our superpower being the fact that we can help those startups get their very first you know major revenue deals etc etc then let's do that um and so in that in that fund we did 30 deals um over three years and yeah some of them today certainly in the women's health space are some of the leading companies.

22:53So that's amazing. How, how do you balance? Cause of course we've seen, you know, a few ways when it comes to big trends, um, within venture, for example, we had, you know, blockchain a few years ago, for example, and now we have, of course, AI. Yes. How, how do you balance when it comes to your investment thesis and, and what you and Asia are committed to building with Muse versus maybe some of the outside noise when it comes to different kind of megatrends that are happening or even trying to incorporate some of those megatrends into your thinking relating to the categories you're investing in.

23:42A couple of things that are pretty fascinating about these overlooked markets. typically they're pretty recession proof right if you think about something like women's health future of child care elderly care like the sectors that the future of parenting these are typically you know huge sectors that are not subject to these like huge market swings and so that's the first point yes we've been through the hype cycles but I will say Asya and I definitely remained disciplined throughout that I think you know our view for trends like AI today the whole view here is look AI has to be baked into your product or offering just like you had to have you know the internet as part of your you know company you know during that boom it's like it's not it's going to become a commodity like you're either using it or you're dead and so what I think is really interesting about us is firstly, you know, overlooked markets, you know, I feel like they're pretty insulated from a lot of these big trends.

24:46Second of all, in the age of AI, we believe that your AI is only going to be as powerful as the data that it's trained on. And if you look at what's happening today, all the big players, open AI, etc., there's a data race, right? If you look at all the publicly available data, that has been mined. And I think this next, you know wave will be around obtaining proprietary data sets and what's super interesting about the areas that we invest in is that there's very little public data on them anyway so I'll give you an example women's health you know the the data the research etc that's out there is very little and frankly what does exist is very marred in bias and so if you look at a company like for example we were very fortunate to have led the pre-seed of a company called midi which is now one of the fastest growing women's health companies out there it's like the virtual care clinic for women over 40 and they probably own the largest data set on women over 40 and so that data set only becomes more and more valuable in this age of ai and given that you know we were the early backers in some of these companies, I do think that I think we're very well positioned, given what's happening in this AI boom that keeps us, frankly, insulated from this noise.

26:14What's also really interesting, too, in terms of the market that you're serving is that women over 40, right? Just overall, a very underserved market, even though they have incredible spending power, right? And I think a lot of companies and startups, when you think about who they're appealing to in consumer, typically very younger, Gen Z, maybe millennial, who knows, Gen Alpha kind of consumer, whereas you're actually appealing to customers who, again, have disposable income and is incredibly underserved. And that's also super interesting and also very powerful. Extremely. And I think, I mean, I'm sure you know this.

26:54I think it's close to 80 % of all household decision, household purchasing decisions are made by women. Yeah. You know, especially in this older generation that now have young kids and 80 % of the healthcare decisions. And so, you know, it's a very powerful demographic. And look, it's not just women's health. If you look at things like the future of parenting, again, in the AI age, it's like we've back companies that are focused on something called the family graph right how how does a family today interact now you know I'm a I'm a mom I have two young kids you know my pain points as a parent today are completely different to my parents generation and so who are the entrepreneurs that are building the tools the technologies the products that are going to help make my life easier now that family graph nobody's looking at like the big guys the you know the big ai companies are very focused on you know individual agents b2b sass like applications whereas whoever can own and control that family graph of how a family unit interacts that's it's a very powerful um data set to be able to to tap and again it's like an area that we invest in so it's not just women's health it's um it's a very exciting time i think to be investing in these historically overlooked underserved markets totally so midi health i know that as you mentioned they become a standout they're uh it's um and they're they're doing extremely well what did you see in that team early that maybe others didn't so something i think pretty unique to us as a fund is we we already know what we're looking for.

28:44I haven't mentioned this yet but we do invest very early. We like to be you know the first institutional check into the company like we're real conviction investors and what we do at Muse is for the sectors we invest in we do these three months deep dives like with our like interns and we are trying to identify like white spaces before the market catches up. So to give you an example the way MIDI happened five years ago we knew that menopause was a huge opportunity and as a result we talked to everybody in the space all the players in the space but we came to the conclusion that there was still a gaping hole for some kind of 360 degree virtual clinic that only catered to women over 40.

29:25We made that thesis internally and then we went out to our network and I'm very proud I'm a Kaufman fellow and I went to my Kaufman network and I said listen we're looking for a company like this and thankfully one of my classmates who's a big health tech investor is like hey I think this person's building exactly what you're mentioning solving the problem that you wanted yeah and by the way she's a serial entrepreneur like they're a killer team and I'm like I need to meet them immediately and that's how we found Joanna um and you know when we met I think what was super interesting is we already kind of knew the market so well that we were finishing each other sentences right we she didn't have to sit which she had to do with a lot of other investors and educate and explain how massive this opportunity was we're like nope we know we have full conviction can we please write you a lead check which we've never done before you know we had such conviction in like what they were building um and that's how the whole thing happened and um you know midi's one example but you know it wasn't just menopause a few years later we came up with the thesis that you know hormone testing was going to be really important and you know and again went out to source these deals we knew that um you know breast cancer detection and examination today was just terrible like what what existed for mammograms which is terrible and could be resolved and so we basically identify these trends and then we go try and find entrepreneurs that are building so in terms of the investment style, if it's fair to say, it's a bit more top down in that you actually try to discover the trend or you have an insight on the trend and you kind of go and try to find the best company that you can find that's solving that exact problem that you're hoping to solve.

31:16Yep, absolutely. And it's exciting because, you know, we're doubling down on women's health. You know, you feel like people now understand how huge this is and, you know, we're just getting started but there's so much more opportunity and we continue to do that process it's like okay so what's next and it's not just for women's health like i said it's across the other sectors i think totally so and all the other sectors that you invest in including obviously women's health do you ever get surprised meaning since you're investing kind of like top down and you have this insight and you find the best company that's actually solving this problem and maybe you don't need to be educated about it because you've actually been doing a ton of research market research already.

31:57Do you ever get surprised in terms of when you're talking to a company and say, oh my gosh, this is such an interesting way that you're solving this problem or if it's a problem that didn't exist that is actually within my thesis? I think, I mean, for example, you know, longevity is a hot word right now, right? Like everyone's trying to invest in technology and you hear about all these companies that are being built. And, you know, do I ever get surprised? What surprises me is kind of the lack of creativity and innovation sometimes. I'm sorry. Like when you are so deep in a sector and you understand, and by the way, in something like women's health, it is a very, very complex industry to navigate, especially in the US, right?

32:43There's a lot of stakeholders. And the healthcare system is, I mean, incredibly, incredibly hard to navigate, you know. Incredibly. And even for us who've been investing in it over the last decade, you know, we still learn. But what's fascinating to me is when you get entrepreneurs that are trying to build in these spaces and they really do not understand like how complex, you know, the different stakeholders are, what it means to do a deal with a health system versus, you know, an insurer versus, you know, direct to consumer like healthcare companies. It's really hard. And I think what surprises me is A, there's quite, there's a lot of, entrepreneurs who still, you know, don't really understand that.

33:24But then what is encouraging is sometimes you'll meet an entrepreneur who doesn't just know it, but they've kind of hacked it and they've thought about, you know, how they're going to, you know, change their business model to address a problem. You know, for these longevity companies today, I'm like, oh, you know, we, you have function, you have superpower. Now, you know, we're the thing that is going to come. And I'm like, yes, but America is not a cash pay company. America is not a cash pay country. It works on insurance. Like there's only so many people that can afford these very expensive tests.

33:57So I don't know if that answers your question. No, exactly. Well, I guess how do you balance that, right? When you actually explore a new company and you say, okay, this is incredible technology, incredible innovation that you're building. But in terms of how, because it is this murky line in terms of does the consumer pay? Does insurance pay? How do you kind of assess that? Because obviously, at the end of the day, you know, it also needs to be a viable business for you to invest in. Honestly, it's why there's like some companies that are out there today that I'm still scratching my head as to how this scales, how this continues to.

34:31Just because the consumer is paying for the whole thing, the whole bill, and the whole bill is incredibly expensive. I mean, less expensive, I guess, than what it traditionally would be. I mean I think you know in answer to your earlier question about you know how do you avoid the hiatic etc we do believe in like fundamental business models right business models that make money versus there's a lot of business models that are literally venture backed and you know sometimes that's worked like okay you just just raise so much you can't fail but it's just kind of against our thesis and a value that we're really proud of at Muse is like the democratization of care.

35:08There's a lot of companies out there that are obviously consumer technology companies that are concierge for those who can afford it, right? So aimed at the 1%. But we try and avoid those companies completely. We're trying to look for companies that really understand the current healthcare system and how to work with it versus against it. That's where I think like true change and true scale can happen. But right now, there's a lot of noise about a totally different model, which we just frankly don't understand. I know we began this conversation. I was curious about celebrity partnerships and your approach for on the corporate side versus startup side.

35:49I know that your superpower is partnerships, if that's fair to say, just in general. When you look at a company and you find a company that you really like, what's your approach in terms of, okay, how can I be most helpful for this company? How also to navigate within partnerships? because when I first think about partnerships, I'll be honest with you, I think about B2B companies and like, you know, helping land, like for example, a customer or, you know, doing some type of partnership from that perspective. From the B2C route, how do you, because I know that you invest obviously in consumer technology, what's your approach to partnerships?