The 98 Perspective
The 98’s Investment in Cambri
Joy Marcus & Lynda Clarizio | December 2023
The 98 is pleased to announce our most recent investment, Cambri. Cambri is an advanced product innovation platform that goes beyond traditional product concept testing to enable businesses to launch consumer products more successfully. Cambri combines proven research methods with an intuitive self-service interface so that any member of an innovation, product or marketing team can collaboratively leverage the platform and benefit from the insights. In addition, the company recently introduced “Launch AI” leveraging AI to score new product concepts on the basis of their likelihood of success.
Market research is a massive $83.9 billion global industry, from which Cambri estimates new product testing to comprise $9.5 billion. Cambri addresses four key industry challenges: speed, cost, accuracy and ease of use. Current market research offerings take a long time to return results and are costly. Even after extensive investment in time and resources, existing solutions often result in inaccurate findings resulting in missed opportunities or launch failures. The significance of these challenges is profound, leading to the astonishing 95% failure rate of new product launches today (Harvard Business School study).
Cambri has an extensive customer base, from global consumer brands like Coca-Cola, Nestle, Carlsberg, Electrolux and Fiskars, to smaller regional brands mostly based in Europe. The company was founded by former Accenture executive Heli Holttinen, PhD along with co-founders Outi Somervuori, PhD and Dani Kamras, and is led by CEO Ben Harknett. Cambri is headquartered in Helsinki, with offices in London and Stockholm, and was listed on Deloitte’s "Technology Fast 50” as one of Finland’s fastest growing technology companies in 2023.
The 98’s Investment in Stratyfy
Joy Marcus | April 2023
Founded in 2016 by Laura Kornhauser and Dmitry Lesnik, Stratyfy provides transparent machine learning solutions for fair credit and risk decisions with the goal of enabling inclusive finance and reducing AI bias. Stratyfy’s solutions generate insights that improve the accuracy of machine learning while providing transparency to its users, avoiding black box pitfalls, enabling businesses to analyze each prediction and decision from multiple angles.
Credit and risk model development and deployment carry financial, operational, and reputational risk for financial institutions and fintechs. 65% of companies cannot explain how their AI model decisions or predictions are made and 55% deal with harmful bias in digital-decisioning initiatives.
As credit modeling sophistication has increased over time to utilize artificial intelligence and machine learning capabilities, the models have become more accurate. Yet, they are simultaneously becoming less transparent and more difficult to explain. Black-box models have come under scrutiny from the CFPB and legislators because of the lack of transparency and the risk of introducing bias and unfair lending practices. To maintain computational power of machine learning models in use, the modeling platforms need to continue evolving to solve these problems.
The global risk analytics market size is $44B and growing at a CAGR of 12.4% from 2022 to 2027. Within that market, Stratyfy’s products cater to North American banking and financial institutions, which represents a nearly $5B opportunity.
Stratyfy helps banks and insurers make better risk-based decisions by allowing them to combine their institutional knowledge with Stratyfy’s powerful data tools. Importantly, Stratyfy has developed a way to detect and mitigate unwanted bias in its customers’ decision systems, something other advanced approaches have not been able to do effectively.
In addition to solving for risk, Stratyfy’s solutions also provide financial institutions with an opportunity to recoup the enormous sum of revenue lost due to biased lending practices. According to Citigroup, providing fair and equitable lending to Black entrepreneurs might have resulted in the creation of an additional $13 trillion in business revenue over the last 20 years.
Stratyfy has impressive founders. CEO and Co-Founder Laura Kornhauser has deep industry expertise, with 12 years at JP Morgan focused on building and delivering risk and credit products to corporate and institutional customers. She is a well-regarded fintech innovator and thought leader with degrees from Princeton University and Columbia Business School. Chief Data Scientist and Co-Founder Dmitry Lesnik is an experienced technology leader, with 10+ years’ experience as a quantitative analyst in financial institutions. He holds a PhD from the University of Dusseldorf and an MSc from the Moscow Institute of Physics and Technology.
We believe that Stratyfy offers a differentiated solution to a growing problem. Stratyfy’s edge lies in its intuitive and easy-to-use technology that is transparent and customizable. The platform has been built and iterated over the past five years by a team led by a highly qualified technologist and chief data scientist with decades of experience in quantitative roles for financial institutions. We also believe that Stratyfy is at an inflection point, having just secured its first $1M+ annual deal from fintech leader FIS and $.5M+ annual deal from leading regional bank Truist, both of whose seals of approval should encourage additional market adoption.
Bias is Bad Business: The 98’s Take on Women Investing in Women
Lynda Clarizio & Joy Marcus | March 2023
New research published in the academic journal Organizational Science has caught the attention of many in the venture capital world. Coverage of the research has generated headlines such as “For Female Founders, Fundraising Only from Female VCs Comes at a Cost” in Harvard Business Review, leading to pointed questions about the value of women investing in women. At The 98, our female-run VC firm investing in tech businesses led by women, we read this reporting with great interest. And here, we’d like to offer some thoughts in response.
Looking at data from Crunchbase, the research found that female entrepreneurs who received initial funding only from female investors were two times less likely to raise a second round of funding than female founders raising their first funding round from all male investors or a combination of male and female investors.
It is important to note that the research covered data from a relatively small sample size and was somewhat dated. The study identified 290 female-founded companies out of a total of 2,136 US companies receiving their first round of venture capital financing between January 2010 and April 2018. Of these only 20 received their first round of venture capital financing from all female VCs, clearly an edge case. Moreover, the research inferred but did not directly prove that having only female investors impacted the inability of these 20 companies to raise a second round of financing. And it did not provide any evidence to suggest that this is indicative of a broader market trend.
The research also included a subsequent study asking 134 MBA students from a top business school to assess female and male entrepreneurs giving identical business pitches. The students evaluated pitches by female entrepreneurs less favorably when they received support from a female rather than a male investor, perceiving these female entrepreneurs to be less competent.
The research concludes that “attribution bias” is real in the case of female VCs and the female founders in whom they invest – i.e., when people see a woman raising money from another woman, they assume the only reason is because of gender homophily rather than prudent analysis and review by the female VC of a promising business.
While attribution bias may be real, it flies in the face of data regarding the performance of female venture capital investors and women-led startups. The data that we have seen indicates that venture firms with female investing partners outperform. Research by Harvard's Paul Gompers and Silpa Kovvali found that VCs that increased their proportion of female partner hires by 10% saw on average a meaningful 1.5% improvement in annual fund returns and a nearly 10% increase in profitable exits (P. Gompers and S. Kovvali, "The Other Diversity Dividend", Harvard Business Review (July-August 2018)). Moreover, according to Pitchbook and All Raise, 69.2% of US VCs that scored as a top quartile fund between 2009 and 2018 had female investing partners (Pitchbook and All Raise, All In: Women in the VC Ecosystem, 2019).
Data also suggests that women-led startup businesses outperform their all-male counterparts. According to Pitchbook, women-led businesses exit faster than the broader market (Pitchbook, All In: Female Founders in the US VC Ecosystem, 2022). Moreover, women-led teams generate a higher return on invested capital than all-male teams (Kauffman Fellows Report, 2016).
We believe the real issue is that ongoing bias has significant consequences, as female founders continue to be massively underfunded. It is well documented that female founders in the US receive less than 2% of venture capital dollars (Pitchbook, The US VC Female Founders Dashboard, January 2023). This number has not improved or changed significantly for over a decade. It is a stark number as it means female founders lack meaningful access to capital.
Are we surprised that there is bias against female VCs and female founders? Sadly no. However, based on the data, venture capital firms should be clamoring to get into rounds where female investors and female founders are involved -- as women investors outperform as do women-led teams. If bias is preventing them from doing so, it is the investors in their own funds that will be losing out.
We launched The 98 because we believe women-led businesses are an undervalued asset class and that investing in women, in our case in tech businesses led by women, presents significant opportunities for outsize returns. We seek to change the face of venture capital and reduce the funding inequity. Beware of bias as it is bad business.
The 98 Launch Event at NBCUniversal
September 2022
FABULOUS launch party for The 98 hosted by NBCU's Linda Yaccarino. Thanks to Dean Andrea Goldsmith of Princeton's Engineering School for her remarks and leadership in moving women to the forefront of technology. Thanks to Kristen Sonday of Paladin for her dedication to justice tech, building a giant business while doing good. And to Linda's entire team at NBCU a huge thanks for their dedication to the event and our cause at The 98. We could not be more grateful. And we are just getting started!
“It was a great honor and pleasure to participate in the launch of this incredible undertaking by Joy and Lynda, with so many connections to Princeton. Women entrepreneurs bring new perspectives, experiences, wisdom, and creativity to technology startups. The 98 will be instrumental in helping many women entrepreneurs and the startups they create achieve success and positive impact.”
-Andrea Goldsmith, Dean of Engineering and Applied Science at Princeton University
