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Venture fund for female founders raises $182 million
Rethink Impact, a venture capital firm that invests exclusively in tech start-ups founded by women, plans to announce today that it has raised $182 million for its second fund, surpassing expectations.
Founded in 2016 by Jenny Abramson and Heidi Patel, Rethink has invested in an array of start-ups, including Guild Education, which partners with companies to offer workers employer-sponsored education programs, and Ellevest, a women-focused financial information start-up co-founded by Sallie Krawcheck, a former Citigroup C.F.O. It mostly invests in Series A and B funding rounds, alongside other venture firms.
The new fund will invest in female entrepreneurs at a crucial time, Ms. Abramson said: Venture investments in start-ups founded by women accounted for just 4.3 percent of all deals in the first quarter, down from 7 percent a year ago, according to Pitchbook.
• “Female entrepreneurs, entrepreneurs of color and others are finding it harder than ever to get a meeting with a V.C.,” Ms. Abramson told Michael.
• The firm had originally sought to raise $150 million for the new fund, she added. Rethink Impact’s first fund raised $112 million in 2017.
Backers of the fund include Pivotal Ventures, the investment fund started by Melinda Gates; the Ford Foundation; and UBS. “If we want to expand women’s power and influence in tech, one of the best actions we can take is invest in female entrepreneurs, which is why organizations like Rethink Impact are so critical,” Ms. Gates said in a statement.
Here’s what is happening
United Airlines could furlough as many as 36,000 employees, or nearly 40 percent of its work force. Federal aid funds run out in September, and if travel demand continues to be weak at that time, the airline “simply cannot continue at our current payroll level,” it said in a memo to its staff.
Brooks Brothers filed for bankruptcy protection and said it would close 51 stores, out of its roughly 250 locations in North America. The clothing brand, founded in 1818, said it expected to find a buyer “within the next few months.”
The price of gold is soaring on fears of stalled economic growth. Analysts say the haven asset could break its previous record of around $1,900 per ounce, with investors piling into funds that hold the precious metal.
A dearth of protective gear is affecting health facilities across the U.S., renewing pleas for White House intervention. The country set another record for new coronavirus cases recorded yesterday, the fifth in nine days. A surge in cases in Tulsa, Okla., was “more than likely” linked to President Trump’s campaign rally there last month, according to the director of the local health department. (Mr. Trump’s next rally is at an airport hangar in Portsmouth, N.H., on Saturday.)
The British government announced new measures to save jobs, including tax cuts, retention bonuses and even a 50 percent discount at restaurants and pubs. The government-backed furlough plan expires in October, and officials fear that a wave of layoffs could follow.
It’s now easier for companies to cut birth control from health plans
The U.S. Supreme Court yesterday upheld a Trump administration rule that gives employers more ways to opt out of the Affordable Care Act’s requirement on providing free contraception coverage. Under the new rules, any employer — not just religious organizations — may refuse coverage on the grounds of “sincerely held moral convictions.”
The decision could leave more than 120,000 women without access to birth control via their employers’ insurance, according to the government’s estimates. The Trump administration stood for a religious organization at the high court, arguing against Pennsylvania and New Jersey, which had challenged the rule.
• The left-leaning justices Elena Kagan and Stephen Breyer joined their five conservative colleagues in the 7-to-2 decision. Ruth Bader Ginsburg — who was vociferous in her opposition during oral arguments in May — dissented, joined by Sonia Sotomayor.
Contraception is an economic issue in addition to being a health matter. A group of industry associations and businesses, including Amalgamated Bank, Bloomberg L.P. and Trillium Asset Management, argued in a “friend of the court” brief that broader exceptions to the requirement threaten women’s freedom to plan careers and families, jeopardizing economic growth.
That was the point of the Obamacare requirement, according to Nelson Tebbe, a professor of constitutional law at Cornell. “The contraception mandate’s connection between free coverage and women’s opportunity isn’t obscure,” he told DealBook. “We know from prior rulings and factual findings that women will be harmed and that the harm will be substantial and irreparable.”
• This is not necessarily the end of the legal fights: Justice Kagan said states could still argue that the exceptions are “arbitrary and capricious.” A lower court left this question unaddressed, so the high court didn’t consider it either.
The cost of school closings
America’s education system, from public primary schools to Ivy League universities, is grappling with what to do when classes resume after the summer break.
New York City said its public schools would not reopen fully in the fall. The school system, the biggest in the U.S., will instead allow students back from one to three days a week to comply with health guidelines. School officials in Los Angeles, another huge district, are prepared to continue with remote teaching amid a surge of coronavirus infections in California.
The Trump administration is pushing for schools to reopen sooner rather than later. Mr. Trump threatened to cut federal funding for school systems that don’t return quickly to in-person teaching — though his leverage there is limited — and has pressured federal agencies to water down guidelines for a safe return to schools.
• Local officials are chafing at federal directives that come without additional funds for tests and safety supplies. Gov. Andrew Cuomo of New York said yesterday: “We will open the schools if it is safe to open the schools. Everybody wants the schools open.”
Harvard and M.I.T. sued the administration over new rules on visas that would expel foreign college students from the U.S. if their colleges offer online-only classes in the fall. The schools argue that the policy is an attempt to force them to reopen against their wishes and could strip them of tuition revenue.
Don’t lose sight of the bigger picture, especially the economic costs of school closures:
• It will cost students trillions in future earnings, representing a double-digit hit to G.D.P., according to the Brookings Institution.
• It has also hits parents’ productivity, with a study in April finding that eight weeks of school closings cost about 3 percent of U.S. economic output.
‘They make it so easy’
The trading app Robinhood has enabled thousands of people to buy and sell stocks, bonds and options with just a few taps. But that has led to heartbreak and outrage as well, The Times’s Nathaniel Popper writes.
It’s built on making trading as easy as possible. Customers don’t pay commission on trades, and they get a free share of stock by scratching images off what looks like a virtual lottery ticket. The app’s home screen has a list of trendy stocks that users can trade with as few as two taps.
• That approach has drawn big-name backers like Sequoia and the investor and actor Ashton Kutcher. Robinhood is currently valued at about $8.3 billion.
The company’s business is centered on encouraging as much trading as possible, since Robinhood makes money by sending customer orders to Wall Street firms — far more than traditional rivals like Charles Schwab make. And more than at any other retail brokerage firm, Robinhood’s users trade the riskiest products — like options — at the fastest pace, according to an analysis by the research firm Alphacution.
Customers, many of whom are inexperienced, have lost money quickly. One college student killed himself last month after racking up large losses.
• Vlad Tenev, a founder and co-C.E.O. of Robinhood, told The Times that only 12 percent of the traders active on the platform each month used options. And even though some of its customers lose money, he said that young Americans risked greater losses by not investing in stocks at all.
Meeting of the memes: TikTok discovers Dogecoin
Speaking of speculative trading, something strange is afoot on TikTok, the social network where young people share meme-laden videos. Users have been urging their followers to buy Dogecoin, the cryptocurrency that started in 2013 as a joke centered on a dog-based meme popular at the time.
Dogecoin’s price has soared on heavy trading volume, and viral videos on TikTok — which has 800 million active users — are the only reasonable explanation. Each unit of the cryptocurrency trades for a fraction of a cent, and the videos assert that if everyone buys at the same time, it could rise to $1 (a mere 23,000 percent higher than its current price). The cryptocurrency has more than doubled in price this week.
The speed read
• Ant Financial, an arm of Alibaba, reportedly plans to go public in Hong Kong and is aiming for a valuation of more than $200 billion. (Reuters)
• KKR agreed to buy Global Atlantic, a former life insurance unit of Goldman Sachs, for $4.4 billion. (FT)
• Alden Capital, which has scooped up dozens of local newspapers, has challenged a takeover bid for the bankrupt publisher McClatchy by a fellow hedge fund, Chatham Asset Management. (McClatchy)
Politics and policy
• Most of America’s banking giants aren’t participating in the Fed’s midsize-business lending program. (NYT)
• The White House hasn’t yet published President Trump’s annual financial disclosure report — and it blamed the pandemic for the delay. (NYT)
• Shares in Twitter rose after a job posting by the company suggested that it was exploring a subscription service. (Bloomberg)
• Only about 8 percent of people who downloaded the streaming app Quibi are paying for a subscription after the end of the free-trial period, one analyst firm estimates. (Protocol)
Best of the rest
• Why Patrick Mahomes’s $503 million contract extension with the Kansas City Chiefs isn’t as big as it seems. (NYT)
• “Pandemic Is a Great Incubator for Financial Fraud” (Bloomberg Opinion)
• “What It’s Like to Enter the Work Force From Your Childhood Bedroom” (NYT)
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