Rather, they operate as a cross between individual "angel" investors and venture capitalists, with a long-term outlook. Their investors are individuals, not institutions, and they work "side-by-side" to connect women-led portfolio companies with resources to deliver good returns through sales for investors.

Their returns have been above average. They assert that the "average woman-owned business makes 20 percent more revenue with 50 percent less investment than other companies."

Cathy Connett, one of the firm's longtime managing partners, said Sofia Fund is now on its second fund, of $5.5 million. The funds' winners over the years have included Tactile Medical, now one of Minnesota's hottest public companies; Rebiotix, Xiotech, CEB-Iconoculture, Coolibar and Magnet 360, which were sold after years of local incubation.

Connett responded to questions on behalf of Sofia Fund.

Q: Tell me about Sofia and its purpose.

A: The objective was to bring funding to women-led businesses that were not getting access to capital and to bring more women into investing. Sofia Fund is named after the Greek goddess of wisdom, as the partners want to provide wisdom, resources, knowledge and experience as well as dollars. Sofia Fund now operates its second fund, a $5.5 million fund. Three of the current partners, Cathy Connett, Joy Lindsay and Dee Thibodeau, were involved from the beginning. Lisa Crump, a co-founder of the 3-D printing technology company Stratasys, joined us in 2006.

Q: Why is a women-led fund that invests in companies with diverse leadership important?

A: As multiple research studies have documented, diverse teams perform better, whether at the board level … or as leaders of small to midsize businesses. We want to capitalize on this performance. We also know that women-led companies have a difficult time raising money. We also know that women-led companies have a difficult time raising money. In 1998, women-led companies received four percent of all VC funding. In 2017, women-led companies, according to Forbes, received only two percent of the VC dollars. Angel investors, who provided over $30 billion of funding to entrepreneurs in 2017, however, have recognized the opportunity with diverse management teams. In 2017, 25 percent of the companies they funded were led by women.

Sofia Fund has a diverse investor team of men and women, and we focus our investments on companies with diverse executive teams. And while our primary consideration is gender diversity, we recognize that ethnic diversity makes a positive impact on company performance; of the six women-led companies that the second Sofia Fund has invested in so far, two have ethnically diverse CEOs.

Q: Tell me about investing in Rebiotix, which recently was sold to Ferring Pharmaceuticals?

A: The first Sofia Fund invested in Rebiotix in 2012 when [Rebiotix] was raising its first round of funding. We have known CEO Lee Jones for a long time, and some of us had been investors in her previous company. It was easy for us to know that Lee and her company would be a good bet.

The second Sofia Fund had an opportunity last year to invest in Rebiotix when the company was raising more money and, after a separate analysis of the progress their team had made and the risks associated with the investment, we decided to move forward and invest. Lee Jones saw an opportunity to take a treatment that had been performed in doctors' offices for over 50 years, yet was not a standard treatment, and has moved forward with a target for FDA approval. Rebiotix and Lee Jones are recognized for their expertise and as world leaders in the microbiome space. The microbiome space is growing exponentially as more medical issues are found to link to the body's microbiome. Ferring recognized the value Rebiotix has in this space.

Q: Please address your performance and the growth of the fund.

A: The four partners have individually invested over $10 million in over 50 companies. About half the companies have had exits. Returns were above the typical return of an angel investment, which is approximately 25 percent. In the first Sofia Fund, which invested $1 million in nine companies, we have experienced three exits, which has almost fully returned the total original principal. There are four companies still operating from the first fund's investment, so everything returned from here will create a positive return for its investors.

The second Sofia Fund (launched in 2015) has invested in six companies. Rebiotix was our first exit. We are continuing to invest from this fund.

We see progress in the number of women-led companies stepping forward to find funding. For the first fund, we considered about 200 companies over more than seven years. For the second fund, between 100 and 150 women-led companies apply to us for funding each year.

Q: What's the future for Sofia Fund?

A: We will continue to invest from our second fund and consider opportunities for future funds. We just added a new portfolio company, celebrated the Rebiotix [sale] and made an additional investment into one of our existing portfolio companies. We've just returned from the Angel Capital Association Summit in Boston, where Oculogica, a Sofia Fund portfolio company, won an award for its growth and innovation. Oculogica develops technology for diagnosing traumatic brain injuries. We were there with the company's founder, a woman.

Neal St. Anthony • 612-673-7144