Erin and Sara Foster Launch a Venture Firm for Start-ups
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So, you may ask what do two sisters who are comedy writers, producers and clothing entrepreneurs know about finance and investing?
The answer is a lot. For Erin and Sara Foster, the path to creating a venture firm began when they were asked by Whitney Wolfe Herd, the founder of online dating app Bumble, to become creative coheads in 2017 to help set up Bumble BFF, an app to find new friends, and Bumble Bizz, for making professional connections. Things went well, and by late 2019, the Blackstone Group took a majority stake in Bumble’s parent company MagicLab.
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The Fosters were also investors and advisers to Mirror, the home-fitness start-up that streams through a mirror-like device. It was acquired in 2020 by Lululemon for $500 million. That same year, the sisters cofounded their women’s lifestyle clothing brand Favorite Daughter, which has two stores in the Los Angeles area and sells online.
Then their investment and advising skills were also extended to the canned wine company Bev and the eco-friendly swimwear and clothing label Summersalt.
With all that accumulated experience, the Foster sisters, who grew up in Los Angeles surrounded by the entertainment crowd, decided to form Oversubscribed Ventures to help consumer-oriented start-ups become successful.
“This [venture firm] was really born out of necessity,” said Sara Foster, the older of the two sisters. “The deal flows just started coming.”
Erin agreed. “We could only write a certain amount of checks from our personal funds. We were writing $25,000 checks but working really deeply with these founders,” she said. “We wanted to have more skin in the game and do it at a deeper level.”
With that decision, the Fosters took on the role of general partners in their venture firm that is financially supported by Corazon Capital. Corazon Capital is a Chicago-based venture capital company led by Phil Schwarz, the former chief merchandise officer at Tinder, another online dating app; Sam Yagan, cofounder of SparkNotes and OKCupid, and Steve Farsht, the former chief executive officer of DCM Services, a debt-collection agency.
Right now, Oversubscribed Ventures isn’t going to be doing huge $20 million investments but will have sizable stakes in each company. “We really exceed in that seed money or even pre-seed money. That’s the sweet spot,” Sara said. “We’re going to be writing checks between $250,000 and $500,000.”
One of Oversubscribed’s goals is to help more female entrepreneurs succeed. The Fosters pointed out that approximately 2 percent of venture-capital funding is directed toward female-founded start-ups, and that 2.4 percent of founding partners at venture funds are female.
Erin said they will select companies to invest in by using their instincts and applying a few filters, such as “who is the customer and do we understand the customer? Is the customer our friends.”
So far, they have revealed six companies in which they have invested. Those include Bach, an online app for planning bachelorette parties; Juliet, which sells wine in stylish boxes; 10Beauty, which sells at-home manicure machines; Nara Organics, which makes organic infant formula; Exponent, a skin care brand, and OpenSea, a Web3 marketplace for non-fungible tokens and crypto collectibles.
The siblings join several celebrities branching out into the investment world. They include Kim Kardashian, who runs Skky Partners with Jay Simmons, tennis star Serena Williams, who operates Serena Ventures, musician Jay-Z, who has Marcy Venture Partners, and basketball player Stephen Curry, who handles his investments through SC30.
The two sisters, whose father is music producer David Foster, who divorced their mother, former model Rebecca Dyer, when they were young, said they always knew they would have to work.
Their careers started out in comedy. Erin and Sara are known for their VH1 TV series “Barely Famous,” and a popular podcast called “The World’s First Podcast.” They are collaborating with Kristen Bell on a recently announced Netflix series about an agonistic woman who has a relationship with an unconventional rabbi.
With those entertainment roots, who would have thought they would become financial investors with a background in entertainment?
“Erin and I spent our 20s really underachieving and really not living up to our potential,” said Sara, who is 42 and two years older than Erin. “If you had told us in our 20s that we would be doing this at this point in our life, we’d have said, ‘No chance. That’s not even an option.’”
But here they are. “I am really happy that Sara and I have not limited ourselves because we could have many times chosen to stay in our own lanes and not ventured out because it is scary and you might fail,” Erin said. “You have to take a risk and try it out to see if you can win or lose.”
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