Health care firms were pushed to confront racism. Now some are investing in Black startups.
A new investment fund launched by one of the few Black venture capitalists in health care is focused on backing Black entrepreneurs. And the investors include some of the biggest names in for-profit health care.
Marcus Whitney stands out in Nashville’s $95 billion health care sector as an investor in startups. In addition to co-founding a venture capital firm, he’s organized an annual health tech conference and co-founded the city’s professional soccer club.
And, often, he’s the only Black man in the room.
So in summer 2020, as Black Lives Matter protesters filled city streets around the country following George Floyd’s murder, Whitney pondered the racial inequalities that are so obvious in his industry — especially locally.
“I sat at the intersection of two communities — one that I was born into and one that I had matriculated into,” he said.
On a quiet Sunday morning after the protests died down, he pounded out a long letter to his peers that pointed out those making the most money from Nashville’s for-profit health care industry are still almost all white men.
Whitney hit publish on Monday, leading to weeks of intense conversations.
The racial reckoning of the past couple of years has inspired many industries to take a look at their histories and practices. In health care, there are long-standing and well-documented disparities in care for Black and white patients.
Those disparities have carried over into who gets funding for research and health startups. Of the nation’s more than 900,000 health care and social assistance companies, which include home health and other health services, roughly 35,000 — or fewer than 4% — are Black-owned, according to data from the U.S. Census Bureau.
Whitney wrote that this problem isn’t his to fix, but he realized he’s in a unique position as one of the few Black venture capitalists in health care. So his firm, Jumpstart Foundry, launched a dedicated fund to get behind Black entrepreneurs in health care. The letter was “pretty key” to pulling in investors, he said.
The fund is called Jumpstart Nova. It’s a tiny slice of the estimated $42 billion of venture funding invested last year in health tech. But it did exceed its initial goal, raising $55 million from the likes of pharmaceutical giant Eli Lilly, medical supplier Cardinal Health, and the hospital chain that started Nashville’s health care industry, HCA.
Each corporation measures its annual profits in the billions of dollars, so the fund represents only a sliver of their investments. But Jumpstart is also just one part of their broader diversity investment initiatives. For example, Indianapolis-based Eli Lilly has committed $92 million to Black-led venture capital firms since December 2020, according to company spokesperson Carrie Martin Munk.
Whitney said he didn’t have to convince those blue-chip firms that investing in Black founders was a wise move, but he did have to make the case that they would have enough promising startups from which to choose.
“That was really emblematic of the fact that there was a disconnect between the communities. These investors simply did not know enough Black people to know whether or not there were enough deals out there,” Whitney said. “This is not like an indictment of them. This is the reality of our country.”
Jumpstart Nova is the lead investor in three of the four companies it’s working with so far. That means Whitney’s team scrutinizes the business plan, vouches for the founder, and draws up all the financial and legal documents so it’s easier for others to come along.
“It’s validation. You need someone to say, ‘We’re in,’” said Dr. Derrell Porter, founder of San Francisco-based Cellevolve Bio, one of the first startups to land a lead investment from Jumpstart Nova.
His firm is trying to streamline the process of commercializing promising cell therapies. Hundreds are in development, and of those, each is customized for a patient by using the patient’s own cells. The therapies target cancer, central nervous system diseases, or viruses. Cellevolve is partnering with academic medical centers and small biotech companies in an attempt to make the commercializing process more similar to how a pharmaceutical company shepherds a drug to market.
“Marcus was one of the few investors that I spoke to that immediately got what we’re talking about,” Porter said. “He was like, ‘This is either not going to work at all, or it’s going to be massive. It’s nowhere in between.’”
Porter said his only discomfort has been feeling pressured at times to play the role of a Black entrepreneur with a hard-scrabble upbringing. “Folks are looking for the story to tug on their heart strings,” he said. “But that wasn’t my life.”
He grew up in Compton, California, in a middle-class family, with a mother who is a nurse and a father in construction. “I can’t tell you this traumatic, inner-city, drama-filled narrative,” said Porter, who has an M.D. and an MBA from the University of Pennsylvania.
Jumpstart is primarily looking for Black-led companies with untapped profit potential. But the venture fund’s backers also say they expect some startups will work on fixing health inequities.
One of the fund’s initial investments is in DrugViu, which consolidates the medical records of people with autoimmune diseases — particularly underrepresented people of color — so their personal health data can more easily be included in scientific research.
Dr. James Hildreth, president of Meharry Medical College in Nashville, said he hopes some startups will work to ensure health inequities don’t get worse, especially now that so many new companies in health care are built around using artificial intelligence. Hildreth said he fears what big data could do without Black representation in the decision-making process or — as DrugViu is trying to resolve — in the clinical data.
“The people designing the algorithms can unconsciously sometimes put their own biases into how the algorithms are designed and how they function,” he said.
The historically Black medical school launched its own for-profit arm in 2021 to seek “profitable activities that align with Meharry’s mission of eliminating health disparities.” Meharry has also invested in the Jumpstart Nova fund. Hildreth said he sees it as an opportunity to make money and to make a statement to students.
“We believe enough in the ingenuity, the innovation, and the intelligence of folks who look like us that we’re willing to invest in them,” Hildreth said. “With the expectation that the companies that come out of this fund are going to have a huge impact, not just on our communities, but people in general.”
Copyright 2022 Health News Florida