Black-led VC fund aims to even the playing field for minority health-tech startups
- For Black-led startups, the lack of diversity in venture capital can pose a hurdle to access funding
- The number of women and minority-owned venture and private equity funds rose 25% the year after the George Floyd protests, according to Fairview Capital Partners.
- The Jumpstart Nova fund, launched in 2021 to invest exclusively in Black health-tech firms, has raised $55 million from investors including Eli Lilly, HCA Healthcare and Bank of America.
Dr. Derrell Porter knew he had a good idea: a company that provides a platform to help researchers develop and commercialize gene and cell therapies.
"Academic medical centers and scientific innovators — they're not pharmaceutical companies. They tend to look for partners to help finish the development of their programs," explained Porter, who founded Cellevolve to help make it easier for those researchers to connect with biotech companies.
Getting start-up off the ground meant making his own connection with financial backers, but his timing was bad. He began talking to investors about Cellevolve in March 2020, on the eve of the pandemic shutdown.
When things reopened, Porter found that getting venture capitalists to invest was about more than buying into an idea.
"They're really making a bet on you as the entrepreneur, and therefore it's a profoundly personal decision," said Porter, who holds a medical degree from University of Pennsylvania Medical School and an MBA from The Wharton School. He noted, "being different or in the situation where the investor may not see themselves in you, or may not find a way to connect, that makes it harder to find capital."
The venture capital industry is among the least diverse in finance. Nearly eight out of 10 VC investment partners in 2020 were white, 15% Asian and just 3% Black, according to the VC Human Capital Survey conducted by Deloitte, in conjunction with the National Venture Capital Association and Venture Forward.
Marcus Whitney is an African American venture partner and the co-founder of Jumpstart Health in Nashville. He says he felt a cultural shift from investors he'd talked to for years, following the George Floyd protests in 2020 and the focus that summer on racial equity.
"I tapped into an awareness that there was a willingness to do something that I've never really felt at any point in my life," said Whitney.
He seized on that willingness as an opportunity to raise capital to invest in Black-led firms.
"The number one question was, hey, this sounds great. I want to be a part of it. But are there actually enough deals out there?" he said.
He had no trouble finding companies and launched the Jumpstart Nova fund to invest exclusively in Black-led health firms. He wasn't the only one to capitalize on the greater willingness to invest in under-represented founders last year.
In 2021, venture capital and private equity saw a 25% jump in woman- and minority-owned firms in the industry, according Fairview Capital Partners. The actual numbers remain small — 627 women- and minority-led firms, 84 of which were Black-owned. Their capital raises were also smaller; the median was $100 million, compared with $170 million industrywide.
One of Whitney's first investments was Cellevolve, which included taking a seat on the company's board.
"Without Marcus … taking the bet on Cellevolve and me personally, I mean, we never might have gotten a company off the ground," said Porter.
The Jumpstart Nova Fund now has $55 million investments from backers including Eli Lilly, HCA Healthcare and Bank of America. The plan is to back 20 start-ups this year, but Whitney's already identified more than 150 prospects.
"We think we can catalyze more capital going to these founders beyond what we can do from an investment perspective," Whitney said.
He hopes forging a network that brings more focus to under-represented founders will help even the playing field when it comes to accessing and raising capital.