Black-led venture capital fund aims to level the playing field for minority health tech start-ups

Scientist analyzing medical sample in test tube.

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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 science innovators — they’re not pharmaceutical companies. They tend to look for partners to help them complete the development of their programs,” said Porter, who founded Cellevolve to facilitate the connection of these researchers with the biotechnology companies. .

Starting a startup meant making your own connection with backers, but its timing was bad. He started talking to Cellevolve investors in March 2020, on the eve of the pandemic shutdown.

When things reopened, Porter found that getting venture capitalists to invest wasn’t just about buying into an idea.

“They’re really betting on you as an entrepreneur and so it’s a deeply personal decision,” said Porter, who holds an MD from the 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, makes it harder to find capital.”

The venture capital industry is among the least diversified in finance. Nearly 8 in 10 venture capital investment partners in 2020 were white, 15% Asian and only 3% black, according to the Venture Capital Human Capital Survey, conducted by Deloitte, in collaboration with National Venture Capital Association and Venture Forward.

Marcus Whitney is an African-American venture capitalist and the co-founder of Jumpstart Health in Nashville. He says he felt a cultural shift from investors he had spoken with for years, following the 2020 George Floyd protests and this summer’s focus on racial equity.

“I realized there was a drive to do something that I had never really felt at any time in my life,” Whitney said.

He took that desire as an opportunity to raise capital to invest in black-led businesses.

“The number one question was, hey, this looks great. I want to be a part of it. But are there really enough offers out there?” he said.

He had no trouble finding companies and started the Jumpstart Nova fund to invest exclusively in black-led healthcare companies. He wasn’t the only one to capitalize on the greater willingness to invest in underrepresented founders last year.

In 2021, venture capital and private equity saw a 25% increase in women and minority-owned businesses in the sector, according to Fairview Capital Partners. The actual numbers remain low – 627 businesses run by women and minorities, including 84 black-owned. Their capital increases were also lower; the median was $100 million, compared to $170 million for the industry as a whole.

One of Whitney’s first investments was Cellevolve, which included a seat on the company’s board of directors.

“Without Marcus … taking the gamble on Cellevolve and me personally, I mean, we could never have gotten a business off the ground,” Porter said.

The Jumpstart Nova Fund now has $55 million in investments from backers including Eli Lilly, HCA Healthcare and Bank of America. The plan is to back 20 start-ups this year, but Whitney has already identified more than 150 leads.

“We believe we can catalyze more capital to these founders beyond what we can do from an investment perspective,” Whitney said.

He hopes that creating a network that puts more of a focus on underrepresented founders will help level the playing field when it comes to accessing and raising capital.

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