3 Firms Level the Playing Field in Health Equity Investing

3 Firms Level the Playing Field in Health Equity Investing. The cover of Leveling the Playing Field in Health Equity Investing. New Download!

The path to accelerating innovation in health care to address issues like health equity can be difficult to navigate. As many hospitals and health systems look to partner with and perhaps help fund startups, they are experiencing no shortage of opportunities.

The cover of Leveling the Playing Field in Health Equity Investing.And as studies have shown, it can be easy to overlook fledgling companies led by underrepresented Black, Hispanic, Asian or female entrepreneurs. A new AHA Center for Health Innovation report, “Leveling the Playing Field in Health Equity Investing,” explores the challenges these entrepreneurs face, how some venture capital (VC) funds are expanding opportunities for underrepresented startups and how the field can benefit.

Diversity Gains Uneven

The historic challenges facing underrepresented company leaders are also an issue within the venture capital community, notes Deloitte’s Venture Capital (VC) Human Capital Survey released earlier this year.

Deloitte and its partners, Venture Forward and the National Venture Capital Association, have conducted four VC human capital surveys since 2016 to benchmark and assess the state of diversity, equity and inclusion in the VC field.

However, even with studies showing the benefits of diversity in the VC industry, progress has been uneven. For instance, in 2021, VC-backed startups raised more than $345 billion in funding, yet only 2.4% was invested in startups led by female founders, 1.3% led by Black founders and 2.1% by Hispanic founders.

Results from the most recent survey conducted in 2022 by Deloitte and its partners show that the VC industry has made “significant but somewhat inconsistent progress” in increasing its gender, racial and ethnic diversity since 2016. Regardless, it’s clear that much work remains to level the playing field in health care for startups led by underrepresented groups.

Creating Opportunity

To ensure that this happens and that progress is fast-tracked, some VC firms have created health care innovation funds to provide capital to startups founded by Black individuals, women and other groups that historically have had difficulty accessing outside capital to fund their companies and innovations.

Some firms are targeting their investments toward underrepresented communities in health care. The AHA has invested in three firms to support health care technology companies and entrepreneurs who too often are left out of early financing.

3 Venture Capital Firms Disrupting the Status Quo

Jumpstart Nova

With $55 million in assets under management, the firm invests in Black-founded and -led health care startups offering tech-enabled services, biotech, diagnostic devices, health IT, digital health and consumer health and wellness. The firm’s strategic limited partners, including the AHA, Advocate Health Care, Eli Lilly, HCA Healthcare, Henry Ford Health System, LHC Group, Cardinal Health and Meharry Medical College, help the firm to understand the field’s challenges and how innovative companies can be successful in solving them.

SteelSky Ventures

This female-led venture capital firm is laser-focused on improving access, care and outcomes across women’s health. The fund, one of the world’s largest focused on women’s health, has provided investments to 16 companies in the consumer health, digital health and medical device sectors, among others. With $73 million in assets under management across its platform, SteelSky continues to expand its commitment to improving women’s health while seeing a cascading effect from its investments. More than 2,000 jobs have been created across the portfolio of companies in which SteelSky has invested. About $500 million in annual recurring revenue has been achieved by the portfolio, which has a combined valuation of $5 billion.

Seae Ventures

This VC firm is committed to advancing equity by investing primarily in entrepreneurs who are women as well as Indigenous, Black, brown and other people of color whose companies seek to reduce the health disparities affecting traditionally underserved and historically marginalized populations. Founded in 2019, the fund has more than 30 investors representing both health care payers and providers, financial services companies, endowments and foundations, and major U.S. corporations. Seae has invested in 18 companies concentrated on women’s health, behavioral health, financial health, value-based care, diagnostics and digital health.

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