Trends Watch: VC Investing and Minority- and Women-Led Life Sciences Companies
- Nov 3, 2022
EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.
This week, Elana talks with André Harrell, President & CEO, AH2 Management.
What is your outlook for VC investing in the life sciences?
I would say mildly promising in lieu of current inflation and market turbulence issues. In the past few years, we’ve seen significant interest in VC funding towards the biotechnology sector. Thanks to companies like Moderna and BioNTech who delivered masterfully innovative platforms during the COVID-19 crisis, the biotech industry has become the darling of many VC funds. McKinsey & Company noted that VC companies invested from 2019 to 2021 a total of $35 billion into biotech companies with advanced platform technologies which have transformed the industry. We’ve seen biotech companies (like the biopharma company we support) have a laser focus on developing the next generation platform technology that will address unmet needs in several therapeutic classes.
If VC investment firms can continue to effectively identify and capitalize promising biotech companies that address health care’s unmet needs, at acceptable price points, and are safe, the outlook for the life sciences will be bright.
Where do you see the greatest opportunities and why?
While I’m very pleased to see the noise level has increased regarding investing in minority-led life sciences startups, the checks written and deposited still have some room for improvement. While the “noise” is appreciated, there remains unspoken nuances and subconscious biases that block a deal with a minority founder. For those VCs who have evolved in their investment theses, there are many exciting opportunities that can be yielded from this underserved talented community. Below are a few opportunities I’ve personally uncovered:
- Investing in minority-led life sciences startups can unlock unforeseen innovations that can only be uncovered by those indigenous to the community. As an investor, you’re rewarded with an “inside view” of the market.
- Underserved communities often receive the fewest of health care services; many minority founder startups have tapped into this neglected market and have brought attention and innovation to those less served.
- Female founders have been the best stewards for women’s health care issues and many of the female led startups are addressing health care problems often overlooked or simply ignored. This cognitive dissonance is a great opportunity for the investor community to take advantage of.
- Lastly, and not to be under-emphasized’ minority founders I have found to be focused, driven and most importantly resilient. As an investor in opportunities, what we look for is “stick-to-itiveness” behavior from the startup and many minority-led startups personify that behavior.
What are the greatest challenges you face and why?
Well, the biggest challenge currently is the volatility of the marketplace due to inflation, supply chain and global events. There is still a ton of capital on the sidelines and investors are hesitant supporting opportunities outside their portfolio investments, which doesn’t bode well for the minority startup. Having the opportunity (thank you EisnerAmper) to share my thoughts on why investing in minority startups is not just the right thing to do but it’s intelligent business -- even during such tumultuous times and challenges -- is something I cherish.
What keeps you up at night?
Fortunately, I sleep well. If I’m able to continue supporting the underserved founder and sounding the alarm on their behalf, that will provide me the peace of mind knowing I’m doing my part to bring about a level playing field. So far that strategy is providing me a good night’s rest.
The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.
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Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.
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