Venture Philanthropy Investors Share Their Insights

4 Feb

By Christine A. Wu, Research Analyst, LSN

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At RESI San Francisco, a panel of Venture Philanthropy investors engaged in a stimulating conversation addressing patient access for underserved populations, assessment of “positively impactful” technologies, and their relationships with traditional venture capital investors, among many other topics.

Moderated by Christopher de Souza of Broadview Ventures, panelists include:

Patient Access for Underserved Populations

The panel addressed patient access, particularly regarding support for underserved populations who may not have health insurance coverage or access to intervention. Dan Smith said that Autism Speaks takes a deep dive into the reimbursement pathway to make sure interventions are available to those who otherwise wouldn’t be able to afford the technology. Autism Speaks also requires that, once a product is on the market, a certain percentage of the previous years’ sales would be dedicated towards matching giveaways or cost reductions for a specific population.

Both Foundation Fighting Blindness and The Michael J. Fox Foundation (MJFF) provide education for payers. MJFF holds seminars to educate communities on unmet needs in symptomatic Parkinson’s Disease (PD), and where the disease-modifying research is today. Rachel Rimsky added that MJFF also performs big data analyses with communities in the regulatory and payer sides for them to fully understand the unmet need and how to best approach provision and reimbursement.

Weighing “Positively Impactful” Technology

While life science-focused foundations tend to be indication-focused, Breakout Labs and Broadview both have broader venture philanthropy mandates as LP-backed investment firms. Lindy Fishburne and Chris De Souza defined “positively impactful” opportunities to deliver a breakthrough technology to market. “We’re not going to engage in opportunities where you’ve taken an existing technology and turned the widgets around differently,” Fishburne explained. “We’re looking for brand new, breakthrough technology with a new way of looking at a problem, like two sequences coming together for the first time.”

Typical questions Fishburne asks include: “is this a scientific breakthrough? If it were to work, would it matter and is it not just incremental? Is this a team with a structure set up to enter the market and have a shot in becoming successful?”

De Souza agreed, “It’s a matter of looking at the revolutionary, not the evolutionary.”

Relationships with Traditional Ventures

Panelists discussed their relationships with traditional VCs, varying from due diligence collaboration to referring companies to investors for follow-on funding. Zilliox added that while VC due-diligence partnerships are helpful for creating a new company, the exit strategy is more difficult to agree on because the mission and motivation are not always in agreement.

As Breakout Labs invests early, the firm considers the traditional venture world during seed funding as an important part of their model. Fishburne explained that much time is spent on understanding and building the venture investor network in order to introduce their companies to them at the appropriate times to forward relationships. 

Biggest Challenges for Venture Philanthropy Investors

On the scientific research side, Rimsky said that the biomarker field is currently the Fox Foundation’s biggest challenge. Smith acknowledged that addressing the diversity of the autism population and their needs is their greatest difficulty, since autism-related conditions vary among individuals.

On the business side, Zilliox said her biggest challenge is working with companies with no knowledge of the path towards commercialization – “that is my biggest nightmare.” Fishburne further pointed out that there is a delicate balance in finding the right people to lead companies: “Unfortunately there are some scientists that should just be scientists.”

Helping portfolio companies to raise follow-on money from the bigger players is another challenge. Fishburne explained that there’s a lot of incentive to step back and say “I’d like to see more” and the endpoint they’re racing towards keeps moving backwards.

The final challenge is maintaining the attraction of their focus area of research. Managing expectations and keeping the community engaged even when discussing long-term projects has been difficult given the longer research timeline for such breakthrough discoveries.

Final Remarks

  1. “Foundations have a lot of deep expertise on the table that’s overlooked at times,” Smith said, “The mission focus can especially bring you more forward than you realize.”
  2. Venture Philanthropy investors are more open to high-risk, interesting projects
  3. Foundations have a huge access to expertise and are always open to conversations to think through different approaches.
  4. Particularly for these panelists, venture philanthropy investors are always on the look-out for new opportunities, especially for follow-on funders to advance early stage companies.
  5. For platform technologies, in order to approach indication-focused firms, you must have data where you’ve made a real claim for that specific indication. “It’s not for you to come in to us with a platform technology, but as an application of the platform that meets our mission,” De Souza pointed out.

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