If racial justice wasn’t front of mind for biopharma, the events of 2020, from the COVID-19 pandemic to police brutality, put it there. Companies are tackling the issue on multiple fronts, including diversifying their workforce and making sure they’re testing their drugs in diverse populations. With its latest efforts, Eli Lilly is focusing on building startups.
The company invested $30 million in Unseen Capital Health Fund, a venture fund aimed at supporting founders of early-stage healthcare companies who are Black or of other racial minorities, Lilly announced on Friday. In addition to identifying, funding and supporting minority-led businesses, the fund will also target companies working on solutions for marginalized communities.
Unseen Capital is already investing in companies and plans to top out its fund at $100 million.
“The pandemic has reinforced our understanding that there is unequal treatment and unequal access to healthcare in underserved communities, made worse by a lack of financial investment for the promising ideas that rise up from within these communities,” said Lilly chief financial officer, Joshua Smiley, in the statement. “At Lilly, we are committed to helping address systemic inequities in health and business that too often have devastating effects on the lives of historically marginalized people.”
Lilly’s investment in Unseen Capital is just one part of its racial justice efforts. Its other goals include boosting diversity in its clinical trials; teaming up with other companies and the OneTen coalition to hire, train and advance African Americans; doubling its spend with diverse suppliers; and building or boosting community and national partnerships to drive social change, the company said.
“Lilly has been a staunch supporter of our mission to source outstanding historically underrepresented founders in health and to redefine what investing in health means for a new generation of founders,” said Kayode Owens, general partner of Unseen Capital, in the statement. “Unseen Capital is working in lockstep with Lilly to identify and fund those leaders in health doing work that is both amazing and underestimated, as we move to address inequities and access to quality care for all.”
The life sciences venture sector needs funds like Unseen Capital because, historically, it does not back entrepreneurs from all racial backgrounds equally. An analysis of 25 of the most active U.S. life science VC firms found that, although the firms invested more than $57 billion across more than 1,100 biotech financings from 2013 to 2019, “the startup community, biotech or otherwise, has remained nearly closed to under-represented minorities,” wrote Jackie Grant, Ph.D., a principal at Abingworth, in Nature Biotech last summer.
“A study by RateMyVC and DiversityVC showed that Black founders receive just 1% of VC dollars. Worse still, Black female founders receive just 0.2% of all funding, illuminating that a large portion of the minority talent pool is untapped and underutilized,” Grant wrote.
There are many reasons behind this disparity, including unconscious bias.
“This includes ‘pattern matching,’ where investors are more willing to invest in those who resemble other entrepreneurs, and ‘like hiring like,’” Grant wrote. That becomes a problem when less than 1% of the nearly 200 senior-level positions at those top 25 VC firms are held by under-represented racial minorities, including Black, Latinx, Native American, Alaskan Native, Native Hawaiian and Pacific Islander.
In her piece, Grant laid out steps venture firms can take to combat racial disparity, including hiring under-represented minorities, expanding their networks beyond the usual suspects and helping build the pipeline of new biotech leaders and entrepreneurs.