The chance that a startup founded by an African American man will receive venture capital funding is estimated at less than 1%. When the startup is established by an African American woman, the figure tumbles to just 0.2%.
At the 2022 BIO International Convention in San Diego, a panel explored how gaps in VC funding of Black- and women-led start-ups impact the development of scientific breakthroughs, new inventions, and business creation. The panel highlighted the sea change needed to fund and support companies led by underrepresented founders to solve long-standing social issues and fuel industrywide innovation.
Moderated by Cynthia Isaac, Ph.D., Managing Director, Corporate Communications Practice, Syneos Health, the panel featured three Black women entrepreneurs addressing structural barriers to health equity:
- Melanie Igwe, Co-Founder and COO of ViuHealth (formerly called DrugViu), a comprehensive and diverse Real World Evidence (RWE) platform for immunology diseases research and drug development;
- Erica Plybeah, Founder and CEO of MedHaul; MedHaul enables access to safe, quality, and inclusive transportation services for often overlooked populations, improving their quality of life and care; and
- Ashlee Wisdom, Founder and CEO of Health In Her HUE, a digital health platform that connects Black women and women of color to culturally sensitive healthcare providers, culturally relevant health content, and community
Cynthia Isaac: Erica, a lack of transportation options is being recognized as a structural barrier to achieving optimal outcomes for all. A lot of people would say it’s a simple problem to solve, “Just call an Uber or partner with Uber.” It’s not that simple, is it?
Erica Plybeah: The ride-share model is great for the general population. But what MedHaul does is take it a little bit further. We focus on patients with vulnerable needs. And for us, these are extremely low-income patients, elderly patients, people with physical or intellectual disabilities and people in rural communities. And so, we provide an extra level of care for patients who may not be suitable for a ride-share ride. Think about a chemo patient who just received radiation. They’re typically extremely fatigued and tired. They may be using a wheelchair because of their condition. Our transportation network is built of specialty transportation companies that can provide that level of care that may be more suitable for that patient’s physical and clinical needs.
Cynthia Isaac: Ashlee, with Health in Her Hue, are you solving the problem of lack of health literacy or is it a different problem?
Ashlee Wisdom: Health literacy is more focused on an individual’s ability to find, interpret and then apply health information. But there is a term, health fluency, that I think is more appropriate and better because it doesn’t only put the onus on the patient to find information and to understand and interpret information. It puts the onus on people who are creating health information to make it more accessible, to make it easier to interpret.
We’re not just making health information easier to understand, like explaining A1C test in diabetes. We’re really connecting the dots between women of color’s lived experiences and how that impacts their health outcomes so that they’re able to, one, better manage their own health, and two, also have more thoughtful and quality interactions with their physician. For example, they're able to say, "Hey doctor, you're prescribing me this medication. I want to take it, but I'm going to have an issue actually filling the prescription. I don't have a pharmacy close to me." So not just putting the onus on the patient, but really helping them get information that is actually relevant to the experiences that they are navigating day to day.
Cynthia Isaac: Melanie, with DrugViu, what is the solution that you're developing?Are you building trust among previously overlooked communities so that they can participate in trials?
Melanie Igwe: We consolidate medical records for people who are living with autoimmune conditions. We also capture patient reported outcomes. All this data is fed through our matching algorithm to pre-qualify patients for clinical trials. But if you don't understand someone's lived experience, if you don't understand the way to message someone, all of that will fall short. And really what's important for us is shifting the paradigm, developing tech at the intersection of empathy and really understanding people's lives. This is the way that we feel we've been successful with recruiting diverse patients to date. I'll give you an example. When people look at diversity, many times it's looked as a monolith. We leverage clinical data on patients, but we also look at where do they live? Where do they work? What is their literacy around their health in general and use all of this information to create structured and targeted marketing. After they are matched to a clinical trial, we use trial navigators to further engender trust of those patients and make sure that there's always somebody with them throughout the entire process of identification to going into their screening. And we also follow them through the life cycle of the trial to make sure that they are retained.
Cynthia Isaac: Your answers bring home why it's important to support women- and Black-led companies. But there are barriers to raising the necessary funding to develop your products. I was reading an article in HBR with research showing the type of questions that VCs ask women is different from the questions they ask men when they are evaluating the companies. And that has a direct impact on the type and the amount of money raised by women founders. When you were raising cash, what were the strategies you employed to mitigate these risks? Was there a certain type of investor you approached?
Melanie Igwe: Because DrugViu was our second venture, there was a lot of learning that we had from our first venture. At every step, VCs or any organization that is looking to deploy funding or capital into your company, is looking for you to be de-risked at each stage. We started off with applying and being accepted into TechStars. Being in that accelerator and really being able to get that foundation of knowing how VCs talk, this is the way that we have to show our metrics and our traction. And also, just understanding that it's really important to have certain relationships and connections, where there may be people that are uncomfortable with you because they don't even know that they have a bias but being able to have an organization that has a lot of weight and heft behind them to essentially say, "Hey, these guys are good." That is how we started on our journey.
Ashlee Wisdom: De-risking is probably the first thing any Black woman is doing as they're thinking about raising capital. For me, the way that I de-risked myself, so to speak, was two ways. One, I took a job right before I knew I wanted to transition into Health In Her HUE full time where our clients and the people I would be interfacing with were investors, because I don't come from a family of wealth. I knew I couldn't go to my family and ask for a $50,000 check, but I know that there's also a lot of back channeling that happens in the venture capital space. People want to know, "Do you know so and so, and what are they like?" I strategically took that role to learn the venture capital landscape.
I was also really intentional about building a community around Health In Her HUE and using that to learn the collective pain points that women of color and Black women in particular were having as they're navigating the healthcare system and using that to inform the product that we were going to build. By building a community, I knew that I could, one, engender trust by being really thoughtful about understanding what problems Black women are having, that we were in a good position to help solve. I was really thoughtful about building traction and having the numbers so that investors couldn't disregard my business concept.
Erica Plybeah: Before I started my company, I worked for a very successful venture-backed company called Flatiron Health. It was an oncology analytics company that was ultimately acquired by Roche, and I joined the team back in 2015. I had never worked for a venture-backed startup. I had never heard of venture capital or a tech startup prior to that. That was the lens that I had. I didn't know all of the statistics around Black founders not being able to raise capital. So I went into this a little bit more optimistic than I should have, but that's the lens that I still try to keep. I don't look at the stats. I don't read articles that talk about how hard it is, because if I did that, I would never do it because it's virtually (impossible). You heard the statistics earlier.
The next thing that I did was really try to educate myself. I built relationships with investors just to learn about what they look for, how does their process work? What is venture capital? What are the different documents that we're signing? What does it mean to give away a certain amount of equity in your company?
Through my research, I knew that healthcare investors or life science investors would be one of the best fits. And then also social impact investors. Social impact investors are investors who invest in for-profit companies that have some sort of social benefit. My company is a benefit corporation, we're certified B Corp, so we have a focus on both profit and purpose or social impact. And so that's what I guess helped a little bit.
Cynthia Isaac: Is the bar higher for you as a Black female founder? If so, can you give an example of how the bar was set higher?
Erica Plybeah: Regardless of industry or role, the bar is naturally higher for women and especially women of color. But in our space, an example of that would be the amount of what we call traction in tech startups, or the amount of goals or milestones achieved before you receive investment. And for non-minority founders or mostly white male founders, there is a space where they can receive what we call pre-seed funding, which is funding that founders receive. And they have no company yet, no product built or anything like that. It's just an idea. It's a vision. And they receive funding. That is very rarely the case for Black founders. I actually don't know any Black founders that have gotten funding for not having a product at all.
What I did was I built the first version of our product or what you may heard of as an MVP, minimum viable product. And then we got our first three customers. We are a B2B, we work directly with health systems, payers and soon sponsors and CROs. And acquiring these types of customers is not cheap at all. It's not cheap, but we had to get that traction before any investors would take us seriously, which is unfortunate and is not feasible to do. It's virtually impossible. Now that I think back on it, I don't even know how we did that, and I don't recommend it.
Melanie Igwe: Yes, the bar higher. And it is higher because there's a lack of comfort. When you are not comfortable with people, there's a level of trust that's just not there. So their questions are more rigorous. The diligence is longer. You have to come in with a high amount of traction. You have to come in with people, that's why we did TechStars which was phenomenal for us because of the relationships and the introductions that they made.
This challenge has really forced myself and my co-founder to be very scrappy, to be fiscally disciplined and to be very aggressive in our pursuits of getting revenue and traction and growing our business.
Ashlee Wisdom: The only other thing I'll add is, the goal post also sometimes moves for us. And that latter part is what's really frustrating at times. Investors were astonished with the amount of traction we had with our first MVP and were like, "How did you do this?" I was like, "I was bootstrapping. And also I'm solving an actual problem." That's really what it also comes down to. But what's frustrating about the goal post moving, we're a pre-seed company that just hit our milestones, then we got enterprise contracts. We never committed to doing that post pre-seed. That's something that we set out to do with our seed run. And we had an enterprise pilot. And then you get investors saying, "Well, we want to see more enterprise contracts."
I then reply, "We only raised $1.2 million. I can't build this whole sales team with just that amount of money." That's the part that gets frustrating. But you can't do this work having a pessimistic mindset.
Cynthia Isaac: If VCs invested in women at the same rate that they invest in men, you could boost the global economy by $5 trillion. I wanted to end by asking you, what do you think is left on the table if people don't invest in companies like yours?
Ashlee Wisdom: If you're not investing in people of those diverse perspectives, you're losing out on opportunities that you may not be privy to by virtue of your identity and your limited lived experience.
Erica Plybeah: Investing in women or investing in entrepreneurs of color is not charity – it's a business opportunity. Organizations are missing out by not expanding their mindsets or expanding their thoughts.
Melanie Igwe: If you're a pharma company and you ask, "What is the point of making sure that clinical trials are more diverse?" Think about all of the patients that are either non-compliant because your medication is not efficacious for them, how much money is being left on the table because you didn't include them in clinical research at the onset. There is a business imperative to make sure that you understand the unique experiences of different people and leverage organizations like ours to have that unique insight and perspective, and then be able to make a significant impact, but also a significant return on investment.