Inside a VC Firm’s Strategy to Advance Equity and Diversity in Health Tech Innovation

Startups founded by women or people of color often don’t garner as much capital from investors. For example, women-founded companies received just 2.4% of all capital invested in venture-backed startups in the U.S last year, and Black founders raised only 1.4% of all 2021 funding.

Recognizing that these statistics are unacceptable, Julien Pham founded Boston-based venture capital firm Third Culture Capital (3CC) with the mission to foster more equity and diversity in health technology innovation.

“Having been in the healthcare space for several decades, I can tell you that some of the most talented people are, in fact, founders who are women, people of color, and immigrants,” said Pham last week at HLTH in Las Vegas. “And the challenge is that these individuals tend to be underfunded and overlooked, because they have not necessarily been exposed to the right universities, programs, etc. So we’re trying to be contrarian to that by investing in and over-indexing on these individuals, just so they can have fair access to capital.”

3CC is intentional about connecting to the “unique lived experiences” of the founders it invests in, according to Pham. With this approach, the venture firm ensures that it is not just checking its diversity boxes.

He pointed to Robbie Felton, CEO of Intus Care, as an example of a founder who stood out to 3CC. Intus Care, a predictive analytics platform designed to improve care outcomes among geriatric patients, was founded in 2019 by three undergraduate students at Brown University. Felton created the startup with his classmates because of the experiences he had with his mother growing up — she was a geriatric social worker in Detroit, and she would often take him along with her on home visits to see her elderly and disabled patients.

“If you hear Robbie’s story, you know he’s uniquely qualified to do what he’s doing because of the work he did with his mom. You can try to say that he hasn’t worked in that industry, but he’s heard the stories and he understands the pain points,” Pham said. “That’s what we care about. We want to understand what drives founders.”

When 3CC is evaluating startups and deciding how to deploy its capital, the firm is not necessarily focused on the technology at hand. Rather, 3CC is interested in finding out how founders are planning on leveraging that technology to make a change, according to Pham. He said he needs startups to answer the question “How do you bring outside thinking into care delivery, so you can truly innovate?”

The startups that 3CC supports should be focused on healthcare’s quadruple aim, Pham declared. The quadruple aim refers to the ability to improve health outcomes, decrease the cost of care, and improve the care experience for both patients and providers.

If startups want to prove to 3CC that they are making progress on achieving the quadruple aim, they must collect data. If a startup isn’t far enough along to produce its own data, Pham said they can make a case using proxy data from studies and reports.

“At the end of the day, you have to make a point about the change you’re making, and you’ve got to prove that you are building a pipeline of interested parties that want to partner with you,” he said.

Photo: Irina Devaeva, Getty Images