Bio­science in­dus­try stake­hold­er col­lab­o­ra­tion key to ad­dress­ing in­equal­i­ty

Biotech Voices is a collection of exclusive opinion editorials from some of the leading voices in biopharma on the biggest industry questions today. Think you have a voice that should be heard? Reach out to senior editors Kyle Blankenship and Amber Tong.

When a glob­al pan­dem­ic hit, the bio­science in­dus­try an­swered the call for vac­cines and ther­a­pies in record time, which will save mil­lions of lives. This re­sponse was pos­si­ble be­cause of a sus­tained in­vest­ment of risk-cap­i­tal by the ven­ture cap­i­tal in­dus­try in life sci­ences com­pa­nies, peak­ing in 2020. Great sci­en­tists, vi­sion­ary lead­er­ship and high-qual­i­ty in­vestors that backed new sci­ence and bold en­tre­pre­neurs led to the in­no­v­a­tive tech­nolo­gies of BioN­Tech and Mod­er­na that con­tributed to the ini­tial Covid-19 vac­cines.

As the sec­tor right­ly basks in the glow of this year’s ac­com­plish­ments, there is a con­cur­rent re­al­i­ty to con­front. Covid-19 has fur­ther ex­posed the in­equities in so­ci­ety, dis­pro­por­tion­ate­ly im­pact­ing women and mi­nori­ties. This im­bal­ance is al­so ev­i­dent in the bio­science com­mu­ni­ty, pro­vok­ing many lead­ers to act on in­equal­i­ty.

Ven­ture cap­i­tal­ists find­ing rea­sons to change

The ven­ture cap­i­tal in­dus­try, not on­ly with­in life sci­ences, has well-doc­u­ment­ed chal­lenges with di­ver­si­ty, eq­ui­ty and in­clu­sion. On­ly 2.6% of to­tal VC fund­ing in 2020 has gone to Black and Lat­inx founders, and fund­ing for fe­male founders has sunk to lev­els not seen since 2017. De­spite that, I per­ceive a grow­ing ap­petite for change. The ques­tion is – How?

In VC firms, the low at­tri­tion of in­vest­ment part­ners and the lim­it­ed ex­pan­sion of firms lim­its ca­reer op­por­tu­ni­ties for the many tal­ent­ed As­so­ci­ates and Prin­ci­pals that rep­re­sent the fu­ture. With no vis­i­ble route to part­ner, these em­ploy­ees seek op­por­tu­ni­ty else­where, out­side ven­ture cap­i­tal. The loss of such tal­ent re­duces the chance to in­tro­duce more di­ver­si­ty among a ven­ture firm’s part­ner ranks.

A lack of di­ver­si­ty among VCs great­ly in­flu­ences in­vest­ment de­ci­sions and cap­i­tal al­lo­ca­tion. For ex­am­ple, re­search shows how in­ter­ac­tions with in­vestors dif­fer be­tween men and women en­tre­pre­neurs (We Ask Men to Win and Women Not to Lose: Clos­ing the Gen­der Gap in Start­up Fund­ing. Kanze, Huang, Con­ley and Hig­gins). The ques­tions di­rect­ed at men ex­plore the size and mag­ni­tude of the op­por­tu­ni­ty. In con­trast, women are more like­ly to be ques­tioned about pre­ven­tion fac­tors and down-side risk.

Cre­at­ing a new com­pa­ny in life sci­ences, and grow­ing it, in­vari­ably re­lies on ven­ture fi­nance. VC firms have a strong in­flu­ence over the com­pa­ny build­ing process, in­clud­ing the com­po­si­tion of boards and se­nior man­age­ment, as well as the tal­ent and cul­ture. In­suf­fi­cient di­ver­si­ty among ven­ture in­vestors can lim­it a port­fo­lio com­pa­ny’s com­pet­i­tive­ness in the tal­ent mar­ket be­cause di­verse can­di­dates se­lect em­ploy­ers where they see them­selves rep­re­sent­ed and suc­cess­ful. Just 3% of VC in­vest­ing part­ners are racial or eth­nic mi­nori­ties and around 11% are women. This leads to an ex­ist­ing bias among VCs to­wards his­tor­i­cal suc­cess pat­terns, which has been to the detri­ment of mi­nori­ties and women.

Pri­vate com­pa­nies re­act to pub­lic mar­ket re­quire­ments

The re­cent Nas­daq pro­pos­als to the SEC on board di­ver­si­ty and dis­clo­sure, along­side new state laws and reg­u­la­tions, are forc­ing many pub­lic com­pa­nies to be­come more di­verse. Mean­while, pri­vate com­pa­nies in the bio­science sec­tor re­main strong­ly in­flu­enced by ven­ture in­vestors who many per­ceive as pas­sive re­gard­ing di­ver­si­ty and in­clu­sion.

The in­ter­play be­tween ven­ture in­vestors and port­fo­lio com­pa­nies is a source of great op­por­tu­ni­ty to ad­vance DE&I in the sec­tor. In­creas­ing di­ver­si­ty will cre­ate val­ue for all stake­hold­ers, and re­duce the fric­tion points as com­pa­nies tran­si­tion from pri­vate ven­ture own­er­ship to the pub­lic mar­kets. Chang­ing the com­po­si­tion of the board and the man­age­ment team takes time and en­er­gy and can cause a com­pa­ny to lose vi­tal mo­men­tum. Cul­ture is of­ten seed­ed ear­ly in a com­pa­ny’s life and pos­i­tive­ly ad­dress­ing cul­ture from the get-go re­duces the need for cul­tur­al cor­rec­tions as a com­pa­ny ma­tures.

The pow­er of the col­lec­tive

For small com­pa­nies, with­out the ex­per­tise and hu­man cap­i­tal, the in­tent to im­ple­ment DE&I prac­tices, tools and poli­cies of­ten fails. Prac­tices bor­rowed from large in­ter­na­tion­al com­pa­nies are not rou­tine­ly ef­fec­tive ei­ther.

The range and com­plex­i­ty of DE&I is­sues com­pa­nies need to tack­le, make the task daunt­ing and com­pli­cat­ed. In­stead of or­ga­ni­za­tions in­di­vid­u­al­ly piec­ing to­geth­er a DE&I strat­e­gy, con­stituents have an op­por­tu­ni­ty to work col­lab­o­ra­tive­ly and pre-com­pet­i­tive­ly to de­vel­op DE&I so­lu­tions that are de­signed for the op­er­a­tional re­quire­ments of ven­ture cap­i­tal firms and ven­ture-backed pri­vate com­pa­nies. The Bio­science & In­vestor In­clu­sion Group (BI­IG) is one such op­por­tu­ni­ty (www.bioin­clu­sion.org).

Bio­science & In­vestor In­clu­sion Group chan­nels col­lec­tive com­mu­ni­ty ac­tion; some­thing the bio­science sec­tor does well. BI­IG en­ables com­pa­nies and in­di­vid­u­als to con­tribute their per­spec­tive or ex­pe­ri­ence to struc­tured work­ing groups ini­tial­ly pri­or­i­tiz­ing In­vestor In­ter­ac­tions; Hir­ing and On­board­ing, and Peo­ple Growth and Re­ten­tion. The DE&I so­lu­tions BI­IG de­vel­ops will be freely ac­ces­si­ble to help ad­vance and ac­cel­er­ate DE&I in the in­dus­try.

When in­vestors and en­tre­pre­neurs link arms in the face of chal­leng­ing prob­lems, they are ca­pa­ble of re­mark­able achieve­ments. This uni­ty and the open and col­lab­o­ra­tive spir­it of the bio­science com­mu­ni­ty can tack­le an­oth­er big prob­lem the sec­tor must con­front — in­equal­i­ty.

Karl Simp­son is the CEO of Lift­stream and a founder of The Bio­science & In­vestor In­clu­sion Group.

Biotech Voic­es is a con­tributed col­umn from se­lect End­points News read­ers. Read more here.

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