Publications / Underinvested: Strategies for Supporting Diversity, Equity, and Inclusion in Health Care Venture Investment

Underinvested: Strategies for Supporting Diversity, Equity, and Inclusion in Health Care Venture Investment

The venture capital industry invested $136.5 billion in US-based companies in 2019, creating a wealth of opportunities for new products and services to solve problems and improve lives. Data show that when diverse investors and founders receive that capital, they generate strong returns.

According to research from First Round Capital, companies with a female founder performed 63% better than its investments with all-male founding teams. Another study shows that for every 10% increase in racial and ethnic diversity on a company’s senior-executive team, earnings before interest and taxes rise 0.8%. These outsized returns are true for fund managers too — when diverse fund managers have access to capital, they tend to outperform average benchmarks.

When it comes to health care investing and innovation in particular, financial health is not the only thing at stake — improved physical and mental health are too. Increasing diversity among health-tech founders has the potential to improve companies’ effectiveness in meeting the needs of patients and providers in Medi-Cal, where just 20% of enrollees identify as White.

Despite the strong case for diversity, and large numbers of women and people of color founding companies, Black, Latinx, and female funded founders and investors are all underrepresented in the venture ecosystem. This report summarizes the wide array of initiatives working to increase that diversity and to address the underlying inequities that plague the VC ecosystem.

The report focuses in particular on three types of approaches:

  • Capital — getting more capital into the hands of diverse investors and founders
  • Networks — broadening the traditional closed networks that perpetuate lack of diversity
  • Metrics — tracking relevant data to measure progress

For more detail on a wide array of existing interventions taking these and other approaches, explore the database below. This database is not intended to be exhaustive nor is it an endorsement of the initiatives it includes.

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