January 13, 2022
*NOT FOR EXTERNAL DISTRIBUTION*
SOURCE: Modern Healthcare
AUTHOR: Kara Hartnett
Nashville-based Jumpstart Health Investors has launched a new fund that will invest exclusively in Black-founded health tech ventures.
The funding round brought together nearly 100 investors — including Eli Lilly and Company, HCA Healthcare, Cardinal Health, Meharry Medical College, Vanderbilt University, American Hospital Association, Bank of America and Pinnacle Financial Partners — to raise $55 million for the seed-stage fund, dubbed Jumpstart Nova.
The firm has already made four investments, including a virtual EHR platform for patients with autoimmune diseases, a biotech platform focused on cell therapy innovations, a tech-enabled behavioral health provider for children with autism and a food allergy management startup.
Marcus Whitney, co-founder of Jumpstart Health Investors, will serve as managing partner alongside Kathryne Cooper, the former co-director of the West Coast Consortium for Technology & Innovation in Pediatrics.
The fund has been in the works since August 2020, according to Whitney, and raised $10 million in its first few months. The original financing goal was to raise $30 million to invest in companies focused on health IT, digital health, tech-enabled services, diagnostic devices, biotech, medical devices and consumer health and wellness. With the additional capital, Whitney hopes to invest in more than 20 Black-founded businesses — ranging from $250,000 to $3 million per investment.
Apart from bringing innovative health tech solutions to the national market, the fund aims to increase the share of Black-owned companies in the U.S. healthcare sector, which currently is less than 5%, according to a press release.
In 2021, funding for Black startups in the United States quadrupled but remained disproportionate to the country's overall demographic makeup. Nearly $1.8 billion was invested in Black-owned startups in the first half of the year, only 1% of overall venture capital in the U.S. in the same timeframe, according to data collected by Crunchbase.
Jumpstart's focus is also about populating investment networks with more Black leaders and entrepreneurs, Whitney said. According to the 2020 VC Human Capital Survey by Deloitte, Venture Forward and NCVA, only 4% of all investment professionals are Black.
James Hildreth, president and CEO of Meharry Medical College, a strategic investor in the fund, said the disparity is representative of the number of practicing Black physicians in the country, and that correcting it will require "bold approaches and ventures."
"Jumpstart Nova's support of Black-founded companies in the healthcare sector is just that kind of innovative thinking," Hildreth said in the release.
The endeavor began with a letter Whitney sent to Nashville healthcare executives in 2020, and quickly evolved to an oversubscribed fund with a large network of healthcare and financial players, he said.
"I had an opportunity to create something that could be transactional insofar that it's investing money," he said. "It's not like working on diversifying the board of directors, which could take five or more years. This is something that can be done relatively quickly but it could also be transformational."