Fundraising for charitable organizations and how that money is used can be a touchy topic for many, especially when some donors have strong feelings about where the funds should be directed.
In our Diabetes Community, the national advocacy leader JDRF is one of the most prominent groups in the midst of this issue. To solidify their focus on "closing the gap between scientific advancements and commercial solutions," the type 1 diabetes-focused organization has spent the past few years building up a venture equity fund known as the JDRF T1D Fund. It invests directly in promising technology, treatments, and cure research advancements for T1D, and any financial returns are used to make more investments.
To be clear, this is not directly connected to general fundraising through JDRF awareness walks and galas, but rather operates independently as a seperately-goverened investment fund.
Since its founding in early 2017, the T1D Fund has raised over $70M and now has 16 companies in its portfolio -- a number of which were not previously involved with T1D before deciding to participate in the JDRF T1D Fund. That translates to $15-20 million in capital being invested per year, we’re told.
JDRF is not the only medical nonprofit getting into this game, either. It is in fact a nationwide trend, according to the Wall Street Journal: "By strengthening their investment programs, nonprofits aim to rally more startups to their cause and stand out in a capital-rich market that gives entrepreneurs more financing options than ever."
Leadership and goals
We talked recently with Katie Ellias, who took over as the T1D Fund's Managing Director just over a year ago (in July 2018). She does not live with diabetes herself, but has significant experience in investment fund management for private equity firms and the nonprofit sector.
She tells us the Fund’s aim is simple: to be a catalyst to create an investment market for type 1 diabetes therapies and technologies. Their aim is to attract new capital and new talent and faces to this T1D ecosystem, such as investors or companies that haven’t traditionally been focused on this particular chronic condition or even healthcare in general.
“This is very much rooted in the patient experience and ultimately what’s going to bring therapies and new drugs to the market, for the benefit of patients, through the craft of venture (fundraising) that needs equity investments. That felt like a win-win for me," she says.
Coming from a family line of doctors and medical professionals, she entered the health universe from the business and investment side. She previously worked in the cardiovascular unit of med-tech giant Medtronic, while her husband worked at Medtronic Diabetes early in his career. She says joining the T1D Fund has been a “marriage of that and what I love to do every day, which is venture capital investing… in the life sciences space.”
One of the frustrations she's had on the for-profit side is the gap between industry bottom-line goals and actual patient benefits. This T1D Fund has presented her the opportunity to focus on both at the same time.
Promoting a focus on type 1 diabetes
“Our team is licensed to go and hunt for biology that’s relevant in other cancer or autoimmune-focused companies and make the case for why those really smart talented people who have money from other investors should apply their talents to T1D. That’s something we are doing as much as we can, to educate the medtech and broader investment community about what impact they can have in diabetes, and how they can be a part of solutions," Ellias says.
“It’s about collaborating and working more broadly together... This is a new model for JDRF, something that wasn’t as front-and-center, until now."
Highlights of the Fund's accomplishments to date include:
- Several participating companies were before only focused on cancer or other autoimmune conditions, but are now also focusing on T1D.
- Several venture investors who’d never done a T1D deal before are now funding at least one portfolio company.
- Likewise, many scientists who’ve been working on other health areas are now devoting their energies toward T1D research.
- Specific examples of promising life sciences companies now focusing on type 1 diabetes that had not been doing so before include:
* San Diego company Biolinq creating an early stage non-invasive patch that “will meet unmet needs for T1D, as to glucose monitoring and being AI-compatible so it can also measure blood pressure, ketones, and more.” The company expanded its med-tech and T1D investor base by working with the JDRF T1D Fund.
* Pandion Therapeutics out of Cambridge, MA focused on islet-targeted therapies for autoimmune and inflammatory disease. Type 1 diabetes had not been on its radar before investment from the JDRF T1D Fund.
* SQZ Biotech out of Massachusetts is developing cell therapy that could retrain the immune system not to attack the ever-important insulin producing beta cells. It had been more cancer and oncology focused, but with the Fund’s involvement, the company started a T1D program to collaborate with researchers on the diabetes side.
How funding decisions are made
As far as decision-making on capital investments, Ellias says their first lens is always to consider how big an impact the solution may have in diabetes. Beyond that she says the Fund acts like a traditional venture fund but doesn’t limit itself to specific parameters. They’re pretty agnostic as to what stage a company may be in, but like to have a mix of those in very early pre-clinical work to those in later-stage R&D.
More broadly, the Fund does align with the JDRF's overall focus areas on immunotherapies, beta cell therapies (like regenerative and replacement approaches), and improving lives.
"There are different tools in our Fund... One of these investments may not be end of the rainbow, aspirational flavor of whatever the particular treatment is. But their work tells us very important things and serves as steps in the direction we need to take to get there. There's a lot of room to demonstrate benefit, without being what may be 10 years down the road as the end result everyone wants to see."
In the future, they'd like to expand into multiple new areas. One of those is regenerative therapies and beta cell stress, which Ellias says is seen as an under-funded area of diabetes research that the Fund hopes to foster with investment.
While patients are never eager to think about diabetes as a business, we know that's the reality. It's nice to know that beyond the profits big companies make on the basic supplies we need, investment money is flowing into promising new therapies -- and paths to a cure -- for the future!