Seae Ventures “widens the funnel” for founders, funders and others

The venture capital industry is one “where pattern recognition plays a significant role,” according to Jason Robart, co-founder and managing partner of Seae Ventures. He believes that when venture capitalists are looking for investments, they tend to look for people they know and recognize, including those they went to college, graduate school with, and in previous investment roles.

These spaces, however, remain homogeneous. For example, as of 2021, women made up about 58% and racial and ethnic minorities made up about 44% of undergraduate students at four-year colleges. However, for full-time MBAs, women drop to 41% and racial and ethnic minorities to 37%.

These divisions continue to expand into investment roles. In investment banking, only 25% of analysts are women and 32% are non-white. In private equity, only 35% of all roles are held by women and about 27% by those who are racial or ethnic minorities. And at venture capital firms, Seae’s focus, only 11 percent of investing partners are women and 14 percent are minorities. For venture capital in particular, white men make up only 38.1% of the US population, but oversee 98% of assets under management in venture capital.

Seae Ventures, however, aims to undermine this widespread recognition of the model and diversify those who receive investments – and those who make investments in the first place.

Seae invests in early-stage technology and healthcare companies founded by diverse entrepreneurs. Mr. Robart and Tuoyo Louis, the firm’s two founding partners, worked together at Zaffre Investments: the corporate affairs arm of Blue Cross Blue Shield of Massachusetts. In 2018, they both left Zaffron, joined forces and started Seae a year later in 2019. As Mr. Robart said, he and Mr. Louis had two guiding principles: They wanted to find solutions for underserved and underserved populations with a view and wanted to find founders who have traditionally been underserved and overlooked. These two areas of interest have been shown to have various overlaps, including women, racial and ethnic minorities, low-income people, and those living in rural areas.

Companies led by women, for example, received only 1.8% of venture capital funding in 2023. That percentage has stubbornly remained around 2% for the past five years, yet, as Mr. Robart pointed out, “No you can tell me that 50% of the population has only 2% of all good ideas”. Black-founded companies — regardless of founder gender — received just $0.75 billion, or 0.48 percent of all venture capital invested in 2023. Mr. Robart noted that black founders saw an increase in funding from 2020 to 2021 after the killing of George Floyd; they received $1.6 billion in 2020 and $4.9 billion in 2021, but their funding has declined since then. And even at the peak in 2021, these founders received only 1.4% of venture capital funding. Meanwhile, Latino founders consistently raise only about 2% of all venture capital each year, and Latino founders and women of color combined have raised just over 1%—having passed the 1% mark previously in just a few years: in 2021.

If venture capital allocations had been proportional to population last year, black founders would have received about $22 billion, as about 14% of the US population is black and more than $170 billion was invested in venture capital. risk in 2023. Female founders would have received about $85 billion, and Latino founders would have received about $32 billion — or 19 percent. As Mr. Robart summarized, these founders have “exceptional business plans” but are not yet able to “raise capital and drive the promise and growth of their solution.”

Unlike traditional venture capital, Seae supports a diverse range of founders, including – but not limited to – those who have been overlooked, underrepresented and underfunded. In fact, 75% of Seae’s portfolio companies are led by BIPOC and 44% are led by women.

And in turn, the founders and companies that Seae supports can help overlooked, underrepresented, and underfunded populations—and thus achieve another of Mr. Robart and Mr. Louis’ original goals. Seae’s portfolio company, Tia, is an example. Tia is a women’s health clinic that allows women to access in-person and virtual care for physical, mental and reproductive health. As Mr. Robart said, “the health care system, frankly, has not served women well,” but Tia “provides care that clients and patients want.”

Similarly, Cayaba Care “works with its community,” in Mr. Robarts’ words, to provide pre- and postnatal care, particularly to women in Philadelphia, Pennsylvania: where the company is based and where about 40 percent of the population resides. Black. Cayaba Care services – which aim to address issues such as breastfeeding concerns, mental health and postpartum needs and can help women find relief from symptoms, pain and general stress and anxiety – are specifically tailored for black, brown and high-risk . mothers. In the United States, the maternal mortality rate for black mothers is more than 2.5 times that of white women. Especially in Philadelphia, it’s about 4 times higher.

However, the effect of Seae’s portfolio companies goes beyond just addressing women’s health. Another investment, Movn Health, is a virtual cardio business. After a cardiovascular event, such as a cardiac arrest or heart attack, about 60% of patients are referred to cardiac rehab, but as Mr. Robart noted, only about 15% go to rehab, and only about half of that number – 8% – actually complete their rehab regimen. About 80 percent of Americans don’t even have access to cardiac rehab, which typically consists of three sessions a week for 12 weeks, primarily because of factors such as high costs, long wait times, low accessibility, and challenges of transport. And these factors disproportionately affect hourly workers, low-income people, minorities, rural residents, and women. Because Movn Health care is virtual, it has an 80% completion rate and a 12% all-cause readmission rate at 12 months, compared to the national average of 40%. Its patients also have lower rates of high blood pressure and progression of pre-diabetes to diabetes than the general population. “It’s a great business model,” Mr. Robart summed up, “and a great solution.”

And Seae Ventures’ portfolio — and potential impact — is growing, especially after acquiring Unseen Capital in July 2024. The two venture firms have similar investment theses, or “cross-mission synergies,” according to Unseen Capital Managing Director Erica Murdock , he said.

In fact, the name “Unseen” itself embodies the purpose of the company. Launched in 2020 by founder Kayode Owens, it seeks founders and grantees who are often overlooked or simply unseen. Specifically, Unseen Capital focuses on early-stage healthcare companies started by underrepresented founders focused on improving minority health. The company’s portfolio includes MedHaul, which provides safe, reliable and efficient medical transportation for healthcare providers and clinical trial sponsors, Health in Her Hue, which connects women of color and other women of color to culturally competent healthcare providers , health and community content, and Violet, which highlights the cultural competence of clinicians working for Violet’s clients and provides further educational opportunities, enabling clinicians to improve their skills and the company itself to support the matching of identity-centred care to patients.

Tragically, Mr. Owens passed away in 2021. Seae Ventures’ acquisition of Unseen Capital, however, allows both firms to continue their missions of supporting a range of founders in pursuit of innovative and equitable healthcare solutions.

The team will also honor Mr. Owens’ legacy by empowering, inspiring and supporting the next generation of fundraisers and fundraisers. This fall, Unseen Capital will launch both a scholarship in Mr. Owens’ name and a scholarship fund for students at Historically Black Colleges and Universities (HBCUs) who want to pursue entrepreneurship or venture capital — but find themselves shut out because the homogeneity of these areas.

In other words, these scholarships and bursaries will do more than “benefit those who are already prepared to benefit,” as Mr. Owens wrote before his death. He noted that his skin color “…made it more difficult to be a successful founder, and it took me years longer to get into a position where I could help companies succeed on my own terms.” Mr. Robart and Mr. Louis of Seae Ventures had a similar experience: When they started Seae, there weren’t, as Mr. Robart put it, “not many people like us” in the investment community. Together, these opportunities for HBCU students and young graduates can help “widen the funnel,” as Mr. Owens wrote. In addition, mentoring programs in general can have a tremendous impact on them; they can increase minority representation in leadership positions by about 9% to 24%.

Mr. Robart is also optimistic that, overall, society will continue to make progress. “There may be some bumps as we move forward, but success breeds success,” he concluded. And through current successes and future successes, Seae Ventures and Unseen Capital can improve the prospects for those who have historically been overlooked and underserved—and, in the process, help disrupt the recognition model that still pervades venture capital: for founders, funders and More.