In the latest episode of Health Law Diagnosed – Women Leaders in Health Care, a series that brings together women leaders for discussions on timely key issues and reflections on developing a career in the industry, host Bridgette Keller leads a conversation around investing in women's health. She is joined by Lauren Edgerton, Healthcare Director at Piper Sandler, and Kathryne Cooper, Partner at Jumpstart Nova.

Lauren and Kathryne discuss the areas of women's health that have seen the most growth in the last few years, how they evaluate a potential investment including their standard criteria, and how you can get involved in investing in women's health care.

Our guests also cover topics such as:

• What are the unique challenges in raising capital for companies that focus on women's health?
• Why do you think women’s health has historically been underfunded compared to other sectors, and what can be done to improve funding for women’s health?
• What advice would you give to women interested in a career in investing in health care?

Investing in Women’s Health - Transcript

Bridgette Keller: Hi there, welcome back to Health Law Diagnosed, a Mintz podcast dedicated to health law, health policy, and social issues in the healthcare industry. I'm Bridgette Keller, your podcast host.

We are back after a brief summer hiatus to continue our series featuring women leaders in healthcare. As you know, these episodes bring together women leaders who we have the pleasure of knowing and working with for discussions of key issues in healthcare generally, and for developing a career in the industry.

The Challenges of Investing in Women’s Health

Bridgette Keller: Today's episode is focused on investing in women's health. Women face unique health challenges, yet many conditions are under-researched and underfunded.

There are many reasons for this. The first and foremost is the historical bias in medical research, which has primarily focused on male populations and men. The cultural stigmas related to discussing women's health issues, limited representation of women in leadership, policy gaps, lack of awareness and advocacy, of course and the perception of profitability.

Yet, investing in women's healthcare is not just a moral imperative; it is a smart financial strategy with far-reaching societal benefits. By prioritizing women's health, we can drive economic growth, improve health outcomes, and empower women everywhere.

Introductions

Bridgette Keller: So today, I am joined by two guests to discuss their work in this very important area. The first is Kathryne Cooper, a partner at Jumpstart Nova, where she focuses on growing and funding early-stage companies in the healthcare arena. I'm also joined by Lauren Edgerton, a director in the healthcare group at Piper Sandler, where she works in healthcare investment banking. Kathryne, Lauren, thank you so much for joining me today.

Lauren Edgerton: Thank you for having us.

Kathryne Cooper: Great to be here.

Bridgette Keller: I'd love to start by having you both introduce yourselves, tell us a little bit about your career, what brought you to where you are today, and the type of work you do. Kathryne, would you start us off?

Kathryne Cooper: Hi! This is Kathryne Cooper. I'm based here in Los Angeles, and, as you said, I'm a partner at Jumpstart Nova, which is a healthcare venture firm. Specifically, we're a seed fund specializing in healthcare startups led by exceptional founders.

I've been in healthcare my entire professional career. I've been an investor for the last eight years—three of which as a partner at Jumpstart Nova, and five years as co-director of CTIP, which was a medtech accelerator and small fund. Before that, I started my career at Stanford, majored in human biology, and was pre-med. Then I went to three years of medical school at USC here in LA but decided I didn't want to be a practicing clinician. So I joke, "What do you do with a Stanford degree and three-quarters of med school?"

You start working in health tech startups! I'm a sucker for school, so I went back to USC and did an MBA. Coming out of that, I linked up with some physician friends of mine in the accelerator space and focused on medtech. So, healthcare has been the common thread throughout my career, and I've shifted from trying to actually treat patients to now investing in startups that have an outsized effect on the healthcare industry.

Bridgette Keller: Katheryne, Thank you so much for that great introduction. It's so interesting to hear about your career path and sort of your trajectory, and how you've changed focus a couple of times to lead you to this dynamic area where you're investing in early-stage seed companies.

Bridgette Keller: Lauren, could you give us a little bit about your background and introduce yourself?

Lauren Edgerton: Yes, thank you, Bridgette. So, I'm Lauren Edgerton, a director on the life science tools and diagnostics team at Piper. That means that we cover diagnostic companies, such as a cancer test or even a COVID test. I also cover companies that make the machines on which these tests are run or other equipment used to manufacture drugs. I've been doing this for about three and a half years now. I worked on medical devices prior to that for an additional five years. I've essentially had an interesting or curvy career. I've done investment banking for a variety of groups—sponsors, med device, TMT, restaurants. I've worked at boutique firms, I've worked at bulge bracket banks, and I've lived in San Francisco, LA, and New York.

Bridgette Keller: Oh, wow! Lauren, it sounds like you've had a really interesting career as well, and you've really been all over the country, working in this industry. I'm really excited to hear what you both have to say about investing in women's health.

Sectors in Women’s Health Seeing the Most Growth

Bridgette Keller: So why don't I kick us off, and I would just sort of love to know what you both are seeing. Where are the areas in women's health, which sectors are seeing the most growth?

Lauren Edgerton: So, the sectors that have really taken off most recently, and I would think about even the past five or so years, one of the big ones has been genetic testing related to fertility. When you think about non-invasive prenatal testing, that has become a market that is fairly saturated at this point. I would say anything related to cancer—so ovarian cancer, breast cancer, any of those areas—has also been taking off lately. Some of that is easier than others. Ovarian cancer is a difficult condition to find a diagnostic test for, but it is also one of the most needed ones, just given how difficult it is to diagnose by the time it has spread. So, folks are very interested in investing in those areas.

I would say the other thing is that folks are also looking at potential tests that might reduce the cost to healthcare systems. For example, I’m working with a client who has a test that determines whether or not someone should get radiation after breast-conserving surgery. There's also a company that determines whether or not a woman should get chemo after breast-conserving surgery. So overall, yes, there is interest in genetic testing, particularly from a fertility perspective, and with cancer. I think anything cancer-related for men or women is particularly hot right now. And then, anything around cancer or other diseases that can help reduce healthcare costs.

Bridgette Keller: That's really interesting, Lauren. And what do you think have been the historical challenges in those industries? Why is it taking off now?

Lauren Edgerton: So, I think some of what has made that take off recently is the mapping of the whole genome, which was pretty key in driving into the fields of genetics. I would say the other thing is, you have companies like GRAIL, or Exact Sciences. A lot of these companies have come up with blood tests to be able to detect cancer early, to be able to monitor, you know, if cancer has come back, to be able to determine at what stage cancer is at. And so, I think that has been a lot of what has also fueled that both for men and women, but also has made that particularly interesting for women.

Bridgette Keller: Yeah, it's interesting to think about, right? So, I guess it's like the advances in science. I mean, once we started mapping the whole genome, so much became possible from a science perspective. And we've seen so many advances in healthcare, you know, as a result of that. And we were just talking on one of our last podcast episodes about AI, how there was a shift in the AI technology, right? And suddenly, like, the amount that you could input into, you know, these AI functions like ChatGPT and others, it suddenly changed, it increased. And then the uses for AI became prolific. And so, it sounds like, you know, investing in these areas where we're talking about blood tests and cancer testing and different treatments, sort of targeting treatments, what might work best for a particular patient, all of these areas are seeing the most growth, it sounds like, because the technology was there, the science was there, and now it's just sort of growing beyond.

Lauren Edgerton: No, and that's spot on. And even to follow further with that, that also is, again, while when—and you mentioned this before—research was primarily focused on the male population. Now that we do have some of those AI algorithms and companies, I believe what you will see is companies that are more willing to try to target drugs to women, because now they have essentially an AI engine to do that for them, and they don't have to necessarily go out and test it on a large population without knowing what will happen. They'll be able to, just like you said, be able to say, “Okay, for a female in post-menopause with these types of epigenetics, they would respond to this type of treatment,” or we can map it out in this AI algorithm to spit that out and then run a trial off of that. I also think that'll be huge for all healthcare, but I think that will enable women to be able to have treatments that are better suited for them than in the past.

Unique Challenges Raising Capital for Companies Focused on Women’s Health

Bridgette Keller: Yeah, that sounds great. I think it's going to be fascinating to see how it happens. And I'm just wondering, so what are the unique challenges that arise when it comes to raising capital for companies that are focusing on women's health?

Kathryne Cooper: Well, I was going to say that Bridgette and Lauren touched on this a little bit. And I think it's related to the challenges of raising capital, simply kind of the data available on existing women's health solutions. And, more importantly, what folks believe the market and appetite is for certain aspects of women's health. Because there are not a ton of women's health companies that have had significant exits or IPOs, there may be a sentiment in the market that these aren't necessarily companies that can make money. And so, if you're looking from a venture, maybe Lauren's perspective as an investment bank, we're looking at historical data to predict kind of future returns. And the fact that it doesn't exist is a challenge for companies that are raising now to prove out that there is something they can do. There will be customers for them, payers, providers they can work with, etc. It's kind of a chicken-and-egg scenario, because there's no proof, it's hard to say that this would work. I am of the view that I think women's health companies, because of this, there is an untapped opportunity for women's health. So it's an extraordinary area as a VC to double down and make outsized returns. But other folks are maybe a little bit more risk-averse because it historically hasn't necessarily done well. And, Bridgette, I think you brought up a couple of factors that can be related to that. There aren't a ton of investors that are women—I'm talking about venture specifically. I think less than 6% of partners at venture firms are women. So if everyone you're pitching to doesn't have a great way to identify with the solution or problem that you're solving for, that can be a really big challenge.

Bridgette Keller: Yeah. Oh, my gosh, those are great points. I mean, it's so interesting to think about healthcare equity, and how we can sort of improve the funding and the research and the growth. Because, you know, women's health is a gap, and it needs to be filled. But how do we do that, right? How do we create opportunities for women leaders? How do we create opportunities to demonstrate, you know, and have success? I just think it's really interesting. And then, like you were saying, Kathryne, it just takes some people who want to really focus in this area to have that success and to start demonstrating what the profitability is here. And look at how widespread the effects are.

Lauren, do you have any thoughts from your perspective, coming at it from the investment banking side of things, about any particular challenges in raising capital for women's health companies?

Lauren Edgerton: Yeah, I think it's going to be very similar to what Kathryne said. The more successful exits we have of women healthcare companies, the more dollars that are going to be put behind it. So what that means is, exactly again, what Kathryne said: going after segments or markets that are large and have reimbursement in them, having companies that have a clear path to getting regulatory approval, and being in guidelines. You don't necessarily want to be changing the standard of care, but you also need to add value to the healthcare system.

So, there are a lot of different trends—yeah, I guess a lot of different trends that would need to be considered or characteristics of either the test that's being created or the device that's being used when one is thinking about whether or not someone might want to buy that, or whether or not someone would want to take that public. Because every investor, even at the beginning, is ultimately thinking about how do we exit this? And so that's just something that founders—frustrating as that can be sometimes—is something that folks should always keep in the back of their mind.

I think the other thing, too, that people should realize a little bit about healthcare, I would say more than in other industries, which will make sense, is that people tend to invest in things that have impacted them directly. So, diabetes companies have been funded or started typically by someone who's had diabetes. You've got cancer or neuro companies that often have started by someone who's lost a loved one to either of those, or they have a history of Alzheimer's in their family, things like that. And so, if we have fewer women who have been impacted, right, as board members or investors, then you're just going to have fewer people out there putting money to work who have been impacted by these health conditions. And so that's part of where we have to start: getting more investors and getting more board members who are women.

How to Identify Promising Women’s Health Startups

Bridgette Keller: Yeah, that makes perfect sense. And you know, speaking of how you find those companies and how you decide what to invest in, Kathryne, how do you identify promising women's health startups? What are the key factors you're looking for when you're evaluating a potential investment?

Kathryne Cooper: So how I would evaluate a potential investment for women's health startup wouldn't be any different than I would for another startup. I would just say it's a different sector. It’s like looking at Med device versus healthcare IT, and maybe kind of within digital health. This is a solution for women's health, but the factors that go into evaluating there isn't some sprinkle of secret sauce for women's health companies only.

We look at a couple of things. We look at founder experience which we define in a number of ways, and this is a kind of select one or all from the dropdown menu. So, we look for founders with technical experience, meaning they're leading the technical aspect of their team and have experience in that regard. We look at experienced founders, so those who have founded one or more companies. We look at folks with clinical experience, which could look like, you know, I am a nurse, and I'm creating a solution for nurses.

At Jump Start Nova, and I in particular, evaluate startups in a variety of ways. I would say no one factor is over-indexed from another. So, we'll look at things like what makes up the founders of this company and what makes up the company and their approach. That’s the solution and the problem that they're solving for. When I want to understand that, I believe that the problem they're solving is truly a real problem in healthcare and, more importantly, that someone would pay to solve or fix. So, if there is no downstream payer, buyer, etc., for the solution, it's unfortunately not of interest to us as a venture fund.

I look for founders who have some sort of connection to their company in the way that they're solving the problem, but that can come from a variety of reasons. It can be from lived experience. So, Lauren touched on this a little bit. A lot of people start companies from something that happened to them. So, if you're a women's health company, maybe you have some connection to the problem that you're solving. Maybe you had an adverse outcome for maternal health, and you want to focus on that.

We also look at folks who have technical experience, clinical experience, or have founded more than one company. We also look at first-time founders. There's no preference for one or the other, but I want to group them in terms of where their experience comes from and what motivated them, most importantly, to start their company.

I don't believe there is something specific for women's health startups that we need to look for that is different from any other startup at Jump Start Nova. We're early-stage investors, so we primarily do seed investments and some Series A for seed-stage companies. We'll look for companies that are post-product market fit, meaning they've figured out what their problem is and who they're selling it to, and they’ve actually decided to buy it. That doesn't mean you have to have a ton of customers or a ton of revenue, but you need to have figured out what fits.

We also look for companies that can be cash flow positive after call between a seed and seed two or seed extension round. That may be asking for a lot, but we're really looking for companies with great business fundamentals that we can help with connections and our experience as partners, so they can grow substantially and not necessarily need to rely on having a funding round, you know, 18 months after the next funding round. The current venture environment is a little tough for folks in healthcare and beyond, and so we want to be very capital conscious in this capital-constrained environment.

Bridgette Keller: I think that's really helpful, and it makes a ton of sense. Kathryne, you touched on a really good point because evaluating women's health startups isn't any different than how you evaluate any other company. And it just goes to the point that we're talking about earlier that I raised. You know, typically, women's health has been sort of pushed to the side for other things. And we, you know, women's health issues and women's health startups need to be in there and be evaluated in the same way and in those same arenas as all of the other companies or all of the other tech-related or health tech-related startups as well.

Advice for Attracting Institutional Investment in Women’s Health

Bridgette Keller: So, Lauren, on the other hand, what advice would you give companies who are looking to attract institutional investment in women's health?

Lauren Edgerton: One, you want to make sure of what stage of investment you're looking for. Make sure to target those folks who invest at your stage, right? So, either seed investors, growth equity, private equity, institutional investors, or crossover investors. And so, for all of those, it's going to be very similar things that I would tell any client, which I think is going to align pretty well with what Kathryne's saying: you want to think about what the addressable market is, what your reimbursement strategy is, and your regulatory strategy. You want to understand what the capital is going to be used for, and what capital efficiency has been to date.

If you're looking at crossover versus public investors, they should be thinking about near-term profitability, whereas if you're in growth equity, you should be thinking about how much capital you need to commercialize to a certain scale.

I would also be thinking about how the technology differentiates and what the competitive landscape is like. On the crossover side, it's going to be about your gross margins. Another thing to really think about is data.

So, having all of those things and understanding where you need to be for each different type of investor within those confines or characteristics is going to be what helps attract one to institutional investors from the bottom up.

So, I would say having that business plan and that model and understanding that is key.

I think also, as anyone would say, is having the right network of institutional investors. So, whether or not you hire a bank to help you do that, whether or not you know someone in the investing space, whether or not you've had a prior investor in a company of yours, and now you're looking at this sector.

I think one of the big things from a women's health perspective, more uniquely, would be looking at private equity or growth equity shops that have invested in women's healthcare companies and successfully exited them. That tells you that they’ve done this business model, they know how it works, and they've been successful at it. So, they're more likely to do it again.

Also, looking at firms that have a focus on women's health or focus on maybe women-led companies, things of that nature, I think are pretty key to making sure to attract or find the right institutional investors.

But ultimately, a lot of it is going to come down to market, product differentiation, and financials.

Advice for Young Women Starting a Career in Investing in Women’s Health

Bridgette Keller: Thanks so much, Lauren. I think that's really good advice for companies who are starting to think about how to attract institutional investments. I just wanted to ask you both if you have any advice that you would give to young women who are looking to start a career in investing in women's health. What advice would you give them?

Lauren Edgerton: I think one of the easiest ways to become an investor, depending—this is more for college grads—is actually to do healthcare investment banking for a couple of years. Do your analyst years and then get your choice of private equity fund or VC fund or hedge fund that would then take you as a result of that. Now, a lot of people don't get that option or are unable to pursue that path, but I do believe that path is one of least resistance if you can make that happen.

Kathryne Cooper: I would tell them to just start. So, there are lots of ways to be an investor, right? You can be in a VC like myself, and be in investment banking like Lauren, or you can contribute to the investment side like yourself, Bridgette, as an attorney. There are lots of ways to work in and around capital allocation. But if becoming an investor in women's health is your goal, then you should do just that.

And it may seem like there is some sort of pre-prescribed path that you need to take to becoming an investor. You know, you worked in finance for a long time, and then you did X, Y, and Z, or you could say, “My path is maybe I had domain expertise in healthcare and then pivoted into investing.” Lauren has a very different path. Even on our call today, we have very different backgrounds, but we do something similar. And I say all that to say, sometimes I think people can be discouraged early on in their career because they don't feel like they have the exact credentials or haven't done the exact steps. But there really is no pre-prescribed path. You know, if you want to do something, you'll figure out how to do it. And for folks who are encouraging or discouraging on your path, as long as you are focused on what you want to do, we need more women's health investors. We need more investors in decision-making roles at firms who are women, and so please join the industry. We'd love to co-invest with you.

Bridgette Keller: Kathryne, I love that advice. Just go and do it. It's so true. I love it.

I think that's great. Then, the three of us came together, and we're having this conversation because it gives our listeners, especially young women who are thinking about a career in investing in women's health or someone who maybe wants to change focus, the understanding that there are so many different paths to go that route. Maybe you take a more traditional path, Lauren, like you were saying, and you get your investment banking year and then specialize, or Kathryne, like you're saying, just go and do it. You know, figure out what you love, what you want to be doing, and then, you know, find a way to do that and create your opportunities. Don't let things hold you back. So, I think that's really great advice. I really appreciate you both for sharing that.

Well, thank you both so much, Kathryne and Lauren, for joining us today on the Mintz Women Leaders in Healthcare series. Our discussion about investment in women's health has been fun and interesting. I'm so grateful for you both because, you know, knowing that there are so few women decision-makers and women partners in seed funds or investment banking doing this work makes it so important. We need to raise awareness because we need to ensure that women's health is being adequately funded and researched so that we can all access equal care.