For one accelerator, improving healthcare startup diversity means taking on the challenge of removing bias from the screening process
Incubators and accelerators and some investors are increasingly trying to support minority-led businesses and encourage more women to become entrepreneurs. But from the perspective of the Digital Health Accelerator at the University City Science Center, part of the way towards achieving this is to remove any information from applications that could bias the screeners. Even their names.
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The DHA created a blind initial application process that focuses on the founders’ ability to communicate their idea with the goal of removing biases associated with how screeners perceive the founding team.
The accelerator has had three sets of cohorts. Seventeen of the 20 graduates remain in business, creating over 180 jobs, $21 million in revenue, and $47 million in follow-on funding (and growing), with two exits. The accelerator is designed to take in startups with prototypes and enable them to commercialize byselling their products and establishing corporate relationships.
“With an 85 percent success rate, measured by operational assets and continued growth, DHA stats are among the highest ranked accelerators in the country,” a statement from the Science Center said.
Aron Starosta, the program director and architect for the accelerator, is not new to the process, having built accelerators on four continents over the last 10 years. He described how the DHA sets itself apart through its process for screening companies. The goal is to even the playing field and improve diversity, while also ensuring that the best ideas win. To help achieve this, the accelerator uses a crowd-sourced selection process that emphasizes diverse backgrounds of the committee members and a cross-section of the healthcare industry.
The first step in the application is double-blind, removing any identifying information about the founding team or the origins of the technology. The idea is to zero in on two questions for reviewers to consider for each applicant: How does a company talk about their product? Is the idea interesting?
The process challenges the traditional way companies are vetted by investors. The first question investors tend to focus on is the management team. Others seek validation in identifying other accelerators in which the startup has participated. That screeners are expected to focus on the idea first has led to a certain discomfort level that has required some screeners to be replaced in the past few years.
Eamon Gallagher, a program director who works with other startups within the University City Science Center, acknowledged that the DHA’s approach tends to turn the process of selecting companies on its head. He noted there are a few different biases that people bring when they assess companies and it can come in a few different forms. People draw conclusions based on the information they are presented with, whether that is gender, ethnicity, a serial entrepreneur or an alma mater.
The kind of approach Gallagher refers to has been used by orchestras. Some have adopted blind auditions to narrow the gender gap by having applicants perform behind a screen with their names and gender withheld.
Building a 20-person selection committee takes a lot of work. “We pick people who pick for a living. That’s a big deal because these tend to be people who are comfortable having opinions,” says Starosta.
It’s not a coincidence that the people invited to be screeners for the accelerator applicants are those who vet startups and new technologies at their own institutions, be they other accelerators, pharma and medical device companies, health systems, or investment firms.
“They usually don’t occupy the C-Suite at their organizations. They may not be highly placed but they are highly relied upon,” Starosta notes.
Consensus is an important component in the screening process. When just a handful of screeners think a company has a good idea, it’s interesting. But when 15 reviewers with a diverse analytical background share that opinion, the accelerator invests up to $50,000 in each of their companies.
Although the Science Center is pleased with the progress it has made since the launch of the DHA three years ago, there is room for growth. Its approach of creating a blind initial application process that forces screeners to focus on the founders’ ability to communicate their idea and rid the process of biases associated with how screeners perceive the founding team has been a bold move.
Diversity is challenging to get right because the DHA is as interested in getting competitive healthcare businesses as it is in ensuring they represent a variety of demographics. Although Hispanic, Indian and women-led companies figure prominently in its cohorts, that’s not the case with African-American-led businesses yet. The DHA also want to ensure a competitive environment so that entrepreneurs strive to hone their products and strengthen their companies.
The bigger picture is that the DHA and the Science Center views itself as part of a wider effort to continue to grow Philadelphia as a hub for digital healthentrepreneurs and they are looking at forming new partnerships to ensure sustainability and growth for the entire region. That will require more of the founders of healthcare startup success stories to reinvest in the region, as they have done in other areas such as Boston and the Silicon Valley. The DHA is betting its cohort grads will play a crucial role in fulfilling that goal.