‘Something is off here’: Black biotech entrepreneurs still struggle for funding as the industry pledges to diversify

SAN DIEGO — Paul Mola tried his best to keep cool. But inside, he was reeling.

On a mid-February afternoon, he spoke to a room of students and San Diego life science leaders about his journey as a Black entrepreneur and founder of a local biotech company. As the CEO of Roswell Biotechnologies, “I truly try to have a team that is empowered, where they feel supported,” he told the audience.

None of them knew that two days later he’d lay off nearly half his company after failing to raise enough money.


Those cuts slashed an already lean team of 44 down to 24, prompting hugs, tears, and a nagging question across the company: How had it come to this? Roswell had unveiled its first product a few months ago, and the firm had just published a paper on its technology, an innovative microchip built to help researchers diagnose disease and discover new drugs.

“Something is off here,” Mola told STAT. “It’s hard for me to explain why I cannot get funding when everything else is really coming together nicely. Also, it’s interesting that I can get funding from abroad but not here.”


He can’t shake the feeling that his race is a factor, even if it’s hard to say for certain. What is clear is that people like Mola remain rare in biotech, both among the ranks of industry bigwigs and the investors who hold the purse strings.

Over the past year and a half, diversity, equity, and inclusion have become buzzwords in biotech, as they have in so many other industries. But Black entrepreneurs still struggle for support, funding, and recognition. They cite everything from unconscious bias by investors and colleagues to limited access to helpful networks and resources.

San Diego is a microcosm of those challenges. It’s now hoping to be a model of the solution, with a slate of new and planned programs to assist diverse founders. Whether these efforts succeed — and whether they’re sustained — will determine whether one of the nation’s top biotech hubs can be as forward-thinking with its workforce as it is with its science.

“We want to make a big impact that lasts for generations,” said Mike Krenn, CEO of Connect, a nonprofit that supports startups. “If what we’re doing actually works, I think we can take the playbook and give it to Cincinnati, Pittsburgh, and Arizona, because it’s a formula that can be replicated.”

‘You’re not set up for success’

The timing of Roswell’s layoffs couldn’t have been more jarring.

In November, the company debuted its first product, a microchip that wires molecules directly into circuits. The device, built via the same manufacturing process as the chips in your phone, is about the size of a pea and jam-packed with thousands of sensors. Each sensor can detect molecular interactions almost instantaneously through subtle changes in the device’s current.

Mola said the chip could be used for everything from DNA sequencing to disease diagnosis and drug discovery. He likens the product to Intel’s first microprocessor chip, which transformed the computing world 50 years ago. That’s a bold claim, but one he said is based on sound science, adding that Roswell published a paper in January describing its technology in the Proceedings of the National Academy of Sciences. Harvard geneticist George Church sits on the company’s scientific advisory board.

“It’s hard for me to explain why I cannot get funding when everything else is really coming together nicely.”

Paul Mola, CEO of Roswell Biotechnologies

The plan was for Roswell’s chip to enter the market by the end of 2022. There was just one problem: The company was running out of money, fast.

The biotech had raised around $60 million since its founding in 2014 from a mishmash of high net-worth individuals and other companies, many of them in the Middle East. Not one dollar came from venture capital. But now that Roswell needed another $100 million for its next stage of growth, tapping the deep pockets of VCs became essential.

In the early days, Mola struggled to get investors to call and email him back, let alone fund Roswell. And in this latest round, VCs said they were hesitant to bankroll the company because they weren’t sure there was strong commercial interest in the product. But Mola suspects they wouldn’t be so skeptical if he looked more like the typical biotech CEO.

“As a Black entrepreneur or an atypical entrepreneur, because you’re not getting the ‘smart money’ in early, you’re not set up for success,” he said. “You go into this loop of hoping that they’ll come through, and you end up here.”

He’s not the only one, noted Deldelp Medina, executive director of Black & Brown Founders, a national nonprofit that supports entrepreneurs of color.

“I’ve heard that story [like] 50 million times,” she said. “I know that story. I know how it ends.”

Just 1.2% of venture capital goes to Black startup entrepreneurs, according to Crunchbase, a company that compiles business information. It doesn’t help that the VC community suffers from its own dearth of diversity. About 4% of employees at venture firms are Black, according to the latest survey from Deloitte and the National Venture Capital Association. Hispanic people and women are also underrepresented in these firms — they make up 7% and 23% of the VC workforce, respectively. Crunchbase figures from 2020 show that just 2.3% of venture capital went to firms with women founders.

Those disparities shape how investors dish out dollars, according to Medina.

“It’s about who you know, and who you trust,” she said. “The reality is that we’re not always seen as trustworthy with money. We’re seen as consumers. We’re not seen as creators. And that’s a huge problem.”

It’s a problem Stanley Lewis is well-aware of. He’s the head of A28 Therapeutics, a cancer-focused startup. His co-founder, Tom Kottler, is white. The two have frank conversations about which of them should meet an investor based on whether they think that person would be comfortable around a Black CEO.

“Sometimes we say, ‘You know what, I think there’s a company that has shown the desire to work with diverse CEOs,’” Lewis said. “And then there are those where you see that they’ve never ventured outside of people who look like them. And for those, we tend to send Tom.”

Mola reviews notes with Roswell colleagues Raymond Lobaton (middle) and Carl Fuller. Ashley Waters for STAT

A long way to go

When Mola founded Roswell in 2014, he was a first-time entrepreneur, coming off stints at what was then Life Technologies, where he says he helped shape the company’s business strategy and use of DNA sequencing, and Roche, where he was a technical consultant. He spent much of his first several months as a founder stumbling in the dark.

“There was no infrastructure to support me,” he recalled. “I did not have the network. I did not have the mentors. I did not have any of that.”

Some resources simply weren’t on his radar, and he wasn’t on theirs. That includes groups like Connect, which supports San Diego’s entrepreneur community by linking founders with mentors, investors, and more seasoned execs. The nonprofit has programs that have helped startups raise hundreds of millions of dollars, but few of those founders have come from underrepresented racial and ethnic groups.

Regina Bernal hopes to change that. She joined Connect in November to lead its inclusion efforts. In September, the organization will launch a four-month program that will run twice a year, each time bringing in 25 life science and tech workers nominated by their employers to create a support group. Participants — women and people of color — will discuss shared challenges, conduct on-site visits to companies, meet CEOs, and get hands-on experience advising other firms. The program is meant to give participants the tools they need to rise through the ranks of their current employers or start their own ventures.

“We’re serious about this,” she said. “We don’t want to check a box.”

Bernal is also putting together a list of VC firms for whom supporting companies with diverse founders is part of their investment strategy.

To Sarah Richardson, founder and CEO of Bay Area biotech MicroByre, that’s a commonsense strategy.

“As a biologist, my advice to everyone who’s in a position to take bets on people is to diversify their portfolio for their own strength,” she said. “We’re an ecosystem. It takes many kinds to make this work.”

Biocom California, a statewide life science trade group, is also grappling with how to make the industry more inclusive. It helped organize the panel Mola spoke on, and, last year, publicly pledged to diversify its own board and collect data on the demographics of the state’s biotech workforce, among other commitments. President and CEO Joe Panetta said it’s been an ongoing learning process.

“I don’t think we knew squat about this a year ago,” he said. “I think we all thought, ‘What do you mean? We all celebrate diversity.’”

Since the pledge, Biocom’s board has grown to include more women and people of color. And the organization released its inaugural diversity, equity, and inclusion report, though the report doesn’t provide data on the state’s life science workforce, perhaps because only 13% of surveyed companies provided this information.

Companies have also been slow to join the pledge, with about 100 signatories so far. The trade group represents more than 1,500 organizations. Panetta said he’s not sure why the response has been lackluster.

Mola’s theory? Companies are afraid of being held accountable.

For now, he’s working to ink collaborations with researchers and other companies interested in testing out Roswell’s chip. Those deals are part of a bid to show investors that there’s commercial interest in the product.

In the long run, he thinks the key to progress is having more examples of successful Black CEOs who’ve started a company, led it to a successful exit, and then done it all over again. Such serial entrepreneurs often become investors themselves, seeding biotech hubs with new ideas and the cash to get them off the ground.

“Then you’re behind the wall and you can open the door and let others in versus having them scour the wall,” he said.

A28 Therapeutics’ Lewis agrees. He’s still a relative newcomer to San Diego’s biotech scene, having moved from Texas in 2018. So far, he’s been encouraged by the willingness of groups like Biocom to connect him with resources.

“Now, I haven’t raised any money yet,” he added, laughing. “The check hasn’t been written or cashed.”

Then again, he just founded his company in December. And he sees sincerity in these recent efforts — even as he also sees all the work still to be done.

“Biotech has a long way to go in terms of improving its record of helping Black entrepreneurs feel like they belong,” he said, “giving them the dignity and respect of their training and their education, and not holding it against them that they haven’t done things before that they haven’t had the opportunity to do.”

Source: STAT