Why Five Spinal Cord Injury Organizations Teamed Up to Launch a New Venture Philanthropy Fund

Venture philanthropy, which borrows the venture investment model from the world of for-profit business to achieve philanthropic goals, may not be the solution for every ill, but if there's one area where it makes resounding sense, it's in medical research and healthcare.

The drug and therapeutics development pipeline in the U.S. and Europe typically involves companies that conduct the lengthy and costly clinical research and tackle the regulatory approval steps needed to take a drug or technology from the laboratory to patients. Capital is crucial to research-based companies, particularly early-stage companies — and that’s where venture funding from philanthropy can be uniquely catalytic.

Raising money is difficult for companies in the uncertain world of medical research and development. But when foundations with strong scientific bona fides invest in an outfit, it’s an imprimatur that goes a long way toward giving other backers in philanthropy and the private investment sector the confidence and direction they need to pull the trigger when it comes to their own money.

That’s why we took notice when five philanthropic organizations in the U.S. and Europe, all of which share a focus on the devastating effects of spinal cord injury, partnered to create a venture fund that will back companies developing therapies and technologies to aid people living with paralysis and other health issues associated with injuries to the spinal cord. The new entity, SCI Ventures, recently launched with an initial commitment of $27 million, and anticipates raising a total of $40 million by the end of the year.

The fund is the brainchild of leaders at the Christopher & Dana Reeve Foundation, which partnered with four top organizations focused on spinal cord injury: California-based Wings for Life, U.K.-based International Spinal Research Trust, the Sweden-based Promobilia Foundation and the Shepherd Center in Atlanta.

SCI Ventures has a big challenge ahead of it: People with spinal cord injuries desperately need new treatment options. More than 15 million people around the world live with such injuries, yet few medical, surgical or technological solutions exist to address their health needs and quality of life. The most obvious issue, paralysis, may include partial or near-total loss of movement, but also loss of bowel, bladder and sexual functions, among other life-altering impacts. Lifetime average costs to manage care for people with these injuries range from about $3 million to $6 million depending on the extent of the paralysis.

The Christopher & Dana Reeve Foundation, which drove the establishment of the venture fund, is the country’s best-known spinal cord injury philanthropy. Established by the late actor and his wife, the Reeve Foundation team had long been tracking other venture funding efforts within the medical and healthcare philanthropy space, according to Maggie Goldberg, the organization’s president and CEO.

Those venture philanthropy initiatives included Breakthrough T1D, formerly known as Juvenile Diabetes Research Foundation, now a venture fund entirely focused on developing and commercializing treatments for Type 1 diabetes. Another inspiration was the Cystic Fibrosis Foundation: That organization pivoted to a venture funding approach in the late 1990s. About 25 years ago, it invested $40 million in a drug company now known as Vertex Pharmaceuticals to support the development of the first drug that actually corrected the core genetic defect in people with CF. The FDA approved the drug in 2012, and the Cystic Fibrosis Foundation continued to invest in other companies, which produced additional effective drugs.

Those new drugs were game-changers for people with CF, vastly improving health and increasing life expectancy by decades — well into their 80s for some patients. And there was the money: In 2014, the CF Foundation sold royalty rights to drugs developed by Vertex for an amazing $3.3 billion; a few years later, it sold its remaining stake in the company for at least $575 million, plus potential future millions — all money that can go toward additional research to treat and cure CF.

Keeping tabs on the success of these two venture funders, the Reeve Foundation, which had already invested in a couple of private companies, decided it was time to scale up its venture philanthropy strategies. "The concept of playing the role of catalyst and lowering the risk of investment was a way to take innovation from the lab to the real world. And we saw ourselves as the convener that could do that," Goldberg said.

Prior to the formation of SCI Ventures, the Reeve Foundation had backed a couple of companies in the spinal cord injury space. One is ONWARD Medical, which provides targeted stimulation of the spinal cord to restore movement and other functions, alone or in combination with brain-computer interface technology for thought-driven movement. Another investment target was Axonis Therapeutics, which advances drug discoveries for neuron revival and neuromodulation. Those became two of four investments initially announced, along with Sania Therapeutics, a developer of gene therapy for dysfunctional neural circuits, and technology company Augmental, which is developing an in-mouth interface to enable paralyzed people to operate and interact with computers. SCI Ventures intends to eventually support up to 20 companies.

Though a wholly owned subsidiary of the Reeve Foundation, SCI Ventures will have its own governing body, board of directors, investment committee and scientific advisory board.

"The ultimate goal is to bridge the gap from bench to bedside," Goldberg said. "SCI Ventures will be an early-stage investor. Companies looking for funding need fast decisions, and we hope our seed investment will act as a catalyst to attract other investors to back them and see them all the way through to commercializing products." As a nonprofit evergreen fund, SCI Ventures will channel any profits from its investments back into its corpus for the eventual support of other companies in this spinal cord injury space.

As in many areas of medical research, breakthroughs developed for one condition may have broader, unexpected benefits. "My hope is that these investments will enable enough progress that they will impact not only people living with spinal cord injury, but also people living with other neurological issues, like stroke, MS, ALS or Parkinson's,” Goldberg said. “Anyone that has mobility impairment could potentially have their lives improved through the investments we're making.”

IP has been writing about the venture philanthropy movement for the better part of a decade, as the model has continued to intrigue many funders who believe the ones that often prove successful in the business world can drive progress for many of the causes that philanthropy targets. Venture philanthropy as most people understand the term goes back at least to the late 1990s. Early examples included the Roberts Enterprise Development Fund, which invests in organizations that help people overcome barriers to employment, and the NewSchools Venture Fund, which backs innovation in education. (For more background on venture philanthropy, see the piece by IP's David Callahan, linked above.)

There has been some debate about whether venture philanthropy can move the needle any more effectively than traditional philanthropy. And some of the key tenets that venture philanthropy brought from the for-profit investment world — like the idea that funders should provide startup organizations with unrestricted funding and capacity-building support — have since gone mainstream in the philanthropic conversation. Obviously, support for basic biological and other sciences — the sort of grantmaking to academic scientists and other researchers that’s typical in philanthropy — will always be crucial. But when it comes to the companies carrying medical innovations and treatments through to approval for use in the real world of the clinic, venture philanthropy makes a great deal of sense.

Featured