August 14, 2025
Article
Is Venture Philanthropy Right for Your Startup? Here’s How to Tell
Overview
At a time when federal funding is shrinking, healthcare startups are finding critical support from mission-driven venture philanthropies like the ADDF and LLS willing to back early-stage, high-risk science.
Nonprofit investors are stepping in where VCs pull back to offer capital, connections, and risk tolerance to early-stage healthcare innovators
Securing funding for a healthcare startup is challenging right now. Federal funding opportunities have been downsized or cut completely, and venture capital for life science, biotech, and healthcare companies fell by 20 percent year over year in Q1 2025.
But one funding source is quietly expanding its reach: venture philanthropies. These mission-driven nonprofit organizations like the Alzheimer’s Drug Discovery Foundation (ADDF) and the Leukemia & Lymphoma Society (LLS) operate a lot like venture capitalists (VC), yet they take on risks traditional investors often avoid like investing in research still in its earliest stages or with small prospective patient populations..
“ADDF is quite similar to VCs in that we expect market terms,” said Karen Harris, chief financial officer and head of mission related investments for ADDF. “However, as a nonprofit, we are able to take more risks than traditional VCs… . So, for us, really the most important thing is the science.”
Cure spoke with ADDF and the LLS about what it takes to secure venture philanthropy funding and how your startup can build a relationship with the appropriate nonprofits .
Why Venture Philanthropy is Timely and Worth Exploring
According to Lore Gruebaum, PhD, chief scientific officer for LLS, the funding available for biotech, life science, and healthcare companies has declined for several years recently. But, in response, more and more nonprofits are stepping into the venture philanthropic arena.
In fact, organizations often reach out to LLS to discover how to develop funding programs like the one it offers, especially since LLS helped pioneer the space. Subsequently, these nonprofits also are creating new funding opportunities for startups, she said.
“These opportunities can be very helpful for companies that at face value may be less attractive initially for traditional investors,” she said. “We can play a critical role in supporting [those] that are doing something that maybe is still viewed as too high risk or too early for traditional investors. And companies are starting to realize that these opportunities exist and that they offer more than just funding.”
Five Benefits of Venture Philanthropy
Startups can reap many benefits from pursuing capital from venture philanthropies like ADDF and LLS. Here are five:
1. Venture philanthropies offer investments.
Unlike traditional nonprofits or charities that provide grants, venture philanthropies make investments in research projects, clinical trials, and early-stage drug discoveries or treatments. “Instead of giving grants, we make investments, and any profit or returns are invested directly back into science, which ensures a steady stream of funding for new science,” Harris said.
2. Venture philanthropies help startups avoid the “valley of death.”
The valley of death is the period of time when a startup has trouble securing funding and promising ideas can fail due to lack of resources. But capital from venture philanthropies can help fill that gap. “We are stepping into some of these spaces and are working with companies that are not ready for prime time, if you will,” Gruenbaum said.
3. Venture philanthropies are able to take more risks.
While every venture philanthropy will thoroughly evaluate the science behind a startup and do its due diligence, the organizations also can take more risks and offer funding to startups that may be overlooked by traditional investors, said Gruenbaum.
4. Venture philanthropies provide engagement and support.
Venture philanthropies often partner more closely with the companies they are funding. “It’s good for a company to work with venture philanthropy before they step into the VC market because they tend to get a lot of good advice [along with the funding,]” said Harris. Startups also will make good connections and receive help with strategy, budgeting, and positioning, she said.
5. Venture philanthropies build sustainability.
Venture philanthropies often will provide leadership coaching, check in more regularly, and guide startups and researchers on how to position themselves so that they become sustainable, Harris and Gruenbaum said.
Is Your Startup the Right Fit for Venture Philanthropy?
Not every researcher or startup is the right fit for a venture philanthropy. First and foremost, your startup—and the science behind it—needs to align with the mission and goals of the venture philanthropy, Harris and Gruenbaum said. So, do your research ahead of time to ensure you are a good fit.
You don’t want to waste time developing a proposal and then get rejected because you didn’t take time upfront researching, said Harris. Also, look at the philanthropy's portfolio to see what it already owns and what size investments it tends to make.
“Every investment is really driven by our mission [at LLS], which is to improve the lives of patients, and to find a cure for blood cancer,” Gruenbaum said.
Good candidates also have several things in common, according to Harris and Gruenbaum. First, the science or data is there both in the short-term and in the long-term. Second, you are able to differentiate yourself from others in the market and demonstrate why your research or approach is novel, and more importantly, could do some good. And, third, your startup has some initial funding or capital.
“We like it when a company has already raised some money,” said Harris. “It’s very helpful to come with some capital [such as from institutional or angel investors] so that ADDF is not the first or only investor.”
Here are seven other characteristics that Harris and Gruenbaum said startups often have that make them a good fit for venture philanthropies:
Capable, passionate leader or leadership team
Clear vision for growth and impact
Scalability, or the potential to grow
Willingness to collaborate and accept guidance
Well-designed and thought-out pitch deck
Strong financial plan that demonstrates sustainability
Quick response time to questions and requests for more information
“I would encourage every startup to put on their patient glasses and ask what am I providing here that could be a real benefit to patients,” Gruenbaum suggested. “Then, really take a good look at who is active in that space. There are so many benefits that you may not even anticipate; and it’s not just about whether or not they have a grant that they provide.”
Tips for Pitching Venture Philanthropies
When approaching a venture philanthropy for funding, spend time developing a strong application and pitch deck. Also, clearly communicate the need you are addressing and that you have strong data, said Gruenbaum. “What sometimes slows things down is that the company does not have the data room properly set up or not set up at all.”
You also should have a strong summary slide that establishes who you are, how you are unique, and why investing in you is attractive, she said. Be clear about what you want to do or where you want to go with the funding and which medical need you are addressing. It’s also important to explain the science and why you selected this particular disease area, Gruenbaum added.
“Show that you are aware of what the current treatment landscape looks like, but also what’s in development and how you are going to be competitive,” she said.
Your pitch deck should also have a game plan for current funding and then scenarios on how additional funding will be pursued and what it will be used for as you scale the company, Gruenbaum said. The process of getting funding from a venture philanthropy will vary from proposal to proposal. But typically you can expect the process from application to funding to last about two to three months, depending on the complexity, thoroughness, and thoughtfulness of the application and pitch deck, said Harris and Gruenbaum.
Finally, be sure you present bios of your team and highlight why they are the right choice to carry out the research, said Harris. “We look for a strong management team that is going to be able to drive the process forward and we look for a well-thought-out financing plan. We like to know that when we invest in a project that the investment will take the company to a stage where they are then able to get future funding.”
How to Find the Right Venture Philanthropy For You
Aside from research and word-of-mouth, you may need to do some networking to find the right venture philanthropy. Try attending conferences, participating in patient networking groups, offering to speak at different events, serving on a panel, or even writing an article on LinkedIn about your startup or research, said Harris.
“[The goal] is to get a warm contact if you can so you are not reaching out to venture philanthropies cold,” said Harris. “It’s really helpful rather than emailing blind to have someone who can introduce you.”
12 VC Philanthropies to Check Out
Angelman Syndrome Foundation / FAST (Foundation for Angelman Syndrome Therapeutics)
Breakthrough T1D (formerly Juvenile Diabetes Research Foundation)