Marcus Whitney, founding partner, Jumpstart Health Investors has spent the last 20 years building organization and making deals. As one of the founders of Jumpstart Foundry, he made some 80 investments in the first couple years.
To make such a high number of investments, Whitney says you have to leverage technology to be able to scale your data collection and data assessment model.
“We took an approach not dissimilar from online mortgages where we wanted to collect a lot of data and we used some algorithms to try to increasingly improve our ability to assess deals before we even talk to the person,” he says. “It was a way for us to manage our own biases. VC is full of bias and so the more data-driven you can be, hopefully that starts to mitigate some of the bias issues. Leveraging technology was a really big part of how we did that.”
The other factor in his investment activity is network. Whitney says he visited Chicago, Austin, Houston, San Francisco, New York, D.C., L.A. and Denver, places where there are strong health care innovation clusters that also have their own entrepreneur centers.
“We went there and we started writing checks,” Whitney says. “And what happens is when you go into these communities and you tell these people, ‘Hey, we're looking for the best innovation,’ and then you follow up with a check, they will then start referring deals back to you. That's where you want to be. You want to be in that position where you get a reputation as a check writer and people will take you seriously and actually refer deals to you.”
Whitney’s investment decisions were also driven by the entrepreneurs running the ventures. He says entrepreneurship is a great American trait, something that is fundamental to the development of the country. He says if you’re serious about being in venture capital, you have to be serious about trying to unpack what entrepreneurship is really about — the fundamental things, the personality aspects, the best practices — to find the commonalities for successful entrepreneurs.
Those who run venture funds are also entrepreneurs. That’s because they’re not just investing their own money, they’re investing other people's money.
“So it is a business,” he says. “You have a customer — it's your limited partner — and it's your job to return outsized returns for them.”
Whitney spoke at the Nashville Smart Business Dealmakers Conference about his newest fund, Jumpstart Nova, which looks to tackle the intersection of health care and equity, as well as his sense of Nashville’s early-stage community. Hit play on the video above to check out the full conversation.