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�鶹�� BioCapital and Heidrick & Struggles have concluded their ‘Fit for Future Growth’ pilot – a tailored programme aimed at helping early-stage biotech companies build value through increased awareness of the benefits, as well as the challenges, of working with diversity. During the pilot, three companies were introduced to concrete tools to support their creation and development of high-performing teams that will make them more fit for future growth, by using best practice recruitment insights and team management strategies around diversity, equity and inclusion.

How do you develop a biotech company where staff aren’t clones of the founding team? A company that welcomes employees from different professional and personal backgrounds, bringing diverse viewpoints and perspectives. And how do you build this while ensuring that the company still functions as a cohesive unit, delivering against demanding milestones on a tight budget? What other challenges must such early-stage companies overcome if they are to grow and succeed in a notoriously risky and competitive industry? To what extent are company founders aware of the difficulties they may face as they move from lab bench to boardroom? And, importantly, where do you begin?

These are some of the questions that have been occupying the minds of senior members of �鶹�� BioCapital, the biotech investment unit of the Lundbeck Foundation. The questions focus on how investors can best help their young firms, to ensure they grow strongly and sustainably into the future.

The ‘Fit for Future Growth’ initiative traces its roots back several years, to when work began on developing a sustainability strategy for �鶹�� BioCapital, as part of a comprehensive strategy for the entire Lundbeck Foundation, explained Rasmus Thomsen, Head of Sustainability at the Lundbeck Foundation.

“When we started the work, we quickly realised that this was not something that we at �鶹�� could do in isolation,” Thomsen said. “We therefore started a process of consultation with other stakeholders, including peers in the venture industry and – perhaps most importantly – our own portfolio companies. Through these consultations, we learned that sustainability means a lot of different things to different people and that any truly comprehensive strategy would need to be multi-faceted, covering topics ranging from access to medicine to environmental considerations.”

He continued: “We recognised that, for our own sanity and that of our portfolio companies, if you try to do too much at the same time, you risk doing nothing at all. We therefore decided to focus first on ‘People’. In part because it was a topic that really resonated with our companies and would have an immediate impact, and in part because it was an area where we could see the challenges ourselves. Importantly, it was also an area where we confidently could identify concrete solutions that would bring very tangible change and directly contribute to building stronger and more sustainable companies. Quite simply, anyone working with early-stage companies knows that one of the most important drivers of success is getting the team right.” 

A proactive approach to company building

Diversity is a topic that resonates with a lot of people and has gained a lot of attention in the last couple of years. But getting it right, while at the same time ensuring that the teams are efficient and high performing, can be hard, Thomsen argued.

“If you start off as three founders, when you hire the next person, you can easily end up hiring someone from you own network with a very similar profile to yours. Not necessarily as a result of a deliberate strategy, but as a consequence of the dynamic in the biotech industry, where there is little room for error and a significant premium placed on experience and personal recommendations,” he said.

For a considerable time, diversity, equity and inclusion (DEI) has been a guiding principle for human resources departments. Companies, large and small, are increasingly required to report publicly on aspects like the gender ratio at different levels of the organisation, or the ethnic balance.

But getting genuine buy-in can sometimes be tricky, Lars Gredsted, Senior Principal at �鶹�� BioCapital, explained. If DEI is just seen as a reporting requirement, companies can lose interest and fail to benefit from the real advantages of growing a more diverse workforce. There has to be a tangible business benefit.

As Christian Elling, Managing Partner of �鶹�� BioCapital, put it: “What concrete tools can we give our portfolio companies to build higher performing teams that can deliver more value in a time and cash-constrained environment?”

Thomsen added: “We set out to create a platform that would allow us to bring value to the companies, that goes beyond reporting and a tick-the-box exercise that still dominates the ESG area.”

To that end, �鶹�� BioCapital, together with Heidrick & Struggles, a leading provider of executive search, corporate culture and leadership consulting services, - decided to start a pilot programme working with three different-sized portfolio companies – Vesper Bio, NMD Pharma, and Notify Therapeutics. The pilot’s primary objective was for these developing companies to explore why they should aim to create a more diverse workforce, and to produce a plan for how they could go about doing it.

Together, these participants undertook a short series of in-person workshops, out of which they ‘co-created’ what amounts to a best practice manual for recruitment and building successful teams in early-stage biotech, named the ‘Future Fit for Growth’ playbook.

Gredsted stressed that because many biotech founders come from the lab, not the boardroom, “it’s not a given that they just know how to do this”. 

Why founders should care

So, why should growing biotechs care about developing a more diverse workforce?

“One: it’s expected of them, and reporting requirements increasingly demand diversity statistics,” Gredsted explained.

He continued: “Two: it’s the morally right thing to do – to put in place the procedures and culture that gives everybody a fair chance of making it in this business. And three: most importantly, there’s a competitive advantage – although measuring that is extremely complex”.

But what actually is the basis of this potential advantage? In his 1992 book The Diversity of Life, biologist E. O. Wilson argues that the greater the diversity of an ecosystem, the stronger it is. Something similar can be said of human organisations. Those dominated by one type of individual risk having a limited skillset, being slow to adapt, and falling foul of ‘groupthink’. By increasing the diversity of people, we can improve adaptability, resilience, and growth potential.

Gredsted puts it more plainly: “If several members of the senior management team have known each other since university, and all play golf together at the same club, that’s not ideal, is it? They may be very good friends and well aligned in their working practices – but what dynamic does that create in the management team and wider company, when some are perceived as being more equal than others or belonging to a tight knit inner circle?”

There are strong factors at play in most companies, not least small biotechs, unconsciously steering them to recruit individuals in the same image. There is the sheer power of personal networks. There is the overriding business necessity to fill a very specific role. There is the natural tendency to surround ourselves with similar people: we like them, because they are like us. And then there is risk-aversion.

Outlining a typical scenario, Gredsted said: “Imagine you’re in a biotech with seven people, and you’re hiring the eighth – as you really need a particular job done. Do you take a chance on somebody you don’t know? Or do you call your friend Peter, who says, ‘I worked with John, and he’s extremely good at that!’ You probably go with John. The smaller your firm, the less chances you take on the unknown.”

So, Gredsted explained, diversifying recruitment can be extremely challenging.

Hiring for culture add

Louise Triolo, Principal at Heidrick & Struggles, who designed and facilitated the workshops with her team, underlined, however, that while recruiting outside the comfort zone might seem more “challenging”, it was worth it.

During the workshops, Heidrick & Struggles introduced the participants to the concept of recruiting for ‘culture add’ rather than ‘culture fit’, meaning hiring people who add to a company’s skills and culture, rather than just conform to it – who have different backgrounds and think differently to existing staff.

Kyhl Triolo said: “This is an idea that smaller firms often haven’t really thought about, because they are preoccupied with finding people with certain technical competencies, who fit exactly into the role and, in most cases, who ‘look’ like them.”

In the short term, hiring for ‘culture add’ people could feel “uncomfortable”, she admitted. They often take longer to on-board, need more intensive management, do things differently, see things differently, and ask awkward questions. But ‘culture add’ is about looking at diversity in all its senses and bringing in fresh perspectives that lead to better ideas and solutions, she argued. Diversifying recruitment and creating a team that can tap into that ‘culture add’ rather than erase it, is the key to success. 

In the longer term, she said, those differences help create a more robust, culturally richer company that is better primed for future growth.

Chloe Arrowsmith Jensen, ESG lead for portfolio company NMD Pharma, said one of the main seeds the workshops had planted was the importance of hiring for ‘culture add’.

She said: “Yes, if you hire someone for ‘culture add’ they likely won’t fit in as easily: it's going to take more time. But that's the whole point. They aren't one of you. And what they bring, is something that you don't have.”

Louise Klem, lead research scientist at Vesper Bio, who also attended the workshops, mirrored the point.

“If you want to be successful, at some point you’re going to have to diversify your toolbox,” she said. She added that when confronted with the question ‘Who was your last hire?’, it wasn’t great to have to answer: ‘John, who I used to work with.’

Karin Lykke-Hartmann, professor and CEO of Notify Therapeutics, and one of the many transitioning from academia to biotech, said: “The greater the diversity of an ecosystem, the stronger it becomes. By increasing the diversity of people, we can improve adaptability, resilience, and growth potential.” 

All said they gained a lot from the workshops and were impressed with the tangible and practical nature of the advice they received.

“What was particularly attractive, was that it was so focused and specific,” said Arrowsmith Jensen of the project in general. Furthermore, she added, “The playbook itself has also been very well thought through, with easy-to-understand information that you can employ very easily.”

“During the workshop, we learned just how broad the term ‘diversity’ is,” said Lykke-Hartmann. “The challenging task planned by the team from Heidrick & Struggles had a significant impact, pushing us to think beyond our usual limitations – an essential step in understanding this important concept.”

Beyond gender diversity

Diversity has many faces, and while the most obvious measures of success might be raising the proportion of women in a workforce, or of ethnic minorities, Gredsted said other forms such as socioeconomic, educational, or professional background, as well as neurodiversity, should be considered too.

“Diversity should be a wider thing than simply one metric,” he pointed out.

While the ‘Future Fit for Growth’ initiative so far has been a pilot only, the next step will be to evaluate and find the best way to share it with other companies in the �鶹�� BioCapital portfolio. 

Elling concluded: “Ensuring portfolio companies are fit to grow sustainably in the future is not an easy task, but one that we at the Lundbeck Foundation consider essential – to meet our investment objectives and to reflect our 2030 strategy ‘Bringing Discoveries to Lives’.”

For the Foundation, an important task ahead will now be to invite its co-investors in the biotech investment community to discuss how the project learnings can be disseminated and shared with other biotech companies to help them build higher-performing teams and increase their chances of success in a global biotech industry where competition for cash and talent is endemic – and the winner often takes it all.