Written by Will Greene, board member, Foundation for Prader-Willi Research,  and a caregiver for a child with Prader-Willi syndrome.

Early in my journey as a parent of a child with a rare genetic disease, I stumbled upon the story of the Cystic Fibrosis Foundation (CFF), a nonprofit that helped pioneer the concept of venture philanthropy in rare disease research.

At the time, I was still new to the world of rare disease advocacy. I had recently launched my first fundraiser for the Foundation for Prader-Willi Research (FPWR), a nonprofit dedicated to developing treatments for my son’s condition, but I was only just beginning to explore how to best deploy these funds.

This exploration led me to Breath from Salt, a 2020 book by science journalist Bijal P. Trivedi about how the cystic fibrosis community transformed a once-fatal disease into a manageable condition for most patients. The story was remarkable in many ways, but one aspect that stood out was CFF’s bold approach to investing in private biotech companies.

CFF’s success with this approach was legendary: through targeted investments in early-stage biotechs, they not only accelerated the development of breakthrough therapies for their community, but also secured a royalty agreement that ultimately generated USD $3.3 billion for the foundation in 2014. This windfall was then reinvested into additional research, giving CFF the financial firepower to advance even more treatments.

While no other rare disease nonprofit has ever matched CFF’s extraordinary financial returns, many have leveraged venture philanthropy to drive scientific innovation and therapeutic progress. Yet venture philanthropy also comes with significant risks and challenges, requiring careful strategy and execution.

What is venture philanthropy?

At its core, venture philanthropy is the application of venture capital principles to philanthropic efforts. Unlike impact or ESG (environmental, social, and governance) investing, which seeks to generate both societal progress and financial returns, venture philanthropy prioritises advancing a social mission, with financial returns as a secondary benefit.

In rare disease research, venture philanthropy deals can take many forms. A common approach is for a nonprofit to take an equity stake in a company that is developing a therapy of interest. If the company succeeds, the nonprofit can potentially sell its equity, reinvesting the proceeds into future research.

If no company is working on a condition or a modality of interest, a nonprofit patient group may also choose to create one itself. This was the case with the Foundation for Angelman Syndrome Therapeutics (FAST), which launched GeneTx Biotherapeutics LLC in 2017 to develop a therapy for Angelman syndrome. When the company was acquired by Ultragenyx in 2022, FAST retained a significant ownership position, securing substantial funding for further research.

Another common approach is funding a specific research programme in a company that develops therapies for multiple diseases. CFF used this model in several key investments, supporting only cystic fibrosis research rather than their partner’s broader pipeline. A more recent example is the Rett Syndrome Research Trust’s December 2024 investment in ProQR, a publicly traded Dutch biotech developing RNA-editing therapies for Rett syndrome and other diseases.

“Funding industry programmes can be an effective way to incentivise a biopharma company to put their technology to work for a disease indication that they normally would not have chosen,” says Monica Coenraads, CEO of the Rett Syndrome Research Trust. “It’s important to not only vet the science but to also properly vet the funding agreements. Having access to experienced business development advisors and lawyers is critical.” 

Rare disease nonprofits often target early-stage, high-risk programmes that lack sufficient capital from traditional investors. They are typically seen as mission-driven strategic partners who can bring more than just capital, offering community insights, clinical expertise, patient registry data, and other critical resources.

Venture philanthropy extends beyond direct investments in private companies too. Some nonprofits aim to secure rights to intellectual property generated from academic research studies. Others explore ways to monetise assets, such as patient registries or data analysis tools, to create sustainable revenue streams that further their mission.

Lessons from the Foundation for Prader-Willi Research (FPWR)

As a member of the board at FPWR, I’ve had a firsthand look at its venture philanthropy investments, which span a range of deal structures and outcomes. While the specific terms of most investments are confidential, FPWR is committed to sharing big-picture insights and lessons learned from its experiences.

Founded in 2003, FPWR made its first venture philanthropy investment in 2014 when a private company approached the organisation to help fund a Phase 2 study of a PWS medicine. The two parties signed an agreement entitling FPWR to a share of future revenues if the medicine is successfully commercialised.

“We tend to be relatively small investors in the companies we support, but deals like this enable transfer of FPWR knowledge and resources that can be valuable for the companies working in our space,” says Susan Hedstrom, executive director of FPWR. “Our ultimate goal isn’t to make money, but to see progress in PWS therapies.”

Since that first deal, FPWR has made seven additional venture philanthropy investments. While some will take years to mature, a few already show promise to advance new treatments and generate revenues to sustain future research.

One example is Aardvark Therapeutics, a company developing small-molecule therapeutics for metabolic diseases, including a Phase 3 programme for PWS. Since 2021, FPWR made two equity investments in the company, which recently went public in February 2025. Following the IPO, FPWR is legally obligated to hold its shares for a lock-up period of at least six months. After that point, it can either continue to hold its shares or sell them to fund further research.

Other investments have been less successful. In one case, FPWR backed a PWS research programme at a company developing multiple therapies. When the PWS programme was discontinued, FPWR had to write off the investment, despite the fact that the broader company was ultimately acquired by a major multinational.

“One of the lessons from that experience was that we needed to consider carefully whether a company seeking investment is truly committed to the PWS community,” adds Susan. “Small biotechs can sometimes change hands multiple times and shift their strategy in ways that are hard to predict, so we’ve learned to plan for these contingencies and structure our contracts accordingly.”

Overall, venture philanthropy investments still constitute less than 5% of FPWR’s total research spend over the years. For our community, many of the most important research projects are simply too fundamental and unlikely to generate marketable IP to make an issue of ownership. In the right situations, however, venture philanthropy enables the right alignment of incentives to justify the extra effort it entails.

Emerging trends in venture philanthropy

Beyond FPWR’s experience, the broader landscape of venture philanthropy in rare disease research offers varied and evolving models for investment. For example, some medical nonprofits have established dedicated venture funds and hired full-time investment managers to oversee their portfolios, enabling them to pursue their mission while attracting other sources of private and philanthropic capital.

Another growing trend is rare disease nonprofits spinning out and launching their own biotechs. Creating a biotech allows patient groups to maintain more control over drug development, but also comes with added financial and operational risks, as well as potential concerns about conflicts of interest.

While FPWR has considered this path and remains open to it in the future, the organisation has not yet launched any private companies. It is, however, one of the first rare disease nonprofits to run its own interventional clinical trial on a medical technology that showed promise in early-stage studies—a vagus nerve stimulation device that no private company is likely to develop for PWS, even with external funding from FPWR.

As more rare disease nonprofits explore venture philanthropy, they will continue to refine their approaches, learning from both successes and setbacks. With the right strategy and counsel, patient groups can shape the future of rare disease treatments—turning scientific breakthroughs into life-changing therapies.

Will Greene is a member of the board at the Foundation for Prader-Willi Research and a caregiver for a child with Prader-Willi syndrome. Follow him on LinkedIn for insights on rare disease research, advocacy, and innovation.

To learn more about the Foundation for Prader-Willi Research please visit: fpwr.org and follow them on social media

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