Karen Harris and Mahesh Narayanan on Why Alzheimer’s Startups Still Struggle to Raise Money

Alzheimer’s science is finally moving. Two disease-modifying drugs are approved. Two blood tests are approved. And the companies working on what comes next still cannot raise money at the earliest stage.

That gap is the subject of this conversation. Lori Ellis sits down with two investors who fund brain health from opposite ends of the capital stack: Karen Harris, Executive Director of Mission-Related Investing and Finance at the Alzheimer’s Drug Discovery Foundation, and Mahesh Narayanan, Managing Partner and Founder of Neuvation Ventures. They do not entirely agree about how much has changed, and the disagreement is the useful part.

Why neuroscience became the hardest early-stage money to raise

Harris frames the moment as genuinely improved. Two disease-modifying drugs have FDA approval. Two blood tests have FDA approval, and she expects those to enable earlier detection, better monitoring of treatment, and leaner clinical trials. Pharma has been doing Alzheimer’s deals. Her read is that venture capital eventually follows pharma.

Narayanan is more blunt about why it got this hard in the first place.

There’s just been too many failures, to be honest. And whether that’s done by big pharma, whether it’s done by smaller companies, it just hasn’t been enough to show a lot of major capitalists that there’s returns in the neuro space.

His point is not that investors were irrational. It is that the track record earned the caution, over a period he puts at roughly fifty years. What he argues has changed is the last five: more approvals, and more acceptance of these drugs as standard of care.

The commercial question scientists defer for too long

Both investors converge on one failure pattern, and it is not scientific.

I think what I like to see most is a scientist who also understands that this has to be a commercial venture as well.

Harris adds the reason it is so easy to get wrong in this particular field: with Alzheimer’s, commercialization is far enough away that founders forget it is coming. The distance between a promising target and a paying customer is measured in many years, so the commercial work feels like somebody else’s problem until it is suddenly the only problem.

Narayanan puts the same idea in harder terms, and he includes the two constituencies founders reach out to last.

We can make the drugs, we can get them in the market, but if physicians aren’t willing to prescribe it or payers aren’t willing to pay for it, those drugs end up being a failure either way.

That is the practical case for starting the payer and prescriber conversation before the IND rather than after approval. A drug that works and cannot be prescribed or paid for is not a commercial product, and the people who decide both are reachable years earlier than most founders assume.

What a coverage decision signals

The clearest recent evidence in the conversation is a coverage decision. Anthem moved to cover a blood-based biomarker for Alzheimer’s, and Harris treats it as significant well beyond the single test.

Her argument is economic rather than clinical. Blood-based biomarkers are dramatically cheaper than the imaging and spinal-fluid pathways they can partly replace, so a payer covering one is a payer accepting that earlier, cheaper detection saves money downstream. For any diagnostics developer in this space, that is the signal worth reading: the reimbursement path for this category is being established in public, one policy at a time.

Where the non-dilutive money is

Federal funding runs through the middle of the discussion. NIH is releasing more money and more grants. Beyond NIH, Lori raises conversations with the Department of War, DARPA, and ARPA-H, where brain health carries a dual-use argument that most therapeutic areas cannot make. Work on traumatic brain injury, cognition, and neural interfaces has obvious defense relevance, and that opens funding doors that are not open to a typical early-stage biotech.

It is worth putting alongside the broader research-funding picture, including how US research spending now compares internationally. Non-dilutive capital does not just extend runway. It changes what a founder has to give up to reach the next milestone.

Venture philanthropy and venture capital are not competitors

The two investors sit at different points on the same pipeline, and both are explicit that this is complementary rather than competitive.

We’re investing primarily in the IND enabling phase to phase 2A and we view venture as completely complementary, and what we’re doing is trying to get our companies to an inflection point where venture will invest, where pharma will invest.

Harris describes ADDF working closely with VCs specifically to pull further investment into its portfolio companies. Narayanan describes the mirror image from the seed side: he expects more validation than a venture philanthropy funder would at the earlier stage, because his fund cannot absorb the same risk.

So it has to be what we call an MVP. There has to be some kind of minimum viable product for us to see. It has to be much further than just an ideation.

The practical read for a founder is that these are sequential doors, not alternative ones. Venture philanthropy is designed to get an asset to the point where venture will look at it, and the two funders talk to each other.

Reading a founder

Both investors are unusually direct about how they judge people, and neither relies on the pitch.

I always tell the science people, I can tell who’s going to be a good CEO just by the way that they handle those negotiations.

Harris structures and negotiates the deals herself, so she watches the negotiation as the tell. Narayanan runs something more deliberate, which he calls the caddie test.

The goal of a caddie is not necessarily to go play the game for the golfer. The golfer is the one that’s hitting the ball. So it’s just telling them where to go.

His firm builds small tasks into diligence and watches how founders execute them independently. The concern is not difficulty in the personal sense. It is whether a founder can absorb direction, because a seed fund managing twenty-five to thirty companies cannot be present every day.

The two red flags that come up are a CEO who will not commit full time, and a founder who cannot be coached.

The through-line across both perspectives is that the science is rarely the reason an early-stage neuro company fails. The commercial design is, and the same pattern shows up in other categories where the cost and access questions arrive long after the science works.

Open Door Salon convenes these conversations on the record. If your company wants to reach the operators and investors in this room, that is what sponsorship is for.