Bringing Impact Investing to Life

By Tasneem Mayet, Ambassador, Business Fights Poverty and Founder, Purpose Finance

It has never been easier to save lives. Thanks to technology, healthcare no longer has to be one-size-fits-some. Infrastructure-lite innovators, typically funded by private equity and venture capital, are contributing to better health in low- and middle-income countries (LMICs) in novel ways. Their ability to succeed is vital, now more than ever.

Eight million people die each year because of poor or no access to proper healthcare. As COVID ravages our world fueling poverty, millions more will have less access to quality care. Patient impactful capital has an unprecedented opportunity to leap in and support well-led businesses that are improving or saving the lives of those under-served, while building exposure to a sector proven to be resilient and stable in difficult times.

The disruptors of disparities

Here are examples of health inequities the disadvantaged face on a massive scale and how smart businesses powered by technology are responding with needs-based solutions:

1. “Genetic and congenital abnormality in India is the second most common cause of infant and childhood mortality in India, where 9 million infants die each year.” MedGenome, a company based in the US and India, is making prenatal and newborn genetic testing more affordable and accessible. This could help lower infant mortality.

2. Reference genomes that are used for research to develop better medicines and diagnostics largely ignore African DNA. As a result, genetic tests and medicines are often less accurate and effective on Africans. 54Gene in Nigeria is working on changing this by building an African biobank.

3. “Nearly 75% of the world’s blind are avoidably so.” In addition, 50% of blindness in poor and/or remote regions is due to cataract versus 5% in developed countries. IanTech, now acquired by Carl Zeiss Meditec, set up a Global Access Program for its cataract fragmentation devices to reach developing countries. miLOOP is lower cost, easy to use and does not require laser or heat energy, nor hazardous amounts of ultrasound, to treat cataract-induced addressable blindness.

4. Approximately 2.6 million babies die in their first month every year; 98% of them are in developing countries and 80% of these deaths are preventable. Columbia University spin-out Neopenda makes wearable monitors that measure the vital signs of newborns (starting in Uganda). This helps community health workers apply the right treatments at the right times for vulnerable infants to survive. Because these businesses consciously aim to reduce health inequities, they often are purpose-built to serve a specific unmet need. As a result, the well-funded ones are able to pivot with agility until they refine their solutions.

The wind beneath their wings

Funding has typically come from the private equity and venture capital industry. In fact, private equity and venture capital healthcare investments generated a very healthy $78.9 billion (14.3% of transaction universe) and $10.7 billion (8.2%) in value, respectively, in 2019. Total deal value in the first quarter of this year has also increased year-on-year.

However, in an increasingly challenging economic environment, healthcare initiatives that do not address COVID-19–related issues directly will begin to lose priority while traditional pools of capital begin to focus inwards (portfolio preservation).

Yet the need for solutions that reduce health inequities is urgent. Poverty is increasing dramatically. Poorer social conditions lead to poorer health. A 2.6-billion-person lockdown has revealed the vulnerable caring for the vulnerable while an exodus of ex-workers reverse migrate to nowhere. “The COVID-19 pandemic is already estimated to have hurt the world economy more than any other event since the Great Depression.” It has also unveiled a truth: “A problem elsewhere is a problem here”. (G. Stein)

Patient capital could pilot courage

Impact investors have a powerful opportunity to thoroughly participate in funding rounds alongside the Sequoia Capitals and Acel Johnsons of the world, proliferating new norms into the healthcare investment industry. Patient impact investors also have an advantage brewing over mainstream capital that relies on sponsor-to-sponsor and IPO exits. Bringing substantial capital to the table that measures against the UN Sustainable Development Goals (SDGs, see below) and/or follows the Operating Principles for Impact Management will motivate the healthcare industry and other capital providers to align with global needs.

This is urgent if we are to avoid derailing from sustainable development. As more responsible capital enters and eventually leads healthcare transactions, more scientists and engineers will be encouraged to ideate towards lifesaving UN SDG targets. Relevant targets to the four businesses mentioned earlier, to demonstrate measuring against the UN SDGs:

1. SDG3.4 – By 2030, reduce by one-third premature mortality from non-communicable diseases through prevention and treatment and promote mental health and wellbeing.

2. SDG3.b – Support the research and development of vaccines and medicines for the communicable and non-communicable diseases that primarily affect developing countries.

3. SDG3.2 – By 2030, end preventable deaths of newborns and children under 5 years of age, with all countries aiming to reduce neonatal mortality to at least as low as 12 per 1000 live births and under-5 mortality to at least as low as 25 per 1000 live births.

To support the sustainable growth and wellbeing of our economies, our people and our planet, the investment case for healthcare could not be more compelling. COVID-19 is a force multiplier that proves no country or industry is immune to seismic changes in the sector. Impact investors have the ability to guide mainstream capital, and draw more innovation, towards meeting the Global Goals . Starting with healthcare, they must act now.

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