So Where Does an Investor Start?

This post by Meredith Martindale and Bonny Moellenbrock originally appeared on Investors' Circle's blog. You can read it here.

If you went back to East Africa today with a $100K check in hand, what would you look for?

This week, Investor Days: Nairobi attendees share their perspectives on what is important when reviewing global health investment opportunities. We were surprised to find that their priorities actually were not surprising – their focus on finding the right companies and the right entrepreneurs to solve huge global health challenges in East Africa echo the conversations the IC network has when reviewing companies across sectors and across geographies in the US. However, trip attendees were able to identify innovative business and investment models that they think make the right companies for these challenges and characteristics to look for to find the right entrepreneurs to build successful businesses and good investments.


Innovative global health models…
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… Often combine healthcare delivery and technology. Healthcare delivery is complex, and our trip attendees found that technology-based business models can be effective tools for simplifying systems, streamlining delivery, and scaling health interventions. Michelle Schwartz was impressed by TotoHealth, which uses text messages to deliver critical healthcare information to new and soon-to-be parents across Kenya.

“They’re using SMS technology to maximize the reach and effect of community health work, which better promotes prenatal care, safe birthing, and well-child care even in the most rural areas,”

explains Schwartz. Look for technology that makes it easier, faster, or safer to provide and access healthcare.
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… Might not look like health at first glance. Jim Davidson, IC Board chair, reminds us to look beyond the health sector to find industries and companies that have a significant impact on the health of global communities.

“For example, water equals health in so many ways. If we could make clean, safe drinking water accessible to all, we’d eliminate many of the problems that require medical attention today,”

Davidson shares. Jibu, which uses a franchise model to make clean drinking water affordable in East African slums, excites Jim in terms of impact and investing. He adds, “They’re operating well and hitting their targets, so at scale they could positively affect health across Africa and that would make a great investment.” Look into water, agriculture, and energy as additional sectors where impact investing can improve health around the world.


… Innovate on investment models as well. Healthcare delivery via health clinics was a core focus for Investor Days: Nairobi, and we found many exciting examples of clinics that bring quality healthcare to Kenyan communities. However, concerns emerged about the exit potential for clinic models: What is scale? How big do clinic networks need to grow? Are there prospective acquirers? A visit with Jacaranda Health, a network of maternal and child hospitals in peri-urban areas, inspired Stephanie Wilson to bring her US medical real estate background into her global health impact investing strategy. “Good investments are not all about equity. Jacaranda has a strong model, superior care, and the potential to grow. Obtaining and outfitting their facilities is a huge challenge, so structuring this investment around real estate could help them where they need it most and create an interesting risk/return profile for an investor as well,” says Wilson. Look beyond traditional notions of equity and debt to real estate and revenue-based financing as appropriate capital solutions for compelling global health enterprises.


Compelling global health entrepreneurs…


… Are internationally savvy. Global health entrepreneurship is a tall order: companies need to understand healthcare delivery, how to grow a sustainable business, and the emerging markets in which they operate. Our trip attendees discovered that Kenya has a growing population that has developed medical and business skills around the world and returned home to build global healthcare companies in the communities they know best. Stephanie Wilson was impressed by Jacaranda Health as a business and by its Chief Medical Officer Faith Muigai, highlighting that “she’s a Kenyan-born, US-trained doctor and business woman who is bringing 20+ years working in the US health system back to Kenya and building a management team that balances the business side of Jacaranda’s hospital system.” Look for entrepreneurs and management teams that understand both their models and their markets.
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… Have relationship potential.

“Fundamentally, investing is all about trust, and trust is built from relationships,”

explains Luni Libes, maintaining that “trips like ours to Nairobi are much more impactful to investors than virtual meetings and standard pitch events.” Libes has the benefit of spending hundreds of hours with social enterprises through his Fledge accelerator program, including a relationship that came to life when we visited cohort company, GreenChar. GreenChar produces and sells clean charcoal briquettes, and Investor Days: Nairobi gave attendees a chance to observe Founder Tom Osborn engage with his team, customers, investors, and stakeholders. International investments are challenging because interaction is rarely face-to-face, so take advantage of limited time on the ground to get a feel for entrepreneurs as people. Look for those with the potential to build trusting relationships that can grow over time and distance.
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IC members have found and invested in global health companies in East Africa and are calling for more impact investors to get involved. Bill Harrington shares,

“I don’t want this to be merely hypothetical. I’m doing it, I have plans to go back, and I’d love for you to join me.”

Tune into IC’s Global Health Interest Group launch on July 19th – register here – to learn more about how you can engage in global health impact investing.