By Lucy Parkinson, VP of Investor Research, LSN

LSN’s aim is to connect early stage life science companies with the full variety of investors who are putting money into the sector – and while most of those investors are laser focused on financial returns, some are investing with a social impact goal as well.  In the life science space, there are funds focused on curing a specific disease, or improving care for a specific group of patients (such as pediatric patients).

At RESI Boston, a panel of five experienced investors from this field will explain how impact investment works, and how their decision-making process differs from purely financial-driven funds.

The participants are:

Michael Cole (Founder & General Partner, Global Neurohealth Ventures)

Dr. Cole is a Managing Partner at Global Neurohealth Ventures and an Assistant Clinical Professor at UC Berkeley. He provides strategic and scientific consultation for healthcare companies as well as investment diligence consultation for VC firms and family offices. Dr. Cole published 20+ peer-reviewed journal articles and continues to also provide direct patient care. Previous positions include Associate Clinical Professor at UC Davis, Director of Medical Affairs at Pacira Pharmaceuticals, and Head of Strategy and Business Development at OccamzRazor. He received his PhD in neuropsychology from the University of Florida, completed his internship and residency in clinical neuropsychology at the UCLA School of Medicine, and obtained an MBA from UC Berkeley.

David Heenan (Director of Operations, BrightEdge Ventures)

David began his career working on trade, security, and nonproliferation policy issues for the Chinese Ministry of Commerce in Beijing, China and then at Argonne National Laboratory in Chicago, IL. He then transitioned over to the political side, working on economic development for the Governor of Georgia, before joining a congressional office and running digital media for a US Senate campaign. After the campaign ended he joined the Editorial Staff of the Journal on Preventing Chronic Disease published by the Center for Disease Control and Prevention (CDC) in Atlanta, GA. It was there that he came face to face with the inefficiencies in medical research and lack of accessibility to cutting-edge care. In 2015, he left the CDC and founded Aces Health in order to address these challenges by leveraging mobile technology and artificial intelligence. Aces Health, now Dedo.ai, was acquired by a San Francisco based Venture Studio in 2018.

Following the death of his grandfather due to colon cancer, he shifted his focus to fighting cancer and ending the pain and suffering of patients and families affected by the disease.

David graduated from the University of Georgia with a B.A. in International Affairs as a Richard B. Russel Security Leadership Fellow.

Isabella Zhang (Investment Professional, JDRF T1D Fund)

Isabella Zhang, Ph.D., M.B.A., has more than 10 years of scientific research, business and investment experience. She is working at the JDRF T1D Fund evaluating, investing and supporting companies with potential to cure, treat, and prevent type 1 diabetes (T1D). Isabella has previously worked at Lightstone Ventures in Boston, Delos Capital in Hong Kong, and Primavera Capital in Beijing on healthcare PE/VC investments. Her transactions span a broad spectrum of deal structures and therapeutic areas. Prior to that, she was a Scientist in the biopharmaceutical industry at Covance and Genentech on both early and late stage drug development. Isabella has an M.B.A. from the Tuck School of Business at Dartmouth, and a Ph.D. in Analytical Chemistry from Purdue University.

Christopher de Souza (Director, Broadview Ventures)

Chris de Souza, PhD, MBA, is a Director at Broadview Ventures. He started his career at Novartis as a scientist in the Metabolic and Cardiovascular Diseases group and then as Director of Strategic Alliances. After Novartis, Christopher was Vice President of Business Development at SkyePharma US Inc. He then founded a business development consulting practice with clients including JSB-Partners, Diagnostics For All and Metaome.

Christopher has a Masters in zoology from the University of Bombay, PhD in physiology from Louisiana State University and MBA from Rutgers University along with post-doctoral training at The Upjohn Company and Joslin Diabetes Center/Harvard Medical School.

Christopher currently serves on multiple Broadview Ventures portfolio company boards, the board of MassBio and several grant review committees.

John Parker (Founder & Managing Director, Springhood Impact Ventures)

John established and manages CH Innovations, the program-related investment initiative of the Charles H. Hood Foundation, a Boston-based private foundation that supports pediatric research, where he is also a trustee. CHI invests on a mission-first basis in seed-stage companies developing important medical solutions for children. More recently, John founded Springhood Impact Ventures as a platform through which other impact-first investors can provide critical early support to companies with a significant pediatric focus. Previously, John spent 25 years in the alternative investment industry, including senior roles in venture capital, private equity, and hedge funds. Early in his career he also worked in operations consulting and international merchant banking. John is currently an observer on the boards of Aldatu Biosciences, Breegi Scientific, and Noninvasix.

By Karen Deyo, Investor Research Analyst, LSN

The number of consumer digital health apps has been growing at an enormous rate over the past few years. A study done in November of 2017 by IQVIA found over 300,000 apps available, with hundreds more added every day¹. These apps can be tied to wearable sensors, related to wellness areas such as mental health or weight loss or related to chronic disease management, to name a few possibilities. What with more people turning to their smartphones to complement their medical care, and the number of apps flooding the marketplace, how can a new consumer health app catch the attention of investors?

Gyan Kapur, Managing Director of Bayes Ventures and Digital Health CT, a new digital health focused incubator, stressed that to stand out, companies need to have a special premise and team, as well as the ability to demonstrate actual traction. While formal clinical data is not a necessity, if a company has no clinical data that makes it crucial to have other evidence of market traction, such as retention, a good viral coefficient etc. However, Gyan stressed that ‘while not all companies have this data, those that do are much more likely to get funded.’

Sarah Sossong, Principal at Flare Capital Partners, highlighted the importance for potential investors and customers to see early demonstration of market traction and preliminary evidence of your app’s impact on clinical outcomes and costs. For example, some apps have opted for a freemium model out of the gate to get broad consumer adoption. Significant engagement is a great proxy for value, impact, and need, and can be a great starting place for negotiating B2B contracts with payer, employers, or health systems. In today’s highly cost-constrained environment, these same payers, employers, and health systems will also be under pressure to show impact, or risk budget cuts, so it’s also essential for entrepreneurs to be thoughtful about quantifying impact and pick early partners equally dedicated and resourced to demonstrate the app’s efficacy on clinical outcomes and cost reduction. Together, market traction and demonstrable impact can provide evidence of a good underlying business model that will enable a larger path forward and long-term success.

However, entrepreneurs must have a good business plan in mind, and one that does not rely solely on a consumer app – to be successful in the long run, there needs to be a larger path forward, whether that involves partnerships with healthcare providers, a B2B aspect or a larger platform that will be in play. Dr. Sohaib Siddiqui, Managing Partner at Kettlebeck Ventures, agrees that an app is not sufficient for a complete business model, but should only be a first generation product. He highlighted, ‘there are so many consumer digital health apps in the app store, with many more added every day, that it’s easy to get lost.’ Sohaib said that for him to be interested in investing, the app should be a tool, but not the only product, for a company to be able to scale and remain relevant to the market. However, in addition to market traction, Sohaib stressed the importance of proving the benefit to the patient, and how the app can improve care, and to be able to prove value, not just claim it.

Finally, evidence of market traction, a good business model for future product development and proof of the efficacy of your app for the consumer are not all – it is also important to remember that, as potential investors, they all want to see what the return on investment will be. Finding investors for a consumer app can be an uphill battle, and the startups that succeed will be those that provide a needed service in a unique manner that cannot be easily duplicated.

1. https://www.iqvia.com/institute/reports/the-growing-value-of-digital-health