News & Insights

More Than Direct Investment: How Collaboration Between Investors Can Create an Environment for Health Innovators to Thrive

GenH Winner.jpeg GenH Winner.jpeg
Karima Ladhani (right), winner of the GenH start-up competition and founder and CEO of Barakat Bundle, and Dr. Bharati Sharma (center) discuss infant health with locals in Jetalpur, India. 

Of the $715 billion global impact investing market, corporate impact investors in innovation manage more than $7.2 billion in committed capital, an amount that has been increasing at a 54% compounded annual rate since 2016, according to this Stanford Social Innovation Review article. However, only 7% of the total impact investing assets under management focus on improving health, not nearly the capital needed to solve the many critical public health challenges facing our world today. Impact investors not engaged in global health have cited the unique and high risks in health innovation (that an investment may not provide returns quickly or at all) and the specific expertise required to help health start-ups scale and maximize impact.

This crossroads of need and lack of appetite presents a critical opportunity for corporations, especially those with experience in healthcare, to engage as a strategic partner, complementing the work of other impact investors. For us at Johnson & Johnson Impact Ventures (J&J Impact Ventures), an impact investment vehicle within the Johnson & Johnson Foundation, that has meant defining and refining our scope when it comes to direct investment, focusing on areas where we have deep expertise, such as innovation in health services; and taking on the urgency of health inequities in the U.S. and around the world.

But investment alone isn’t enough for a systems-level shift toward prioritizing health in impact investing.

At J&J Impact Ventures, we are not only dedicated to finding and supporting health impact entrepreneurs through investment capital; we also find ways to support entrepreneurs doing important, worthy work that falls outside our criteria for direct investment. This multi-pronged approach is fueled by our vision for a bigger, more vibrant health impact investing ecosystem—this means thinking about and creating tools that can guide, support and incentivize entrepreneurship—to bring new solutions and better health to communities around the globe.

To catalyze the sector and spark greater investment in health, J&J Impact Ventures focuses on a few core areas, beyond direct investment:

  • Supporting early-stage ideas. A great idea can come from anyone, anywhere, at any time. Too often, health innovation ideas are overlooked, even though they are plain sight—especially those from local, female and diverse entrepreneurs. Start-up competitions (like the GenH Challenge, QuickFire Challenges led by J&J Innovation JLABS and MIT Solve), accelerators, showcases and fellowships are different ways to cultivate health impact entrepreneurship. Supporting early-stage ventures is especially critical for areas that aren’t seeing enough investment compared to the need, including caregiving, health worker resilience and culturally-competent care. By seeing a need, creating opportunities for investment (and wrap-around support, such as mentorship and networking) and catalyzing others to invest, we can help scale the right entrepreneur-led solutions taking on today’s toughest health challenges.
  • Building common metrics, definitions and accountability. As the impact investing space evolves to include new and varied sectors that can benefit from impact investment, such as health, there is still work to be done to establish foundational elements for a successful ecosystem. Impact measurement for health impact investing and health equity remains, both, relatively new territory and a critical element of our work to ensure that the solutions we invest in are providing maximum positive impact for those who need it most. J&J Impact Ventures has been hard at work establishing processes, benchmarks and projections to help us measure the financial health of our investments and the societal impact they have. We’ve been working closely with impact advisory partners like The Good Economy and look forward to sharing our insights on effective impact measurement in the months ahead. By establishing J&J Impact Ventures’ terms for impact measurement as a funder, then making our learnings public for other funders and supporting entrepreneurs to embed impact measurement into their business models, we can help drive the field forward and keep impact at the forefront of the conversation.
  • Expanding the global health innovation tent. To do this work well and achieve health for all of humanity, we cannot do this work alone. As we dive deeper into the health impact investing space, we encourage others to join us in lending their capital and expertise to mission-driven entrepreneurs. At J&J Impact Ventures, we have proudly convened multidisciplinary groups of leaders across impact investing, global development and public health to join us in forging a path toward a greater prioritization of health through innovative financing and impact investing. We are also supporting field-growing initiatives like the Echoing Green Racial Equity Philanthropic Fund, which supports the search and pipeline process for their Fellowship program, working at the intersection of health and racial equity; increases awareness of and access to resources by Echoing Green Fellows, supporting the personal well-being and resilience of these BIPOC and proximate leaders so they can continue their important and impactful, yet often stressful, work; and increasing awareness of the role social innovation can play in the movement for racial equity by corporate entities to ultimately ensure that the field supports more BIPOC and proximate social change leaders and supports them more effectively.

To drive greater prioritization of health in the impact investing ecosystem, we must look beyond the movement we’re making through direct investments and toward bigger-picture factors around what the field needs and how we can encourage other stakeholders to take part in health impact investing as part of their social investment strategies. Solving today’s health challenges is a herculean task bigger than any single entity can solve on its own. Instead, in totality, these ecosystem investments help support the health community as we strive to bring better health to everyone, everywhere.