Dana Deardorff, Global Director, for Johnson & Johnson Impact Ventures (JJIV), an impact fund within the Johnson & Johnson Foundation, covers JJIV’s investment thesis, trends in the HealthTech space and what entrepreneurs need to succeed in today’s environment with Joe Wolk, Executive Vice President, Chief Financial Officer, Johnson & Johnson and Investment Committee Chairman for Johnson & Johnson Impact Ventures.
JW: You have had an interesting journey to your new role at J&J Impact Ventures. Tell us about your background what led you to impact investing in the healthcare space.
DD: I’ve been in the healthcare space for about 25 years, much of that in MedTech. I began my career as an entrepreneur. I was in the SF Bay Area for grad school and energized by the startup culture there, I jumped into co-founding several companies and leading development of new medical technologies. From there, I shifted to being an “intrapreneur,” fostering innovation in a larger corporate setting through different positions in business development/mergers and acquisitions, research and development, strategy and portfolio management, and joined Johnson & Johnson seven years ago. I’m excited to bring all that experience to this new role leading J&J Impact Ventures focusing innovation and entrepreneurship on the mission of health equity.
JW: How has your experience as an entrepreneur shaped your approach to supporting other entrepreneurs? What do they need to succeed?
DD: That entrepreneurial experience has definitely influenced my approach as an investor. Early-stage startup companies obviously need capital. My background provides a personal appreciation for the challenges of fundraising, so I try to be helpful to entrepreneurs with guidance about their business plans or pitch, and connections to other investors, when possible, even if they are not a fit for investment. But entrepreneurs need more than just funding, especially in the early years of growth when a company is rapidly evolving and trying to reach profitability. And this is an area with a lot of potential for J&J Impact Ventures—because we have a great opportunity to leverage unique healthcare expertise and resources within Johnson & Johnson to help support JJIV’s portfolio companies.
JW: Achieving greater health equity will take coordinated efforts across sectors. J&J Impact Ventures invests in market-driven solutions... how do these fit in?
DD: With a challenge of this magnitude—more than half the world lacks access to essential healthcare—we know that efforts are required from many different stakeholders including governments, health systems, non-profits, etc. But there is a unique and complementary role for companies that are developing new solutions to address health inequities, especially business models focused on underserved populations. Established organizations are often not well-structured to accept the risk and uncertainty that is inherent with that level of innovation, but startup companies driven by bold entrepreneurs can pioneer new approaches. We want to invest in those mission-aligned companies and help them become successful.
JW: Traditional investors are familiar with venture capital (VC) and how success is very simply measured by return on investment (ROI). How are you looking at metrics in healthcare impact investing?
DD: Our investment thesis is based on the belief that we can achieve strong social impact while also creating positive financial returns—which we will recycle and reinvest to continue expanding the impact. In order to achieve ROI for impact, we take a rigorous approach to setting targets, measuring outcomes, and then reporting on those results. As the space of healthcare impact investing is still evolving there is no consistency on the metrics used, but we have focused our impact framework on three key metrics at the portfolio level: 1) scale – the number of patients reached and HCPs supported; 2) access – the extent of reach to underserved populations; and 3) depth – the degree of improvement to health outcomes.
JW: In recent years, there has been a growing interest in digital healthcare startups and investing in the HealthTech space. What are some other trends that you’re seeing?
DD: The past year has obviously been challenging financially, and unfortunately that macroeconomic environment has created a negative trend with some investment cycles. For example, we have seen entrepreneurs struggle to find a lead investor for equity rounds or forced to restructure deals. But despite those fundraising challenges, I see an incredible positive trend with what could be called “impact 2.0” companies. While many impact startups in healthcare are born from a deep passion for addressing the needs of a local community, they may have fundamental limitations to scale more broadly or compete with other companies. But there is an increasing number of visionary impact entrepreneurs building companies with differentiated solutions that can scale at a regional and even global level.
JW: As we start 2023, what are you most excited about for this year... either for the field, or for J&J Impact Ventures?
DD: For the field, I’m excited for new investors to join this mission of health equity, and to see that there doesn’t need to be a trade-off between financial returns and social impact. Several new impact funds have launched recently, including some in the US focused on underrepresented founders. And for the J&J Impact Ventures team, I’m excited for us to continue building our portfolio and working with our companies to help them grow and reach profitability. Because when social impact is at the core of the business model, if the company is sustainable, then the impact is sustainable.
DD: But now it’s time to turn this around Joe. What are you most excited about this year?
JW: There is plenty to be excited about right now, starting with J&J enhancing innovation with our company now focused exclusively on Pharmaceutical and MedTech businesses. This is a unique moment in Johnson & Johnson’s history that provides us the opportunity to shape the future of healthcare advancing science and technology across these two sectors to improve the lives of patients around the world. That focus will enable growth, while maintaining a competitive edge. I am inspired by what has been accomplished thus far, and energized by what’s to come in 2023.
JW: How can folks learn more about J&J Impact Ventures?
DD: The best way to learn more is though our website and subscribing to our quarterly JJIV newsletter.
This interview contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The reader is cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of Johnson & Johnson. A list and description of these risks, uncertainties and other factors can be found in Johnson & Johnson’s Annual Report on Form 10-K for the fiscal year ended January 1, 2023, including in the sections captioned “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors,” and in Johnson & Johnson’s subsequent Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. Copies of these filings are available online at www.sec.gov, www.jnj.com or on request from Johnson & Johnson. Any forward-looking statement made in this interview speaks only as of the date of this interview and Johnson & Johnson does not undertake to update any forward-looking statement as a result of new information or future events or developments.