Hawthorne Effect medical professionals, called "HEROs", make at-home visits to patients involved in clinical trials for pharmaceutical, biotechnology, and medical device companies.
Hawthorne EffectInvestors who care about creating a positive impact for society have been stepping up to finance companies directly involved in addressing the coronavirus pandemic and to make sure others doing important work have the cash to keep going, according to ImpactAssets in Bethesda, Md.
By the end of the second quarter of 2020, investments made through the ImpactAssets donor advised fund, or DAF, will exceed $143 million, more than total investments made in the fund all of last year. Also, donors in the fund made 250 grants from their DAFs in March, two times the number made a year ago, the firm said.
The figures give a window into how the impact investing community—those who invest for a positive social or environmental outcome—are responding to expedite public health research and responses, as well as to support fledgling social enterprises and nonprofits during a devastating economic downturn.
“Impact investors are leaning in—they tend to do this in a crisis,” says Margret Trilli, ImpactAssets CEO.
Through the ImpactAssets DAF, investors donate a minimum of $5,000 in tax deductible funds. That money is in turn invested in impact-oriented funds as well as individual companies with financings of $25,000 to $90 million, depending on the size of the donor’s DAF and the investor’s wishes. Investors also make annual grants to nonprofits from the DAF.
In the midst of the Covid-19 pandemic, the firm’s investors also have been providing bridge loans to existing portfolio companies—to ensure they are sustained through the economic fallout of the crisis—as well as making new investments, Trilli says.
They are “completing deals on an accelerated scale,” she adds, often willing to be the “first close” on an investment round to make sure companies get a foothold to start their businesses. “They are the kinds of investors you want in your corner.”
Most impact investments now are directed to companies involved with biotechnology and human health. One large investment the firm is working on will fund a company that’s developing a Covid-19 vaccine, she says, although Trilli could not provide details on the investor, or the company.
Another firm getting an infusion of cash is Hawthorne Effect, in Lafayette, Calif., outside San Francisco. Hawthorne’s core business is about ensuring access to clinical trials for patients, no matter where they live, and ensuring trials aren’t disrupted because of a lack of data collection or patient dropouts.
Hawthorne’s solution has been to create a network of “HEROs,” healthcare professionals who take trials to patients, often in remote locations, and then follow up, Trilli says.
“Now they’ve redeployed the hero network to do remote location testing for Covid-19,” she says. “As is the case with many of the portfolio companies: it’s a small tweak to the platform they already built.”
Elemeno Health, a University of California San Francisco startup, is another company receiving additional impact dollars. Elemeno is a digital, cloud-based “micro-learning” platform that provides front-line health care workers with the latest information to care for patients. The firm provides what it calls “just-in-time” training with interactive guidelines, checklists, and how-to videos.
“They’ve been pivoting and rebuilding to fight the virus,” Trilli says.
Investors also are focused on small business as engines of local economies through their support of Community Investment Management, an impact investment manager in San Francisco that provides U.S. small business loans.
“One of the cornerstones of impact investing is lending to underserved communities, whether geographic, or socioeconomic—it’s something we’ve always done,” she says.
“While most investors might look at small business lending and see higher risk, our investors are seeing higher impact,” she continues. “You can [actually] reduce risk by providing capital for a company to weather a storm.”
While impact investors are stepping up, Trilli also is observing similar impulses throughout the financial system and big business that reveal how much was learned from previous downturns. The support—whether it’s from banks forgiving interest payments, or car manufacturers making ventilators—will definitely make a difference in limiting the numbers of people hurt physically and economically by the crisis.
“This is what it feels like to be an impact investor,” she says. “It will surprise me if it goes back to business as usual.”
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April 05, 2020 at 06:30PM
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Impact Investments Rise Amid Covid-19 Pandemic - Barron's
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