• Leading Change in Emerging Health Markets

    7:53 am on May 8, 2013 | 0 comments Permalink | Reply
    Tags: , , , , health, ifc,

    About a month and a half ago, I was in Istan­bul attend­ing a global pri­vate health con­fer­ence hosted by the Inter­na­tional Finance Cor­po­ra­tion (IFC) and John Hop­kins Med­i­cine Inter­na­tional. The event brought together global lead­ers in the pri­vate health indus­try to have share ideas, knowl­edge and lessons in the indus­try. Par­tic­i­pants were mainly senior management/CEOs across the health value chain from health ser­vice providers to phar­ma­ceu­ti­cal & med­ical tech­nol­ogy man­u­fac­tur­ers to investors in emerg­ing mar­kets. On top of the con­fer­ence, my team orga­nized a sep­a­rate panel ses­sion for health providers in sub-Saharan Africa.

    ifc banner

    I just wanted to share some of my notes and key take­aways from the con­fer­ence as I was really struck by the dis­cus­sions of the world’s lead­ing health providers and how it feeds into my work as an investor in emerg­ing mar­kets. Essen­tially, how I should be look­ing at the over­all mar­ket and types of deals I should be focus­ing on. There were two pre­sen­ta­tions in par­tic­u­lar that I would highly rec­om­mend going through, which is Credit Suisse’s Cap­i­tal Mar­kets Per­spec­tive on the health­care ser­vices sec­tor and IFC’s lessons from invest­ing in hospitals.

    • Health is a major dri­ver of GDP growth in OECD coun­tries aver­ag­ing approx­i­mately 7.3% as a per­cent­age of total GDP.
    • There is an upward trend of life sci­ence tools and med­ical equip­ment providers in terms of performance
    • When com­par­ing trad­ing val­u­a­tions (EV/EBITDA), EMEA and RoW com­pa­nies sig­nif­i­cantly out­per­form Amer­i­can com­pa­nies in terms of rev­enue growth, par­tic­u­larly in Acute Care provision
    • Banks are shrink­ing their lend­ing port­fo­lios par­tic­u­larly in SSA
    • M&A activ­ity will con­tinue to increase in a frag­mented mar­ket with pri­vate equity play­ing an impor­tant role in sec­tor consolidation
    • Health­care ser­vices are trend­ing from inpa­tient to out­pa­tient, inva­sive to non-invasive, and from treat­ment to prevention
    • The global finan­cial cri­sis slowed growth rates of com­pa­nies in IFC’s port­fo­lio, but none expe­ri­enced a drop in sales — indi­cat­ing that hos­pi­tal busi­nesses are resilient but not immune to the global finan­cial crisis
    • IFC’s rev­enue pro­jec­tions were rea­son­ably close to actual, on aver­age erring 5% lower than actual (which is impressive!)
    • The health mar­ket in SSA is an SME mar­ket, hence a need for smaller deal sizes, or a con­sol­i­da­tion of deals for increased access to financing

    Over­all, the con­fer­ence left me feel­ing uplifted, but also a great sense of urgency in terms of the work that I am try­ing to do. The con­fer­ence was IFC’s 5th annual health­care con­fer­ence and am already look­ing for­ward to the next one.

     
  • How are We Standing with the Poor?

    3:05 pm on February 18, 2013 | 3 comments Permalink | Reply
    Tags: , ,

    The more some­one iden­ti­fies with a pro­fes­sion or an “accom­plish­ment” such as an award, the less human he will be (in the clas­si­cal sense). In virtue ethics, the only “excel­lence” worth attain­ing is that of “being human”, with all what it entails (honor, courage, ser­vice, sat­is­fac­tion of pub­lic & pri­vate duties, will­ing­ness to face death, etc.); “achieve­ments” are reduc­tions and alien­ations for lower forms of life.

    IN ANCIENT ROME this was a priv­i­lege reserved for the patri­cian class. They were able to engage in pro­fes­sional activ­i­ties with­out directly iden­ti­fy­ing with them: to write books, lead armies, farm land, or trans­act with­out being a writer, gen­eral, farmer, or mer­chant, but “a man (*vir* rather than *homo*) who” writes, com­mands, farms or trans­acts, as a side activity.

    TODAY, as human­ity got much, much richer, one would have thought that every­one would have access to the priv­i­lege. Instead, I only find it in min­i­mum wage earn­ers who just “make a liv­ing” and feel forced to sep­a­rate their iden­tity from their pro­fes­sion. The higher up in the social lad­der, the more peo­ple derive their iden­tity from their pro­fes­sion and “achieve­ments”. — Nas­sim Taleb

    When I was with Acu­men Fund, we would ask our­selves: How are we stand­ing with the poor? And quite frankly, I wasn’t sure if I even really knew what that meant. For the longest time, I thought it meant putting myself into another person’s per­spec­tive, try­ing to see the world through their eyes and “speak up” for those who didn’t have a voice. And then I came across this post­ing by Nas­sim Taleb, who sep­a­rates out iden­tity and accom­plish­ment and really got me reeval­u­at­ing my def­i­n­i­tion. It also made me real­ize how hard it was, as the higher up the social lad­der you are, the harder it is to dis­tin­guish between iden­tity and accom­plish­ment, the harder it is to relate.

    Stand­ing with the poor is about look­ing beyond pro­fes­sion. Beyond awards and accom­plish­ments. Beyond first impres­sions. Stand­ing with the poor is a reminder to one­self to sep­a­rate the way you look at your­self and oth­ers around you; between their accom­plish­ments and iden­tity. Stand­ing with the poor is about under­stand­ing self-worth, regard­less of what situation/career/social sta­tus you are in.

    And at the end of the day, it all comes back to valu­ing human dignity.

     
  • Responsibilities of an (Impact) Investor

    3:02 pm on December 6, 2012 | 0 comments Permalink | Reply
    Tags: , , , , investing, , venture capital

    For the past few months, I have been reflect­ing a lot on my role as an investor. Busi­ness plans and pro­pos­als come across my desk and as I shift through them, it really struck me on how large a respon­si­bil­ity investors play in accel­er­at­ing trends, shap­ing a com­mu­nity or even country’s econ­omy, but yet how lit­tle this respon­si­bil­ity is spo­ken about in the invest­ing cir­cles. We place so much empha­sis on find­ing the right busi­ness, the right man­age­ment team, the right social impact, that some­times we get lost in our own capac­ity to rec­og­nize what really is inno­v­a­tive and what truly deserves to be funded. So, from my expe­ri­ences, here’s what I think an investor’s respon­si­bil­i­ties are on top of the typ­i­cal invest­ment work:

    1) Investors need to live in the future. 

    This is a point I feel very strongly about. If you’re an investor: VC/PE and par­tic­u­larly if you play in the startup and impact invest­ing work, (as Fred Wil­son pointed today in his blog post and what Paul Gra­ham said):  you should live in the future and see what is miss­ing. So well said. I’m cur­rently in an envi­ron­ment (yes, I rec­og­nize that I am in Africa — so feel free to shower stereo­types), where I know investors who are still using yahoo mail, inter­net explorer and Win­dows 2003 (true story!). Not to say that there are any­thing wrong with the prod­ucts, but more so — I think it’s so impor­tant to be keep­ing up with the trends in the world, tech­nol­ogy being one of them. How can you expect to iden­tify an invest­ment that is ‘ground-breaking’ if you’re not even fol­low­ing the newest trends in your sec­tor? Tak­ing this a step fur­ther, if you are fol­low­ing these global trends vs. local trends, it is then our respon­si­bil­ity to seek out entre­pre­neurs who can close this gap and fur­ther ele­vate the devel­op­ing world, or the devel­op­ing world would for­ever be play­ing ‘catch up’.

    2) Don’t be a sheep. 

    This respon­si­bil­ity is par­tic­u­larly impor­tant in the impact invest­ing space. Given that we’re play­ing in a field that is largely uncharted, risk is high and typ­i­cally, most investors are unable to size up a new mar­ket and end up rely­ing on the opin­ions of other investors. aka. I’ll invest if some­one else will too aka. a sheep. Impact investors say that they are risk tol­er­ant, but few trans­late this tol­er­ance into sign­ing along the dot­ted line. A very chicken and egg sit­u­a­tion. Hence, I have to con­stantly push myself to under­stand what is the right bal­ance of being a mar­ket leader but also not be a reck­less investor. Bal­ance is key.

    3) The need to close and dis­burse faster

    There are a lot of delays that occur in [impact] invest­ing. The court­ing of investors and [social] entre­pre­neurs, the dance between find­ing the right termsheet, the issue of mak­ing sure that the social impact actu­ally has an impact, and [insert your tra­di­tional delays in invest­ing here]. This is the norm. This is my chal­lenge to investors: rec­og­nize that the longer the delay, the big­ger the strain on the business/organization. From an entre­pre­neur per­spec­tive, you’re con­stantly watch­ing your ‘run­way’ aka. how much money do I have before I run out, and a delayed clos­ing round and dis­burse­ment is to the [social] entrepreneur’s dis­ad­van­tage as well as to their cus­tomers. If we’re really stand­ing with the poor, then deals need to close quicker with clear and sim­ple terms, as the longer the delay, the more peo­ple are miss­ing out on poten­tially expe­ri­enc­ing the product/service.

    This is by no means sup­posed to be an exhaus­tive list of respon­si­bil­i­ties, but instead ones that I feel are most impor­tant given my expe­ri­ence. As investors, we are in a priv­i­leged posi­tion to start/continue or end trends. I think it’s time that we started think­ing a lit­tle harder about where our respon­si­bil­i­ties lie.

     
  • My Week's Discoveries: Healthcare & Design

    10:47 am on November 20, 2012 | 0 comments Permalink | Reply
    Tags: , , ,

    I’ve been spend­ing a lot of time in the health­care world for obvi­ous rea­sons, and have been immers­ing myself with knowl­edge from all angles. One of the more fas­ci­nat­ing angles is the cross sec­tion of health­care and design. Here’s a cou­ple of my favourite findings:

    1) Cut­ting for Stone by Abra­ham Verghese

    It’s been a while since I’ve read a work of fic­tion and I was highly rec­om­mended this book by my Acu­men Fund col­leagues. I fin­ished this book over the week­end and was so cap­tured by the story, out­raged on behalf of the pro­tag­o­nist, delighted by the inten­sity, and over­all over­whelmed at how beau­ti­fully writ­ten this book was. It’s a story that takes place from Ethiopia to New York, about love, med­i­cine and the inter­twin­ing of fate.

    We are all fix­ing what is bro­ken. It is the task of a life­time. We’ll leave much unfin­ished for the next generation

    - Cut­ting for Stone, A. Verghese

    2) Butaro Hos­pi­tal in Rwanda 

    When you look at East Africa’s health­care land­scape, Rwanda stands out as a med­ical suc­cess. Health indi­ca­tors have improved on all counts since the geno­cide, all pri­mar­ily due to the suc­cess of a uni­ver­sal health insur­ance, where the poor­est 25% of Rwan­dans get free med­ical care. One of my favourite things about the Rwan­dan health­care land­scape is a hos­pi­tal, Butaro hos­pi­tal that was designed by MASS Design Group The hos­pi­tal has no hall­ways, so patients can’t gather in close spaces, and the air in the wards are changed more than 12 times per hour to pre­vent patients from being infected by other patients — par­tic­u­larly, with multi-drug-resistant TB.

    Image taken from: Arch­Daily by Iwan Baan

    3) Future of health­care is Social - Fast Company 

    I recently was in Tan­za­nia attend­ing and speak­ing at a mobile health con­fer­ence orga­nized by USAID and the MIn­istry of Health of Tan­za­nia. The theme at hand was the increas­ing tech­nol­ogy and mobile pen­e­tra­tion that is chang­ing the health land­scape in Africa. There are over 500 mhealth projects deployed around the world with the major­ity of projects (over 30%) being in Africa. I really enjoyed this arti­cle by Fast Com­pany on the increas­ing social nature that comes along with the increased tech­nol­ogy pres­ence in health­care. Also worth read­ing is another arti­cle by Fast Com­pany, on 5 steps to design­ing a bet­ter health­care sys­tem.

    4)  Design for trust - UX Magazine 

    Good design isn’t beau­ti­ful. Good design builds trust. As an investor, when I eval­u­ate health­care inter­ven­tions, I look to see how the ser­vice accounts for fac­tors that mat­ter to a person’s dig­nity: they way they are being treated, train­ing of health­care staff and acces­si­bil­ity of infor­ma­tion. This is espe­cially impor­tant when deal­ing with the poor, who are used to being mar­gin­al­ized, and not receiv­ing proper ser­vice. The arti­cle is more web-based trust, but rel­e­vant nev­er­the­less, when think­ing about how you inter­act with a patient. At the end of the day, when receiv­ing med­ical news, every­one wants infor­ma­tion that is “cor­rect, com­plete and unbiased.”

    7) Design­ing Hand­wash­ing — Core77

    An older arti­cle, but a goodie in address­ing one the most fun­da­men­tal issues in health­care: Hand­wash­ing. A great read in explor­ing: Move­ment Design, Mus­cle mem­ory, move­ment scripts and fluidity.

     
  • Leaning Into Risk

    6:50 am on November 19, 2012 | 0 comments Permalink | Reply

    I’ve been in Nairobi for almost three months now and life seems to have taken to me think­ing in frag­ments and bul­let points. My mind had been flooded with learn­ings, lessons, busi­ness plans, frag­ments of news, dis­cus­sions of devel­op­ment, con­flict, life of expats, impact assess­ments and where to make invest­ments count. It’s hard to seg­ment out the which bul­let points are worth shar­ing but to give some con­text on the dom­i­nant thoughts float­ing around, here’s a blog post that was pub­lished a while back on the Acu­men Fund blog on Oct 22nd. A lit­tle dated, but still rel­e­vant questions.

    ****

    Orig­i­nally pub­lished on Oct 22, 2012 on the Acu­men Fund blog. Repub­lished with permission. 

    In the world of impact invest­ing, there is next to no time to rest. There is a sense of urgency to explore the bound­aries of this sec­tor and uncover the dynam­ics of suc­cess of a poten­tial invest­ment. In the best cases, you get an invest­ment approved and every­thing goes as planned accord­ing to your ini­tial memo. In the worst cases, you get stuck in the trenches, pre– and post-investment, fight­ing to make each dol­lar count.

    In this con­tin­u­ous process of explor­ing bound­aries, here’s a cou­ple of lessons I’ve learned and ques­tions that I’m con­stantly ask­ing myself, which per­haps, you might be too.

    Human­iz­ing Mar­ket Creation

    As I dive in deeper into the health­care and nutri­tion sec­tor in East Africa, I was reminded by a col­league of a great video by Seth Godin at last year’s Investor Gathering.


    Seth Godin dis­cussing mar­ket cre­ation at the 2011 Investor Gathering

    The dri­ving ques­tions at hand: how do we human­ize mar­ket cre­ation? How do we teach peo­ple to use prod­ucts they have never used before? How do we con­vey the value of our ser­vices and prod­ucts of our port­fo­lio companies?

    This is when we aim to have two-way stories—to become part of the fab­ric of the com­mu­nity and co-create along­side the investor com­pany. Mar­ket cre­ation is more than just get­ting con­sumers to use our ser­vices and prod­ucts. Good mar­ket cre­ation is about teach­ing and fun­da­men­tally chang­ing con­sumers’ behaviors.

    The Unre­li­able Narrator

    I’ve become increas­ingly dis­trust­ful of my inter­nal nar­ra­tor lately. I’m slowly dis­cov­er­ing that impact invest­ment eval­u­a­tion is skewed heav­ily towards my inher­ited prej­u­dices of tra­di­tional invest­ments, at the expense of tak­ing into account the social impact. When I stop to con­tem­plate my actions, I find myself won­der­ing whether I am really lis­ten­ing and being objec­tive, or just nar­rat­ing back to myself what I think I heard.

    It’s hard some­times to fully com­pre­hend the impact of what we eval­u­ate, espe­cially if you have not expe­ri­enced what it is like on the ground. This dis­trust means that when we are surg­ing for­ward in a sec­tor that is fraught with uncer­tainty and trade-offs, we need to be mind­ful of the con­text of the investment.

    An Ode to Value

    As an impact investor, our role is so much more than just being a trans­ac­tor of debt or equity to poten­tial investees. We have an oppor­tu­nity to become an ecosys­tem builder, and to lead the charge to solve mar­ket inef­fi­cien­cies. My daily chal­lenges are thus: are we cre­at­ing value pre and post our invest­ments and where do we draw the line of sup­port? How do we value a busi­ness that has neg­a­tive cash flows? How do we encour­age orga­ni­za­tions to move away from grant reliance? How far do we lean into risk for the sake of value?

     
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