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The Wei Forward: Impact Report
Why impactful investing is the way forward in 2022
by Lord Nat Wei of Shoreditch, Advisory Board Memeber Future Planet Capital
With the unprecedented levels of change inflicted by the COVID-19 pandemic, rapidly shifting geopolitics, and the race to get to net zero since COP26, it is clear the world needs to accelerate its innovation and development processes to protect our planet and the human race. Businesses, governments, and NGOs must work together urgently to find solutions.
But there is a vital tool at our disposal that is grossly underused: impactful investing. Innovation and new, disruptive technologies are critical in making progress towards the Sustainable Development Goals (SDGs) and the climate-specific pledges made at COP26, to decentralising our healthcare system to immunise it from future lockdowns, and to make our supply chains and energy systems more resilient to combat inflation and rising living costs. Yes, there has been admirable progress in many areas, but the fact remains that today the technologies simply do not exist to achieve Net Zero in the developed world cost-effectively, or to combat the next pandemic more effectively than we have done so far. World leaders have talked the talk; now researchers, engineers, business leaders and investors need to walk the walk for them. This is where impactful investing comes in.
Experience tells us the greatest technological progress is made by start-ups and scale up businesses, with solutions that government, corporates, and society can get behind when they are needed. Backing innovative solutions to solve pressing issues requires joint action. There must be a concerted effort made by all these stakeholders to unlock impactful investment. Imagine what would happen if we found and unleashed more Kate Binghams (herself a venture capitalist) and the innovative companies they could help us direct resources to not just to procure new vaccines but to revamp the NHS? Or find ways to heat our homes and power our grid more efficiently. Or ultimately help keep taxes low by helping us transition as a country to be more resilient and agile in the face of climate change and future supply and other shocks?
Government should look to play a larger role as a procurer of innovation and encourage impactful venture investing with green and impactful-oriented tax breaks. Pensions industry regulators should take a more balanced risk approach and favour impactful investing so there is a decent world for the pensioners of the future to live in while also boosting the long-term value of their pensions. To not do so, given the societal and planetary risks we face, is a risk itself; one that the regulatory system should be accountable for, alongside protecting the immediate financial returns and assets of members.
Finally, it is essential that society has a more active role in holding legislators, regulators and board members to account, using tools such as the Companies Act 2006, Section 172. All too often we have seen company directors knowingly ignore their duty to help society and the environment, in favour of ill-gotten benefits for a few, just as big tobacco did decades ago. This cannot continue, and customers know it.
The investment community itself has a major role to play. It must look at how best to scale the field of impact, transforming it from a niche, historically less focused on profit asset class, to a
mainstream practice centred around high impact, high profitability, and large global funds. This may require adapting and simplifying approaches; as Tom Beagent, a leading expert in impact at PwC, rightly says: “All investments make impact, good or bad – impact investing is about creating more positive impact.” This transition may also require a reconciliation in academic research between what works practically on the ground for investment professionals and entrepreneurs, and what drives them both financially and socially. This is needed to align incentives amongst the investors, and the investors and the market. It is not a zero-sum game.
But we must be positive and not despair about the challenges ahead. We have the talent, skills and resources, and there are already key players leading the charge such as Future Planet Capital (FPC), who have exemplified a pragmatic approach to creating solutions to huge global challenges, marrying profit and purpose. Whilst the marked growth of impactful and Environmental, Social and Governance (ESG) considerations among investors is encouraging and actors, like FPC, look to generate positive change, we, as an investing community, should remain mindful not to overpromise. It is essential that progress is meaningful and long-term rather than superficial or a ‘quick fix.’
Much of the responsibility for pushing impactful investing rests with VC investors and founders. However, everyone must act responsibly and be accountable. The potential for policymakers, regulators, LPs, pension funds and consumers to play an influential role in bringing impact to mainstream adoption must be recognised and harnessed. A culture change will be needed in Whitehall, in the City, and in the wider country, and there will be bumps along the way as we seek to procure differently, invest more purposefully, and demand those who govern us to be more solutions-focused. We are just at the beginning and the road ahead may seem long, but we must start having joined-up conversations about how we may all endeavour to deliver this change, with impactful investing providing a potential very practical way forward into 2022 and beyond after major shifts caused by Brexit, Covid, and COP26.
By Lord Wei, Author of the Wei Foreward report published by Future Planet Capital.
Future Thinking: Terra Carta
Venture Capital Battles in the Fight Against Climate Change
Future Planet Capital were honoured to have been invited to #COP26 by His Royal Highness, Prince Charles, to support his work with #terracarta and the Sustainable Markets Initiative. There we showcased seven companies that were able to make a clear impact in facing down the challenge of climate change.
Where were the venture capitalists?
Sifted recently wrote that apart from ourselves and a small number of others the #venturecapital industry failed to make an appearance at COP26 and lamented that this key driver of innovation was noticeably absent. Aside from ourselves, General Atlantic were present and they announced a $4bn late-stage venture #climatechange fund. Few of Europe's top 40 sustainable venture groups made it to COP26. Does this reflect an industry failing?
What is the venture industry doing?
I say "No". In fact venture is already making considerable investments in climate change and is further aware of the wall of funding destined to follow from asset managers, corporates and governments. The industry is on the right track and as detailed in the forthcoming Lord Nat Wei's report "The Wei Forward" there are many practical paths for impactful investment to follow, be measured and be recognised.
In our own portfolio and pipeline we number nuclear fusion, sustainable fashion, circular supply chains, smart materials, smart cities and agritech companies as all capable of making an impact through improved energy usage, reduced emissions, circularity, fixing food and protecting the environment. There is a shortage of dealflow relative to demand but it cannot be said that venture is ignoring climate change or failing to make a difference. Instead it is performing a valuable purpose in ensuring that only the best, most practical, most impactful, companies get the majority of funding.
The Business and Sustainable Development Commission estimates that $45 trillion needs to be invested in addressing climate change by 2030. This money can be sourced from the $130 trillion that the Glasgow Finance Alliance for Net Zero (GFANZ) has pledged by 2050 but it needs to find routes for deployment.
The solution is in our hands...
And it is here that Venture can be helped by all those governments, corporates and indeed activists who attended COP. Through a series of nudges more funding can be released and rushed to innovative technologies targeted to beat climate change.
One of the most effective actions available to governments would be to free occupational pensions to invest more in venture. In the UK alone over $1 trillion is managed by local government pensions but their allocation to venture is minimal. This needs to change but in a highly conservative industry this needs encouragement from government. For corporates, similar nudges are required. At all annual general meetings shareholders who talk of engagement must insist on an #ESG policy and one which explicitly targets #netzero. A great example of leadership comes from Arcelik Global and its CEO, Hakan Bulgurlu. Awarded a Terra Carta award for their vision this top 3 manufacturer of air-conditioners and white goods has pledged to be fully carbon neutral within a decade.
And, in the final analysis, it is activists and individual consumers who will make the biggest difference. As voters, activists at shareholder meetings, as employees or through purchasing decisions, individuals in their millions can influence the largest governments and corporations.
So, "Yes", venture is making a difference to investing in impact and innovation but, individuals, all of us, are able to influence, lead and accelerate everything the industry does.
By Douglas Hansen-Luke, Executive Chairman
Founders Interview: Douglas Hansen-Luke
This week, we are interviewing Future Planet’s founder and Executive Chairman, Douglas Hansen-Luke. After a long career in Asset Management in the Middle East, Europe, Asia and Africa, Douglas founded Future Planet Capital to meet an unmet need in the market: impact and innovation at scale. We asked him what drove him to start Future Planet, successes to date, and what the future holds.
1. What prompted you to found Future Planet Capital?
Future Planet Capital was founded in 2016 to enable sovereign funds and other large investors to access the innovation coming out of the best universities in the world. Ventures created at the top universities make up a tremendous amount of today’s global economy. The standout examples, of course, are Facebook emerging from Harvard and Google being founded by Stanford grad students. The idea for FPC stemmed from a desire to systematise this process and when we saw a small deal in 2014 between a sovereign wealth fund and Trinity College Dublin, I believed I could do that better!
Future Planet grew out of a desire to build a fund that makes a difference. I wanted to dedicate all my energies to this and leverage my experience with institutional investors to make an impact and a profit.
After conducting in-depth research into whether this was going to be a viable business option, we concluded that there was an unfilled need in the market. Hence, we developed partnerships with the university managers based around the word’s most prolific centres of innovation: Berkeley, Cambridge, Harvard, MIT, Oxford, Tsinghua and the University California System. We then took these partnerships and connected the brightest people to the world’s most prominent investors; the rest was history.
“Future Planet grew out of a desire to build a fund that makes a difference. I wanted to dedicate all my energies to this and leverage my experience with institutional investors to make an impact and a profit.”
2. When did you first start seeing success with the fund?
We started this the fund in a research-based manner and subsequently surveyed twenty sovereign wealth and pension funds, asking these funds to detail what they want to do with their money. We did this because one of the goals of the fund is to be a good manager of people’s money. Hence, a logical step to managing their money well is to understand where they want it invested.
As a result, we attained early success. In our first eighteen months, the fund managed to deploy one hundred million dollars in assets, twenty million for British Local Government Pensions, thirty million sub-advisories for the British Innovation Fund. Fifty million of co-investment from a Sovereign Fund in the Middle East and from one of the world’s largest technology companies.
The initial success was most definitely there. However, success had to be measured on the results of our investments. Three years later, following the initial ten investments made by our fund, we have nine companies still operating and growing and one unicorn. While there was one failure as the company is no longer trading today. We look upon this as a success; the venture industry is high-risk with up to forty per cent of endeavours failing. Our ninety per cent success rate is something we are incredibly proud to have managed. This is absolutely a testament to the innovation arising out of top universities and our investing strategy
On top of our initial successes, we have looked to expand the stream of investments coming into our Fund and portfolio companies. Future Planet has a partnership with Barclay’s Private Bank that allows ultra-high net worth individuals to co-invest with us and likewise with Global Corporate Venturing for business investors and with Seedrs for individuals. This last is very important to us. Venture Capital investing has long been the preserve of the richest among us. Through an online investment opportunity, we are trying to democratise the industry, offering individuals a chance to invest with far smaller amounts of money in a venture that would have previously been financially unattainable.
3. Future Planet has existed for four years, what have you learnt about the industry at this time?
There are three things that I have learned in the time since starting Future Planet. The first point we recognised early in the process, and this has been backed up by research conducted throughout the four years. We saw there would be an opportunity to arbitrage value, in the centres of innovation, for example, venture companies in Shenzhen and San Francisco are highly valued with those on the Amtrak corridor in the US being slightly cheaper and those in the UK cheaper still. The valuations of companies differ not because of the quality of their product but rather their local market size for both customers and investors. As a result, these companies are subject to the supply and demand of their local area, thus changing their value depending on where they are founded. We at Future Planet research the quality of the company and compared this to international competitors. We would invest in companies with potential and help these them to grow into more significant markets. We have had success with this model taking UK companies such as Congenica, Navenio and Oxford Flow and introducing them to the Middle and the Far East.
The second lesson we learnt while developing the fund is that the biggest brand investors, the Silicon Valley venture giants, are followed by the herd. These firms have access to the best founders in centres of innovation and then often sell out at later stages to those who don’t have that access. We invest at the same time as these investors and from the same pool of opportunity – the universities and their eco-systems.
The third lesson follows on from the other, early-stage investment is abundant. Every Government and fund want people to become innovators. The most inefficient part of the market is stage B and C as it is not as flashy; this growth stage, however, is vital company growth. At the earliest angel, seed and Series A stages the technology and commercial opportunity have yet to be proved. By the time they’re at Series B the technology is usually ready and they are on the cusp of commercial traction and are in a position where our network will be able to help them with the next round of growth.
4. What advice would you give to someone wanting to start an impact fund today?
The first and second generation of impact funds focused mostly on the developing world and real estate in the developed world, such as social housing projects and infrastructure. My view is that the biggest challenges facing the world are far more focused on technology; it is this combined with government policy that is going to make a genuine difference. Climate change is going to impact billions of people. It is a technology that may be able to turn the tide. It is technology medicine that will make a difference in people’s health outcomes once again; this can have an impact on a large portion of the world’s population. Unless you are healthy, it is very challenging for you to do anything else. Once the health is sorted, we can then look at education. Education technology is making learning far more accessible to people, particularly in the K1-K12 age group.
I believe that the impact and innovation move together. There is not enough money focused on connecting these two things; individually, they are both quite niche. But, put these together there are substantial addressable markets. When we view our deals, based on the sustainable development goals, there is often a total addressable market of over one trillion dollars or challenges and solutions that will make things better for over 1 billion lives. COVID or climate change, for example, has undoubtedly changed the lives of all seven billion of us. We could even look at the human error behind car crashes which cause over a million deaths. The vast majority of these would be avoided with autonomous vehicles. We are operating in a unique space and find that very few people are working on the same type of ventures. We encourage new entrants into this area as there is more than enough room to support more than one fund manager. Knowing one’s eco-system can bring particularly strong results, so we are particularly open to local partnerships in Canada, China and India.
5. Where do you see Future Planet and yourself in five years?
Future Planet is one of the most exciting and fulfilling things I have done in my professional career. There is a very significant impact and profit opportunity, and I would be disappointed if, in five years, Future Planet was not managing at least five hundred million dollars of assets. Much more than that I want us to have had first look at the next Google or Facebook but as companies that make a real difference to climate change, education, health, security or sustainable growth. We are already invested in companies that are creating vaccines for some of the world’s most challenging diseases. We want to continue investing in companies that are changing the world. For myself, this would be adequate fulfilment of a life’s work.
I can’t imagine not being involved in Future Planet but over time our team will grow and talent needs time and space to breathe. To allow that in years to come, I plan to be fully supportive of the internal network and external early-stage investment partners we have built so far. Then I would love to use the experience gained bringing academia and private capital together to do the same with private finance, technology and the world of public policy where much work remains to be done.
FPA Winner: An Interview with Pandia Health
(L-R) Tal Badt, Director of Business Development, Tsinghua x-lab, Patrick Chung, Founding Partner, Xfund, Lord Norman Foster, President, Norman Foster Foundation, Sophia Yen, CEO & Co-Founder Pandia Health, Douglas Hansen-Luke, Executive Chairman and Founder of Future Planet Capital and Lilly Bussman, Principal, Oxford Sciences Innovation.
Sophia Yen, CEO & Co-Founder of Pandia Health - Special Category Winner
Future Planet Capital is the world's first global innovation investment platform. Through a unique series of relationships and partnerships with top-tier university funds in Asia, Europe and the US, the firm possesses an unrivalled level of access to technology and life science companies from academic institutions and the "clusters of innovation" that surround them. The Future Planet Awards raises the profile of new and growing firms that will profitably impact global challenges. In partnership with Global University Venturing, The Future Planet Awards provide a platform for growth companies to engage with leaders and influencers.
Sophia Yen, MD, MPH, is the Founder and CEO of Pandia Health, the world's only female founded birth control delivery service, which offers care, convenience and confidentiality. Pandia Health offers the easiest way to receive birth control with free delivery, online prescriptions and automatic refills. As the winner of the UC Entrepreneur Pitch Competition at this year’s Global Corporate Venturing and Innovation Summit, her initiatives to make the process of receiving birth control as simple as possible have also been recognised at this years Future Planet Awards as the winner of the special category award.
Here is an exclusive interview with Dr. Sophia about how she is changing the way birth control is received and understood.
First and foremost, please tell us a bit about your background and expertise:
Thanks for having me! To start, I have 20 years of experience in medicine. I serve as a clinical Associate Professor of Pediatrics in the Division of Adolescent Medicine at Stanford Medical School and graduated from MIT, UCSF Medical School, and UC Berkeley with a MPH in Maternal Child Health. I am the Co-Founder and CEO of Pandia Health and enjoy educating the public and other physicians about birth control, acne, weight management, and other adolescent health issues. I believe that birth control and women's reproductive health is so important, especially in the formative years. I hope to be a pioneer in this industry and start a genuine conversation to become a resource for women and young girls all around the world. I’ve had incredible opportunities, such as hosting a TedX Talk, to create awareness - I truly think this is something special.
What do you think is lacking in birth control education and how is Pandia Health changing the conversation?
We are trying to de-stigmatize birth control. Birth control pills and rings and IUD with hormone, implant, and shot can be used for more than just birth control. We can use birth control to treat painful periods, heavy periods, periods that cause anemia, periods that make women who have anemia worse, to prevent endometrial and ovarian cancer. There are about 5 different progesterones and 3 different levels of estrogens that can be in the birth control pill. so if you don’t like the pill you are on, there are LOTS of others to try.
Did you know that the top cause of missed school/work in women under the age of 25 is their periods?
We have launched #PeriodsOptional. We have a blog, a YouTube channel, and a dedicated website which we will be launching soon. A research study with 1000 women showing that FEW of their doctors have discussed #PeriodsOptional.
We are approaching this from parents of adolescents to adolescent women to perimenopausal women. I had the honor of speaking at my MIT 25th reunion during the TIM talks about #PeriodsOptional and we had women who were interested for themselves as well as fathers who had questions for their daughters and wives. We’re going to make women’s lives better by decreasing the number of periods, decreasing landfill via fewer tampons/pads, increasing school and work attendance.
Pandia Health is educating women through media, blogs, Quora, in person talks at schools, workplaces, sororities, online, youtube videos, interviews on blogs.
We are also collaborating on an academic paper to change the name from OCP to EPP. Oral Contraceptive Pill to Estrogen Progesterone Pills) to take away the stigma of it being for birth control. To take away this political football that they have made of women’s health. We already have POP - progestin only pills, so EPPs would be more clear and less stigmatized.
Women’s health is more than just birth control, it’s about being educated on every step of taking care of your body. Curious about the Morning After Pill, EC, Emergency Contraception, Plan B? Here’s What You Need To Know.
Are there any misconceptions about birth control and women’s health you would like to address?
Yes. This incessant menstruation is a modern construct. If we compare ourselves to women in Mali, Africa per Dr. Beverly Straussman’s research, we have 350-400 periods in our lives, they only have 100. They start their periods at 16, have 3 periods a year, 8 children, breastfeed for 15-18 months. We start at 12, have 13 periods/year, have 1-2 children, breastfeed for 3-6 months. It’s hard to get it into people’s minds that if you are NOT on medicines, then you should have a period every day (otherwise, we need to figure out why you aren’t such as thyroid, malnutrition, stress, etc) However, we have medications that can turn off periods safely.
Where do you see Pandia Health going and why do you think this new way of service is going to work?
We are building the Brand that Women Trust with Their Health. We are the ONLY women-founded, woman led, practicing reproductive health doctor-, 20+ yrs of reproductive health advocacy- founded/led company in this space. It took a woman to realize that we have #BetterThingsToDo than run to the pharmacy each month and that if women can’t get to their ob/gyn’s office for a prescription, then they should still have easy access to birth control. It’s going to work because we have made it work and because women want/need this service. Ask any woman on the pill, patch, ring if she is tired of going to the pharmacy and would like it delivered. I’m willing to bet she will say YES!
Congratulations again and thank you, Dr. Sophia, and your team at Pandia Health, for your achievements and exemplifying our mission to proliferate change!
For more information, watch Pandia Health’s YouTube Channel and visit pandiahealth.com to learn how to start accessing free birth control today.
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