Editor’s note: This article is sponsored by Johnson & Johnson Impact Ventures, which supports ImpactAlpha’s Investing in Health coverage. In partnership with J&J Impact Ventures, ImpactAlpha is exploring the market potential of impact investments in purpose-driven entrepreneurs working to improve health outcomes for underserved communities around the world.
The COVID-19 pandemic has overwhelmed fragile healthcare systems and exposed and exacerbated social and racial health inequalities around the world. This challenging moment demands that we reimagine newly resilient health systems equipped to replace acute crisis response with preparedness, prevention, and community building.
These are the same lessons I learned watching my father, who was a physician, care for patients in his practice as a child in Belgium.
Increased private sector investment is needed now more than ever: The World Health Organization (WHO) estimates an additional $371 billion is needed to achieve the Sustainable Development Goals by 2030. Strategic health investing has the potential to be transformational. Catalytic investments in innovative startups have the power to scale up the “lab to last mile” vision of bringing life-changing healthcare to vulnerable populations in underserved regions.
Filling the health investment gap
The global impact investing market is an estimated $715 billion, yet just 7% of that sum goes toward health. The tide is slowly turning: funding for U.S. digital health startups nearly doubled, from $7.5 billion in 2019 to $14.1 billion in 2020. Johnson & Johnson Impact Ventures (J&J Impact Ventures), an investment vehicle within the Johnson & Johnson Foundation, is helping to bridge this gap, by funding tech-forward approaches to supporting frontline health workers in low-resource settings.
Better-supported health workers trained and empowered to deliver quality care are the foundation of stronger, more equitable health systems.
One obstacle to achieving this goal is that in-country entrepreneurs, who know the needs of their neighbors and communities best, are often overlooked and passed over for funding in favor of ventures backed by citizens of richer countries. This “ex-pat” gap unfairly disadvantages local entrepreneurs in developing communities and undervalues the relevance of their lived experiences.
Conventional notions of who and what are worthy of investment require disruption. J&J Impact Venture’s approach jumpstarts local grantees’ work, enabling them to deliver unique, lifesaving products and services tailored to the specific needs of the people and communities they serve. By fostering true co-ownership, our handpicked grantees generate real social impact as well as financial returns, positioning them for sustainable growth.
One purpose-driven enterprise supported by J&J Impact Ventures that is helping to address the looming shortage of health workers is DANAdidik, a peer-to-peer lender in Indonesia. Co-founder Januar Sudharsono, struggled to pay his university tuition – the same problem his co-founder Dipo Satria experienced in his own family. The pair established a pilot website to help students connect with financial support to help with education costs. With hard work and early investments, it blossomed. Today, DANAdidik operates as a student loan fundraising platform for aspiring health workers that allows the public to provide low-interest loans and participate in profit-sharing once students secure work and begin earning income.
The potential of the healthcare industry’s increasing collaboration with technology companies and startups to pioneer inclusive innovations on the front lines of care is exciting. Sparking creative collaboration to promote wellness worldwide is why J&J Impact Ventures recently boosted its commitment to $50 million to find and support health impact entrepreneurs in developing communities around the globe. The portfolio has expanded to 47 impact entrepreneurs whose work reaches 1.7 million people.
Beyond catalytic funding, J&J Impact Ventures offers entrepreneurs essential access to technical assistance, executive mentorship, and a powerful network. Strategic impact investment contributes to a larger health ecosystem that includes accelerator programs for early-stage startups and regular convenings to share ideas and insights. Our resources enable us to embrace risk and welcome early-stage enterprises, nurturing companies to scale proven business models focused on enhancing health service delivery ensure long-term success.
Nontraditional grants and financing are other important avenues to support health workers and grow promising healthcare businesses. For example, nurse education financing provides low-interest loans and incentives to make nursing education more affordable. Nurses who work in high-need areas are offered loan forgiveness, an important tool to help address the projected shortfall of 18 million health workers. Unique performance-based contracts, such as social impact bonds and development impact bonds, align incentives across government, social enterprise, and investors. We encourage new investment partners to join us.
As COVID-19 has shown with painful clarity, there is a need for innovative health access everywhere. Millions of people worldwide lack access to quality care. Enabling more equitable healthcare access and health outcomes is a primary goal of Johnson & Johnson Impact Ventures and the Johnson & Johnson Foundation. That means health impact investments must meet innovators and patients where they are, which includes established and emerging markets across South America, Southeast Asia, and beyond.
Digital health platforms, like Patient Knows Best, which provides patients with a single online personal health record, and artificial intelligence hold incredible promise for improving the wellbeing of marginalized people living in remote or under-resourced settings. The ravages of the pandemic have sharpened our focus even more powerfully on cultivating the entrepreneurs whose ideas and determination will improve – and save – lives.
Kris Sterkens is Company Group Chairman of Janssen Europe, Middle East and Africa (EMEA) and Chairman, Johnson & Johnson Foundation, EMEA region.