Grand Challenges Canada, a Canadian nonprofit that funds global health innovations, is creating a new venture capital firm and raising money for a health technology impact fund that will focus on women’s and children’s health.
Launching this spring, Cross-Border Impact Ventures will invest in companies at or near the commercialization stage that are committed to bringing their medical devices, diagnostics, digital health services, and therapeutics to low- and middle-income countries.
The firm aims to raise $100 million to $200 million for the fund. It’s the latest way Grand Challenges Canada is addressing gaps in financing for women’s and children’s health — particularly amid unprecedented fundraising challenges as global health funders redirect their attention to COVID-19.
The pandemic has made it difficult to raise capital from public and private sector investors, said GCC Chief Investment Officer Annie Thériault, who is also a managing partner at Cross-Border Impact Ventures.
“The places where we used to be able to go are now focused on COVID,” Thériault said. “And we wouldn't want to say that that's not critical. But you know, everything comes at a cost. We feel very lonely.”
The firm was set up in response to the problem of women’s, children’s, and adolescents’ health being traditionally ignored by the VC sector. While Cross-Border Impact Ventures is being incubated at GCC, it is a legally separate entity and will provide a small share of its revenues with the organization. The firm’s other managing partner is Donna Parr, who formerly worked in venture capital and private equity and was manager at the Canadian Medical Discoveries Fund.
“If you don't have the scale-ups and the successes that demonstrate that you can invest in contraception and make money … then you don't have an opportunity to bring the private sector along.”— Annie Thériault, managing partner, Cross-Border Impact Ventures
Innovators need a wide range of partners and funders to take their work from an idea to proof of concept to impact at scale, Thériault said.
“It’s really impossible for the best technologies to make it, because there's just not enough money, and it's all across the way,” she said.
COVID-19 has driven global demand for digital health innovations and highlighted the value of dual-market applicability, in which a similar innovation can be used in both high- and low-income countries. Thériault said that idea underpins the fund.
“Everyone in the global health industry is trying to bring in more and more private capital into the sector, and the dual-market strategy is a tool that could be used more,” she said.
GCC primarily supports innovators in the form of grants — for example, through the Every Woman Every Child Innovation Marketplace, an acceleration platform for early-stage innovators who are at or just beyond the proof-of-concept stage. It uses about 20% of its capital to make impact investments in companies supporting maternal, newborn, women’s, and children’s health.
GCC has also been a key partner in Saving Lives at Birth — an effort to support innovations to end preventable maternal and newborn deaths — which is part of a Grand Challenges family of initiatives launched by the Bill & Melinda Gates Foundation to leverage innovation to address global health and development challenges.
Innovations by existing groups demonstrate the value of investment from funders such as GCC. Jacaranda Health, which works to improve the quality of care for mothers and babies in public hospitals in Kenya, has gotten support from GCC through multiple stages of growth.
Early seed funding provided traction and credibility, Jacaranda Health Executive Director Nick Pearson said, adding that GCC seems “focused on what works for innovators,” rather than forcing “a rubric of their own on how growth needs to look.”
Jacaranda Health received a Saving Lives at Birth grant in 2012. Since then, it has gone through GCC’s Every Woman Every Child Innovation Marketplace and Transition to Scale program. GCC’s relationship with Jacaranda Health has expanded from investor to adviser, working with the organization to raise money from other donors and investors, including CRI Foundation and Johnson & Johnson.
“Everyone is noticing that we can do things quite efficiently when we coordinate and support each other,” says Annie Thériault, chief investment officer at Grand Challenges Canada.
“Leveraging grant capital in the early days allowed us to test out some of the challenges,” Pearson said. “It took a long time for the profit side to break even because we were dealing with trying to put together a model that was high quality and super low cost. Grants allowed us to prove and iterate on the model and understand where the market was broken.”
Thériault said she hopes later-stage capital from the new VC firm will draw more funders to women’s and children’s health technology.
“The hope is that, by having a vehicle at that stage, that you have more desire to invest early because now there's somewhere to go,” she said.
“If you don't have the scale-ups and the successes that demonstrate that you can invest in contraception and make money, that you can invest in maternal and newborn child health and have huge commercial success, then you don't have an opportunity to bring the private sector along.”
This coverage, presented by the Bay Area Global Health Alliance, explores the intersection between technology, innovation, and health. How are tech, innovation, and cross-sector partnerships being leveraged to accelerate equitable access to health care?