Note: Christian Bausch is sharing his personal thoughts. They do not reflect the views of Boehringer Ingelheim.
HOW DID YOU GET INTO IMPACT INVESTING? WHAT HAS BEEN THE HIGHLIGHT OF YOUR CAREER?
I initially studied business with a focus on the music industry for my undergrad. And then continued my education in Japan at the International Christian University.
What truly inspired my switch to sustainability was the book “Let My People Go Surfing: The Education of a Reluctant Businessman” by Yvon Chouinard, the founder of Patagonia.
Of course, it is more about environmental sustainability, but it made me understand that businesses can be about more than just profit. After visiting a conference by Japanese philanthropist, I got inspired by social entrepreneurship and decided to write my masters’ thesis on how entrepreneurs measure social impact.
After my masters, I worked as a strategy consultant for Accenture and later Deloitte in Japan, both moves inspired also by the work they do with social sector organizations. For the past 5 years, since moving back to Germany, I have been working at Boehringer Ingelheim. This move was inspired by Boehringer’s social efforts to make healthcare more accessible and affordable. After 2.5 years in their internal consulting department, I was delighted to be asked to help set up the impact investing vehicle from which we invest in social startups today.
CAN YOU SHARE AN EXAMPLE OF A SUCCESSFUL IMPACT INVESTMENT YOU HAVE MADE, AND HOW IT HAS CREATED POSITIVE CHANGE?
There are 2 investments I’d like to highlight:
The first is Cowtribe. It is a company bringing vaccines to the farmers in remote areas in Northern Ghana. Cowtribe started from doing this with motorbikes since trucks could not make it through the rivers or tiny dirt roads. After proving this can be done, they started to look for more efficient ways and met Zipline at a Boehringer co-creation workshop. After initial pilots they are now using the Zipline drones for last mile delivery of animal health vaccines. This method saves a lot of money and time, while ensuring vaccines are delivered before they expire. Within just a year after our investment we have seen them grow from delivering vaccines to 8000 farmers to nowadays 12000, which is about 30 million doses of vaccines delivered.
The second one is called Ilara Health. The company provides finance for diagnostic devices to Primary Health clinics in Kenya. It started in Nairobi, and now they're present across all counties in Kenya working with 2500 clinics. The problem to be solved was that 50% of the population didn’t have access to diagnostics, not even to simple blood testing or even blood pressure testing. Ilara Health provides devices cheaper than what is available on the market. They then started to also provide simple EMR systems, since most record keeping is still done manually.
Seeing how fragmented the market is, Ilara has started a reverse franchising model, where they remodel clinics and enable them to provide a much better patient experience. With the ultimate aim to drive consolidation in the market. Provision of medication has also been piloted and rolled out.
HOW DO YOU SEE PHILANTHROPIES AND (IMPACT) INVESTORS WORKING TOGETHER?
A big misconception is that the spectrum from philanthropy to purely commercial is binary and linear – the interesting things happen in the middle of that spectrum.
We are impact first and we don’t have a big financial return target. However, we do want to be catalytic, reuse the capital, and not simply give it away. The idea is to fund highly impactful startups and build them up for more traditional investments to come in later down the line. Bigger investors do not play in this field because of the smaller ticket size, which requires a similar amount of effort (if not more) than funding larger investment rounds.
I truly believe that real impact starts at the bottom of the pyramid – in this case, it’s about access and affordability of healthcare, but also food security (e.g. animal health).
WHAT ELSE WOULD YOU LIKE TO SEE IN THE INDUSTRY?
More capital flowing into the early-stage startups to help them grow to the size that is interesting for later stage investors. The startups we focus on are looking for small investments, and they could also be helped by setting up a fund that bundles them for institutional investors to come in.
I also see that impact investing conferences are split between purely philanthropic and purely returns driven investors. It is crucial to get all the players in the same room. I see it more as a continuum, it begins with small projects in the impact space, and as the company grows bigger, more institutional capital will come in. I’d really love for the industry to all come together and bridge those gaps, for both sides to understand each other and see that we all have a role to play.
DO YOU HAVE ANY RECOMMENDATIONS FOR IMPACT INVESTORS AND FUND MANAGERS STARTING THEIR IMPACT JOURNEY?
Knowledge sharing and collaborating with your peers are the first steps in your impact journey. Finding the right networks, finding peers, mentors, consultants and learning from them is really crucial. That’s the main reason we started the Community of Practice (COP) for Healthcare Investors. This COP gathers investors and investees in sharing best practices, strategic alignment, streamlining of reporting standards, blended finance and pooling of co-funding opportunities.
I also wanted to highlight that impact investing is very similar to the way traditional investments work. Just like traditional investments, impact investments will go through the process of a due diligence assessment, choosing the right funding structure, checking the books, the business model, etc. The only thing that is different is to additionally bring in an impact lens. And if you are an impact first investor, the impact a startup creates will be one of the first selection criteria. But you will still run through the whole due diligence process.
FINAL QUESTION: WHAT ARE THE MOST USED (AND ABUSED) CLICHÉS IN IMPACT INVESTING THAT BOTHER YOU?
The notion that ESG and “do not harm” is impact investing. This often leads to investing in large scale projects rather than supporting early-stage social startups.
Impact investing starts from having a concrete plan of the positive outcomes you want to achieve, a solid and concrete Theory of Change.
You need to want to do more than simply “do not harm”, you need to have a clear vision for the change you want to make in your chosen field.
