DURHAM – Impact investing is booming. And there are no signs of slowing down.

Just check out the Global Impact Investing Network’s (GIIN) latest figures. There is now $228 billion invested in impact funds (investments that generate a measurable social impact alongside a financial return) – up from $77 billion in 2015.

But there’s a catch.

“If you double click on that $228 billion, where is it going?” Wellington Pak, head of strategy and president of FHI Ventures, mused out loud to a crowded room at LaunchBio’s Invest in Cures forum on Thursday night.

To answer his own question: “Eighty percent of it is later growth stage, private equity deals. To be a little provocative, that’s a problem,” he said.
“Where we see the need in the ecosystem is actually in the earlier venture space, and much less of that obviously goes into that space.”

That was his starting point when he and a panel of investment professionals gathered to discuss trends in venture philanthropy.

It was standing room only as more than 200 people packed into the auditorium at North Carolina Biotechnology Center to learn about how nonprofit organizations are increasingly making investments in life science companies.

No longer solely focused on making grants to researchers, these foundations are creating a range of investment vehicles to accelerate the pace of returns on technologies that may provide new therapies and cures for patients.

Trend towards early-stage investment?

In Pak’s case, FHI Ventures is a social enterprise accelerator and subsidiary of FHI 360, a nonprofit human development organization dedicated to improving lives in lasting ways by advancing locally driven solutions.

Looking ahead, he said, he sees a new push to build the ecosystem in that earlier-stage phase.

But that’s not all. Whether working with developing countries or disadvantaged communities stateside, investments will take a more “integrated approach”.

“The trend I’m seeing is that for all of us, I would think, are investments that are increasingly cross-sectoral. Even if you’re looking at a health outcome and attacking that problem, many times interventions require an education investment or an economic development investment.”

Interest in digital tools

For Mark Allegretta, National Multiple Sclerosis Society’s Associate Vice President of Commercial Research, he sees a bend towards companies developing digital tools.

“For example, some tools look at replacing the keyboard on your phone with a keyboard that sends data out on how you’re swiping because that can be a readout of fatigue, a symptom of MS. [It’s] anything we can do to monitor that.”

Another is tracking a person’s outdoor activities or attendance at doctor’s visits.

“There’s a host of digital tools that can present some real opportunities, and all of this is in the non-pharmalogic development space,” he said. “That’s the single most thing right now that we’re seeing a lot of interest in. And fortunately, many venture capital firms are recognizing that this is the new horizon. We’re trying to figure out how to find some space there.”

Accelerating the pace of commercial viability

There’s also a drive towards making investments that are also commercially viable, said Robert Crutchfield who is heading up a new fund, BrightEdge Ventures, from the American Cancer Society.

“Over the last 50 years, the Cancer Society has put $4.8 billion to work in translational research. They’ve done a really good job at identifying investigators who are doing important work in problems that need solving. But what they haven’t been in a position to do is catch those solutions as they are becoming commercially viable. And then be able to put a return profit on those deals so they can invest and get financial gain.”

But that’s slowly changing.

“These organizations that had invested a lot of money in research, they had a lot of data and pattern recognition on where the put is going. It’s a great opportunity for them to take venture capital discipline, leverage that discipline with institutional knowledge that we have through our researchers or clinicians, but apply that for value and syndications around investing and return.”

Surely, it’s a win-win for all.