Our June 2022 Newsletter
Alcanza: Why We Invested
Clinical trials have historically lacked representation from diverse ethnic and racial groups, while also lacking diversity in gender and age. Clinical trial populations are often not proportionate to the populations that are affected by the disease. Recent studies have shed light on the lack of diversity in clinical research. One example can be found in gender representation. Women and specifically women of color have historically been underrepresented in clinical trials. A recent Northwestern Medicine study analyzed over 20,000 clinical trials between 2000 and 2020 and found that women are underrepresented in clinical trials in cardiology, oncology, neurology, immunology and hematology. This stat is particularly troubling given that cardiologic and oncologic diseases are among the leading causes of death among women in the United States.
Minorities are also vastly underrepresented in clinical research. A 2019 article in JAMA Oncology highlighting the disparities in race reporting and diversity in clinical trials in oncology found that on average, 76% of trial participants were white, 18% Black, 3% Asian and 6% Hispanic. Even more striking, a recent analysis of Alzheimer’s trials found that while Black people are more prone than White people to develop Alzheimer’s disease, they represent only 2% of those included in clinical trials.
Adequate representation is critical in clinical research for various reasons. First, disparities in access to clinical trials prevent minorities from benefiting from advances in science. Additionally, lack of adequate trial diversity can result in trial outcomes that are less applicable to the entire population. Further, therapies can have different efficacy and safety effects in different subpopulations. Therefore, lack of diversity in clinical trials may fail to assess racial differences that affect clinical outcomes. Diversity in trials is needed to promote equitable access to healthcare and to improve outcomes by making trial populations better reflect the population across various racial, ethnic, gender and age groups. However, historically, no clinical trial site network platforms have specifically focused on diversity and increasing representation of minority groups.
Solution
Alcanza, which means reach in Spanish, is focused on targeting diverse clinical trial participants and underserved markets to improve equitable representation in the clinical research space. Alcanza Clinical Research is a multi-site, multi-phase clinical research platform with locations currently in Massachusetts, New Hampshire, Michigan and South Carolina. The company has established a presence across Phase I-IV studies and various therapeutic areas, including Neurology, Dermatology, Psychiatry and Vaccine. This is a roll-up strategy in which Martis Capital formed Alcanza upon the acquisition of three initial sites, has since acquired a fourth site and intends to continue to grow both organically and via acquisition of additional sites. By leveraging its national footprint, best-in-class systems, standard operating procedures and deep sponsor relationships, Alcanza is positioned to become a market-leading platform in a highly fragmented space of more than 2,500 independent research sites.
Why We Invested
Minorities continue to be under-represented in clinical trials. However, racial, gender and age diversity is critical in ensuring the equality, validity, and scientific rigor of clinical research. While the issue is beginning to gain wider acceptance, scientific research still suffers from a severe lack of representation across all therapeutic areas. Recently, the FDA and pharmaceutical sponsors have called for greater trial diversity that better resembles the overall population. Further, lack of patient recruitment diversity can slow the drug development process, as evidenced recently by the Moderna COVID vaccine clinical trial. However, while the FDA has called for greater representation in clinical trials, no specific regulations have been enacted. Given the FDA and society’s push for pharmaceutical corporations to implement adequate patient diversity in clinical research combined with the fact that there is no existing market leader in the space, clinical trial site networks such asAlcanzaare well positioned to differentiate themselves by driving recruitment of minority populations. A scaled clinical trial platform such asAlcanzawill have the integrated systems and capabilities to run larger and more complex trials with diverse patient populations, thereby advancing innovative treatments through the various clinical trial stages.
The Alcanza team has extensive experience in the clinical research space and integrating sites. More importantly, the team has an explicit focus on the patient experience and recruiting diverse patient populations; diversity in clinical trial participants is core to the Alcanza team’s mission. Specifically, CEO Carlos Orantes has over 25 years of experience in the drug development industry. Carlos previously led a leading site network brand and oversaw over 50 clinical trial sites. He has direct expertise integrating sites into a broader platform and brings with him a depth of industry relationships and clinical trial expertise. Further, Alcanza’s leadership and the lead investor, Martis Capital, are working closely together in further professionalizing the Alcanza platform. More recently, the Martis Capital and Alcanza teams have developed a true partnership, working together to launch the Alcanza platform and develop the core business strategy. The Martis Capital and Alcanza teams share a similar mission to build a leading clinical trial site network that is committed to increasing representation in the clinical trial space.
Impact
We believe that Alcanza can not only increase representation for minority groups in the clinical trials that it manages, but also has the potential to serve as a market leader in this space and help to change the way the industry approaches diversity in clinical trials. Central to our investment thesis is the fact that Alcanza aims to increase representation for underrepresented groups in clinical research. However, recruiting and retaining diverse populations into clinical trials is not always straightforward as specific subpopulations may be hesitant to enroll in clinical trials, may lack the means of adhering to the trial requirements and may be uneducated as to how their involvement in trials may impact their own health as well as contribute to broader scientific research. Therefore, there is a high level of engagement required by Alcanza in order to educate and engage diverse populations. We are confident that Alcanza has the expertise and the commitment to address this issue. Alcanza has brought on a well-regarded industry expert to serve as the Chief Patient Experience Officer, a leadership role unique to Alcanza within the industry, which further solidifies Alcanza’s focus on this issue. Alcanza intends to specifically focus on aspects related to community and patient engagement in order to successfully recruit and retain diverse trial participants.
IMPACT ENGINE AND BERNSTEIN PRIVATE WEALTH ANNOUNCE STRATEGIC PARTNERSHIP
We are excited to announce that we have established a strategic partnership with Bernstein Private Wealth (NYSE: AB), a global investment management firm serving institutional investors, individuals, and private wealth clients.
The partnership will specifically focus on investments in environmental sustainability, economic opportunity and health equity across venture capital, growth equity and buyout managers. The partnership with AB is a significant vote of confidence in our strategy of generating financial returns, while driving positive impact outcomes.
Adding this investment strategy supports our firm’s mission as a Public Benefit Corporation to “engage more investors, entrepreneurs, and advisors in a market where financial returns are linked to positive social impacts.” It will also contribute to the growth and diversification of the impact investing industry, and the reach of our firm.
You can read the AllianceBernstein press release, and you can always learn more about our firm and investment strategies on our website. Thank you for being a part of our community and sharing in the journey toward our vision of a world in which all investments optimize both financial and social returns.
Our Team is Growing!
Our Showcase Recaps & Chicago Impact Investing Landscape
Private Funds as Impact Investors - Chicago Impact Investing Showcase Recap
By Lily Wang
The final event in Impact Engine's 10th annual Chicago Impact Investing Showcase took place on April 26th. Concluding a series that explored various types of impact investors, this session focused on private funds. It explored the important role funds play in aggregating and deploying capital on behalf of the many actors discussed in prior sessions such as governments, individuals, and foundations. Jessica Droste Yagan served as moderator and provided introductory remarks, putting into context how funds might define their impact strategy within the 5P Framework.
The ensuing discussion offered insights from both fund managers and founders, demonstrating the ways in which capital flows through private funds to generate impact. Tasha Seitz, Partner at Impact Engine, shared how Impact Engine has approached impact investing over the past ten years, across six funds, 68 companies, and $124M in AUM. Tasha explained how Impact Engine invests in companies where financial returns and impact are expected to grow hand-in-hand, and how they seek impact commitments through mechanisms such as board seats, side letters, impact theses, and impact metrics. She shared examples of such investments across Impact Engine's three primary focus areas:
Economic Opportunity: BookNook is a virtual literacy and math tutoring platform that has enabled students to record a 1.0 reading level improvement
Sustainability: Measurabl is a sustainability performance platform that has provided close to 12M gross sq. footage of commercial real estate with actionable sustainability insights
Health Equity: Workit Health is an end-to-end virtual solution for addiction treatment with 1.5K customers, of which 95% reported an improvement in quality of life
Tasha then invited two Chicago-based entrepreneurs to share their views on how working with impact funds has enabled them to achieve their intended impact. Feyi Olopade Ayodele, CEO of Cancer IQ, shared an overview of how her company aims to end cancer with early detection and prevention. She explained how Cancer IQ has been able to help patients, health providers and diagnostic partners stay ahead of cancer with their precision prevention platform, demonstrating a 16% increase in early diagnosis. Feyi shared that working with Impact Engine has been instrumental to realizing her vision of Cancer IQ as a broad network that engages all parts of healthcare. While traditional VC firms may have pushed Cancer IQ to consider a different path due to the slow regulatory environment of the healthcare industry, working with impact investors allowed Feyi to stay true to her mission. Cancer IQ is now integrated across 40 health systems, 200 hospitals, and recently closed a Series B round.
Next, Mindi Knebel, founder and CEO of Kaizen Health, shared how working with investors like Impact Engine has enabled her to expand Kaizen Health's impact reach. The company had its start as a platform connecting healthcare with transportation. However, the company has since expanded into additional projects by leveraging its platform to increase public transit accessibility, reduce infant mortality through a maternal transportation program, improve food security during the COVID pandemic, and offer up to 7,000 monthly rides for Chicago Public Schools. Mindi thanked Impact Engine for believing in Kaizen from the start, and for helping expand Kaizen's reach across a broad range of social determinants of health.
Andy Zopp, Managing Partner of CAST US (Cleveland Avenue State Treasurer Urban Success Fund), then took the stage to share more about how CAST US is working to bridge the capital and resource gap impacting Black, Latinx, and female entrepreneurs in Chicago's South and West Side. The $71M portfolio launched last year and has already invested in 12 high-impact companies led by historically underserved founders. Andy invited two of these entrepreneurs to share how working with CAST US has enabled them to not only access catalytic capital, but also receive support and empowerment from Cleveland Avenue's entrepreneurial development expertise.
Sergio Suarez, CEO of Tackle AI, began with a powerful story of how he looks forward to the day when founders and investors from the Latinx community are common in the VC world. He expressed appreciation for funds like CAST US for driving towards that vision and supporting diverse founders. Sergio explained how Tackle AI is transforming the way companies use and manage unstructured data. Tackle AI enables the redaction and extraction of data in documents at higher speeds, with greater accuracy, and at a fraction of the traditional cost by combining deep learning with core logic engines. Tackle AI has experienced rapid growth, tripling their valuation in the past 8 months, and anticipating a 4x increase in revenue for this year.
Lastly, AYO Foods co-founder Perteet Spencer shared how CAST US' support has been instrumental to AYO's success in bringing West African foods to a broader audience. AYO aims to celebrate the many flavors of the diaspora, while enriching nutritional value through diversified crops and creating lasting economic value through farm partnerships. Since launching in July 2020, they have tripled their frozen food line from three to nine items, and have expanded their distribution reach 90x, growing from 50 doors with Whole Foods to 4,700 doors across several major retailers. They also built their first farm in Liberia in partnership with Girl Power Africa, offering new economic outcomes for women in the region.
The speakers showcased just a small slice in the diversity of impact that private fund investments make possible. They each emphasized the unique value that impact investors bring to the table, and the ways in which impact-aligned founders can maximize their reach with similarly impact-aligned capital. Importantly, they demonstrated how there is no need for trade-offs between financial and social returns in today's ecosystem. Jessica closed out the session by sharing the current landscape of impact investing funds in Chicago, with over 30 firms investing across various asset classes, themes, geographies, and the 5Ps. On behalf of Impact Engine, Jessica expressed appreciation for the continued momentum and growth of this landscape over time, and excitement for what is yet to come for impact investing.
Find more sessions on the 2022 Chicago Impact Investing Showcase page.
Information presented in this document is intended solely for informational purposes and should not be interpreted as a recommendation or offer of securities or any other financial instrument. Unless otherwise indicated, the information contained herein is current as of the date of publication of this document and is believed to be reliable and has been obtained from sources believed to be reliable, but no representation or warranty is made, expressed or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of the information and opinions.
Foundations as Impact Investors - Chicago Impact Investing Showcase Recap
On Tuesday, April 19th Jessica Droste Yagan moderated the third session of Impact Engine’s 10th annual Chicago Impact Investing Showcase. Throughout this four part series we explored the different types of impact investors (Governments, Individuals, Foundations, and Private Funds); but in this session we highlighted the role of foundations as impact investors, through both endowment and grant or donor advised fund pools of capital.
Following opening remarks by Jessica, the session opened with Debra Schwarz of the MacArthur Foundation. Debra explained how the Foundation defines impact investing and introduced one of the Foundation’s investees, Leon Walker from DL3 Realty Advisors, to talk about his work using responsible real estate development as an engine for economic opportunity (a theme very close to home for IE and most directly advanced by our investment into PadSplit). Laura Kernaghan shared how the Chicago Community Trust (CCT) engages in impact investing, and introduced Leah Missbach Day to talk about her experience in impact investing through her donor advised fund at the CCT, World Bicycle Relief. Lastly the conversation was concluded by Robert Tucker who spoke about the inspiring work of the Chicago Community Loan Fund (CCLF) which can also be invested in via the various donor advised funds of the CCT. All the speakers are real life examples of the good that is created when foundations reach investees through impact investing.
Debra noted that MacArthur Foundation, as an organization that has been around since 1983, manages $8B+ in AUM, and has made over 200+ investments throughout Chicago and the globe, they know there is a spectrum to impact investing. On one side of the spectrum falls conventional investing, and as one moves to the other side they encounter Responsible Investing (Screening), Sustainable Investing (Prioritizing ESG Factors), before finally arriving at Impact Investing which they divide into Finance 1st and Impact 1st. (At IE we think slightly differently and see us having financial returns because we lead with impact but regardless the overall point is valid.) Although not all of MacArthur’s assets are invested with an impact first mindset (~$400M are distributed across Benefit Chicago, Catalytic Capital Consortium, CDFIs, Housing, Chicago, and Climate Solutions), they are making strides throughout the whole portfolio and making sure that everything they do ties back to 3 pillars: providing mission driven innovation, being equitable and inclusive, and lastly being sustainable.
As an investee of the Foundation, Leon said DL3 Advisors has helped create over 3,000 jobs in the Chicago area by doing things that no one was willing to do like building a WholeFoods complex in Englewood. Despite being one of the most heavily trafficked parts of the city, Engelwood was continuously overlooked by developers and fell victim to the wide disparities evident in the city which extend beyond economic terms and even demonstrate up to a 15 year gap in life expectancy vs. some other areas in the North of the city. By working closely with the community, DL3 avoided unchecked proliferation and understood that “revitalization” does not have to mean gentrification. They follow a SEED framework: Shape needs into actionable projects, Empower local developers/ contractors, Expand with non-profit partners, and Direct contracts and opportunities. DL3 also adds special emphasis to the last letter by partnering with efforts like CEMDI. DL3 is just getting started and is currently raising $50M in impact equity to pursue large scale placemaking strategies in Jackson Park, Englewood, South Shore, and Grand Boulevard.
Laura noted that CCT is a public charity with the mission of facilitating philanthropy by pooling donations to local nonprofits. They have over $4B AUM and manage ~100 different portfolios that prioritize impact above all else. To help in this mission, CCT has pioneered a platform for various different impact investing opportunities in order to help donors align their charitable assets with their personal values and amplify the charitable assets and philanthropy of the trust. The platform has worked to ensure that several of the available options focus on disrupting the structural issues with the allocation of capital to individuals and communities. As a user of the platform, Leah reminded us of the powerful words of Rev Dr Martin Luther King Jr:
“Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.”
Lastly we heard from Robert about the offerings of the CCLF. This CDFI has had as its mission the economic development of the Chicagoland community since its founding back in 1991. Originally established with a $200K investment now worth ~$140M, this CDFI has helped dozens of projects and institutions all while maintaining an AA-*** & Policy Plus rating from AERIS. Some of its recent fundings include the XS tennis center, Ignite Technology, and the Chicago Neighborhood Rebuild program.
In this session we heard both from a large private foundation and a large public foundation (as well as some of their investees and donor advisors), however the topics discussed here are not exclusive to these behemoth organizations. Jessica concluded the session by sharing a personal story of her experience as a trustee of a small family foundation and provided some examples of how they have been able to embed impact into the allocation strategy of the endowment without sacrificing any financial returns, as well as amplifying impact in their program-oriented investments. If you find yourself in a similar situation we urge you to question your DAF fiduciary or foundation advisors and to please count on Impact Engine as a resource to help advance you in your impact journey.
Find more sessions on the 2022 Chicago Impact Investing Showcase page.
Information presented in this document is intended solely for informational purposes and should not be interpreted as a recommendation or offer of securities or any other financial instrument. Unless otherwise indicated, the information contained herein is current as of the date of publication of this document and is believed to be reliable and has been obtained from sources believed to be reliable, but no representation or warranty is made, expressed or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of the information and opinions.
Individuals as Impact Investors - Chicago Impact Investing Showcase Recap
By Chris Wu
The second event in our Chicago Impact Investing Showcase series took place on Tuesday, April 12th. The focus of this session was the role of individuals as impact investors. Jessica Droste Yagan served as the moderator and made some opening remarks to help frame the discussion. She began by defining some commonly used terms such as socially responsible investing, ESG, and impact investing. Jessica also gave a primer on the 5P Framework, which is a helpful framework for understanding the impact in impact investing.
After the opening remarks each of the panelists made some introductory remarks, beginning with Noelle Laing, the CIO of Impact Investing at Builders Asset Management. Builders Asset Management is part of Builders Vision, the impact platform for Lukas Walton. The goal of Builders Vision is to build a more humane and healthy planet through four impact focus areas: Oceans, Climate & Energy, Food/Ag, and Community. The organization takes an integrated approach to driving system-level change; they use a combination of grants, impact-first investments, market-rate investments, advocacy, and coalition building as a means to achieve that goal. The Builders platform is organized into three strategies:
Builders Asset Management - The asset management team invests strategic, patient capital responsibly across an ambitious, diverse portfolio. The team generates returns that are reinvested to drive long-term impact.
Builders Private Capital - The direct investing team provides capital, mentorship, and value-added resources to entrepreneurs innovating to build a better future. S2G Ventures is part of the direct investment team, they back entrepreneurs across the supply chain from soil to shelf.
Builders Initiative - The philanthropic team seeks to accelerate and catalyze change through grant-making and impact investing in people and organizations on the frontlines of change. They have a special focus on Chicago and the Midwest.
Noelle explained that you need multiple tools at your disposal in order to solve the complex challenges facing our planet. Their platform allows them to take an “Issue First - Tool Second” approach. Builders Vision starts first with the issue that needs to be solved, then sets out to go find the best tool in their toolkit that they have to help solve it. Noelle gave some examples of some of the endowment investments they have made recently. They had invested in an access fund focused on low-to-moderate income (LMI) communities. Chicago place-based bonds is another specific focus area. They have funded an affordable housing unit in Englewood, and also invested in intergenerational housing for seniors that take care of you and for youth that are aging out of foster care. These investments are particularly meaningful to them because those closest to the problem are best equipped to solve it. Some of these opportunities are offered through mutual funds, so folks have access to it even if they’re not a high net worth individual (HNWI).
Noelle then invited Kate Danaher, Managing Director of S2G Ventures Ocean and Seafood to talk about the work they’re doing to make our oceans more sustainable. Kate has spent her career in impact investing. She is also passionate about giving unaccredited investors a chance to become impact investors. Kate joined S2G because the Builders Vision is an incredibly powerful tool for change. Kate gave an example of one of their impact investments, profiling a company called Aquatic Protein based in Beardstown, Illinois. The company is addressing two critical issues: 1) the proliferation of invasive asian river carp in the river basin there, and 2) the need for low cost fish meal for pet food and other land animals. There is a big need to replace wild catch with a sustainable low cost solution. The government spends millions of dollars to try and get rid of the invasive carp. Aquatic Protein creates a business case for the restoration work by actively fishing the carp. Aquatic Protein holds a proprietary zero waste process for producing the fish meal. They focus on remediation and partner with local fishers and give incentives, and have been removing more carp than anyone else in the area. The company’s technology is highly scalable, and can be applied to other invasive species outbreaks in waterways and other regions beyond the midwest. It has been a strong investment for S2G’s venture capital arm because the impact that is enabled by the growth of the business (similar to product-based impact as described in the 5P Framework). If this company is successful, the core of its business could have a meaningful impact on the health of the IL river basin.
Next, Jane Direnzo Pigott, Managing Director of R3 Group, spoke about her personal journey as an impact investor. At R3, Jane specializes in providing leadership, change, and talent consulting to organizations. Prior to R3, Jane practiced law for over 20 years, most recently at Winston & Strawn where she served as chair of the global Environmental Law practice group. Jane became an impact investor because it allows her to align her investments with her personal values. Jane actively invests both directly in companies as well as in funds, with a focus on opportunities where she can utilize her expertise and resources to support enterprises with women and BIPOC founders and leaders. While her personal impact investment thesis centers on improving equity and access, she utilizes the 5P Framework to identify where there might be compelling opportunities. Jane believes that equity has an impact on every single investment, whether it’s a climate change or health investment, and that diverse teams outperform. When assessing opportunities, she looks to define the impact, quantify the level of risk, set a minimum ROI, and to back disruptive technologies. Jane initially looked towards traditional institutions to source investment opportunities and measure impact, but learned that she had to take a more active, hands-on approach. She works with a group of others to help source and diligence deals, and she takes more personal responsibility for looking at exactly what she will measure for impact and be willing to walk away from opportunities that don’t fit her criteria. If she is presented with a strong investment opportunity that does not have diverse teams or at least have a strong plan for addressing DEI, it would not meet her criteria.
Jane highlighted First Women’s Bank as one of her impact investments and introduced Melissa Widen, the bank’s CAO and General Counsel. Melissa discussed how the women’s economy lacks access to capital they need to grow. Women own 42% of all businesses in the US. 50% of those are owned by women of color. This represents 13 million businesses, it’s an intersectional issue. The women’s economy (women-owned and women-led) together needs capital to grow and thrive. Gender disparity is holding women back. Only 16% of all commercial loans go to the women’s economy, that represents just 4% of the total dollars lent. The First Women’s Bank addresses this, it aims to level the playing field to promote financial inclusion across the board, empower women economically. The path to forming First Women’s Bank was challenging, they were viewed as a group of women with no track record, fundraising in the middle of a pandemic within a highly regulated industry. Despite all those challenges, they were successfully able to raise $32.6M in capital.They received their charter from the state of IL last year, arranged FDIC insurance, and had a grand opening in the fall of 2021. Their unique banking practices are now disrupting traditional banking. First Women’s Bank offers a different way to think about your banking relationship. Banking clients are increasingly asking questions like: How diverse is this bank’s board? What are they using my money for? What does the bank stand for, what are their values? Does it align with mine, what is their stance on DEI? In terms of approach, First Women’s Bank leans heavily into SBA lending, which is ideally suited for the small business economy and a great fit for the women’s economy, which tends to be service related businesses.
The session wrapped up with a Q&A session discussing how to balance due diligence between impact and financial return. The panelists also shared resources on how people can begin to dip their toe into the water of impact investing. The list of resources include:
Find more sessions on the 2022 Chicago Impact Investing Showcase page.
Information presented in this document is intended solely for informational purposes and should not be interpreted as a recommendation or offer of securities or any other financial instrument. Unless otherwise indicated, the information contained herein is current as of the date of publication of this document and is believed to be reliable and has been obtained from sources believed to be reliable, but no representation or warranty is made, expressed or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of the information and opinions.