Innovator Support for Scaling: Capital Mobilization and
White Paper Series
Innovation serves as an important tool in addressing Sustainable Development Goals (SDGs) in new and accelerated ways. Particularly in the case of SDG 3 (which is dedicated to “Good Health and Well-being”), significant issues such as equity and impact are at stake in low- and middle-income countries (LMICs), that critically translate to actual lives and the quality of these lives. This makes the scaling of innovations beyond the proof-of-concept stage a crucial priority. However, to scale beyond the proof-of-concept stage, innovators must overcome multiple barriers related to fragmented and immature markets, varying expectations of partnerships and customers, regulatory and legal barriers, team bandwidth, capability and expertise. To successfully unlock these barriers, innovations in global health require funds. This four-paper series focuses on the different tools available, as well as organizational decisions innovators need to make regarding financing opportunities and strategies.
While critical to each and every step of scaling an organization, the financing plan – as a strategy to scale innovations – often receives little attention in the early stages of growth. In most cases, decisions about accelerators to attend, initial financing mechanisms to use and organizational structures to implement are opportunistic, as opposed to strategic. Lacking both a full understanding of financing tools and approaches available as well as access to experts and/or networks to secure the appropriate form of financing, innovators often end up with ad hoc or suboptimal financing strategies, which in turn limit their opportunity to scale. Their struggle often becomes evident when attempts are made to move between growth stages and/or types of financing. Funders and stakeholders in the innovation ecosystem are representative of the interests and risk appetites of a wide variety of actors, ranging from governments to private sector corporations, donors and foundations, return-motivated investors and banks, or researchers, academic and multilaterals. To succeed, innovators must meet the expectations of multiple groups that do not always agree on the ranking or emphasis of priorities. At the same time, the landscape and strategies of funders are continuously evolving. Who will serve as an innovator’s guide through this journey with multiple critical partners? What is at stake if an innovator is not supported?
The Every Woman Every Child Innovation “Marketplace” is a collaborative, ecosystem platform that works across the spectrum of innovators, funders and partners to help global health innovations grow and scale their impact and success. Since 2016, the Marketplace - supported by Grand Challenges Canada, the Norwegian Agency for Development (Norad), the United States Agency for International Development (USAID) and the Bill & Melinda Gates Foundation - has provided innovators with support during critical transition-to-scale stages and helped mobilize funding for innovations ($42M USD, at the time of this report) that serve beneficiaries in 62 countries.
This white paper series shares insights of the Marketplace approach of hands-on support to mobilize capital. In the first paper, we discuss the barriers to scale that programmatic technical assistance support platforms can help overcome, including insights on when and how to leverage these programs to support a strong and intentional financing strategy. In the second paper, we provide an overview of the unique financial landscape in the global health sector and address opportunities for blended financing for innovations transitioning to scale. The third paper covers the business models available to technology innovators in global health, and the bidirectional relationship between these choices and opportunities for financing growth. Finally, the fourth paper dives deeper into the dual market approach and its underutilized potential to unlock financing for many innovations with aims of global reach and impact.
• A summary of the key barriers to scaling innovations in low- and middle-income countries (LMICs), best practices in the health innovation sector for success and a breakdown of support types available to innovators
• A guide to the types of financing offered by public and private funders and investors – mainly classified as grant, debt and equity – along with various market insights
• An examination of the different pathways to scale medical devices and technologies in LMICs
• Defining the dual-market strategy, different dual-market models, and insights, issues and opportunities in implementing this strategy
Who this is for
Technical Assistance Support for Health Innovations
- Successful engagement between Technical Assistance (TA) programs and innovators is dependent upon the compatibility and trust between the advisor and the innovator, the ability of the innovator to learn from advisors while also remaining in charge of their venture, as well as their ability to forge strong relationships that accelerate progress towards achieving key milestones
- There are several types of TA platforms available, and since each platform has specific offerings and expectations, it is key that TA platforms focus on their expertise and collaborate with other platforms focused on other aspects rather than attempting to address all barriers to scaling
Financing Instruments for Innovators to Scale Health Innovations
- There is a wide range of sources and types of capital available to innovators – weighing the pros and cons of each financing product is an important exercise for innovators as they seek to finance their growth
- Investors and funders must understand the consequences of the terms they impose through their financing activities, and the effect they can have on the future financeability of the investee organizations and the populations they serve
Models to Scale Healthcare Technologies
- The institutional origin (i.e. academic institutions, for-profit companies, non-profit organizations) of an innovation is often the primary driver of the scaling model pursued and the types of financing available to support that growth
- Popular pathways to scale for medical devices and technologies in LMICs include: Third-party licensing model, university spin-off model, LMIC growth model, dual-market strategy and scaling through a combination of revenues and grants
- Each scaling pathway presents its own set of opportunities and challenges that should be reviewed carefully by the innovator in order to secure the right type of financing, partnerships and teams to reduce the time needed to scale and increase the likelihood of success
Dual-market Scaling Strategies for Impact
- The dual-market strategy is a relatively underutilized business model for scaling early stage innovations in LMICs, and can be employed to address an overlap in health needs of patients in high income and LMIC markets while aligning collaboration interests between funders and investors
- Models of dual market investing include: Pure cross-subsidy, independent self-sustaining and synergistic models
- Successful dual market models require careful considerations of company, development funders and investors’ interests to align collaborative incentives and unlock critical scaling capital
For more information, contact the EWEC Innovation Marketplace at [email protected]