Venture funds help social enterprises persevere during COVID-19
By: Fhi Ventures
Tags: Social Entrepreneurs, Covid 19, Resilience, Impact Investing, Venture Capital

Adapting to Covid-19: How Venture Funds work with Social Entrepreneurs to persevere during a Pandemic

Authored by: Priyanka Rao, Principal, FHI Ventures

The COVID-19 pandemic has created uncertain times across the world. In addition to bringing a variety of systemic social and environmental issues to the forefront, it has exposed market and economic challenges. Social enterprises of all sizes are grappling with the negative implications of this crisis, with companies struggling to secure healthy cash flow, maintain payroll, reach consumers, and sustain or grow operations. Early-stage enterprises are especially struggling with these issues.

In addition to stabilizing their business, entrepreneurs must figure out how to pivot their business model and raise capital while thinking of ways to address the increased needs and demands of customers and communities. The interplay between pre-existing social challenges and the pandemic has exacerbated existing inequities while posing new problems like how to safely delivery products and services from a public health perspective and how to procure goods in a timely manner given supply chain issues.

As a result, many impact entrepreneurs are overwhelmed. However, the pandemic also presents an opportunity to be innovative, nimble, and agile. COVID-19 is driving growth in consumer online activity, which is positively impacting many digital and B2C startups. New companies implementing novel approaches to socio-economic challenges continue to emerge in areas such as telemedicine, digital mental health, vaccine development, water and sanitation, remote-enabled education platforms, and others. Existing companies are also successfully finding new applications for their products and services and exploring innovative ways to deliver them.

At FHI Ventures, the impact investing venture arm of FHI 360, we have supported our portfolio of early stage companies in the U.S., Asia, and Africa to adapt and create opportunities during COVID-19. Our investees provide a range of examples of successful pivots and business strategies initiated as a result of the pandemic, and these are just some of many examples seen this year by venture-back social enterprises:

· Folia Water’s mission is to make the world a safer, cleaner, and healthier place through its innovative water filters. They are expanding their products beyond water filters and food packaging to include face masks and other personal protective equipment (PPE) using their unique, low-cost process to mass manufacture anti-viral paper. Folia Water’s silverized anti-viral paper could help reduce the amount of virus on the mask’s outer layer. The company has already established several key partnerships with multinationals and value chain partners for all their business lines.

· Access Afya is a healthcare organization based in Kenya and is on the frontlines of fighting for the health and safety of some of the most vulnerable communities in the region. They launched ConnectMed, a telemedicine platform accessible to all of Access Afya’s patients, to reduce the need to enter crowded clinics. ConnectMed is also able to provide patients with e-prescriptions.

· THINKMD has developed a digital home screening and educational app to help determine whether a person has clinical symptoms or conditions associated with COVID-19. In partnership with multinational mobile network operators, THINKMD is distributing the tool to people throughout Africa and Asia. The app will both expand individual knowledge of the pandemic and generate critical health and epidemiological data for disease surveillance analysis.

How can investors support impact entrepreneurs?

FHI Ventures has worked closely with its investees to help them adapt to this “new normal” and equip them with ideas and tools to take advantage of emerging opportunities. Reflecting on our experience over the past few months, we realized that investors can play a critical role in supporting companies and entrepreneurs alike in persevering through tough times. To do this, investors must center their response in empathy and aim to build entrepreneur’s resilience while helping them concentrate on high-priority activities that are critical to steering the company in the new socio-economic landscape.

Build entrepreneur resilience through empathy

As an impact-driven investor, we have found that one of the biggest ways to show support is to simply listen to the entrepreneurs. This has been even more important since the beginning of the pandemic. Calls with other investors and entrepreneurs that focus on what matters to them do not yield financial or impact metrics, but they can support an entrepreneur’s psychosocial wellbeing.

We regularly checked-in with entrepreneurs about what was happening in their lives as well as the impact of COVID-19 on their businesses and future ambitions. We found these conversations to be one of the most powerful ways that impact-driven investors can support their investees. They provide a much-needed space for entrepreneurs to reflect on what is happening and identify any lessons they can integrate into their operations and approaches to building, leading, and managing their company into a more resilient future. In addition to helping the entrepreneurs “feel heard,” these conversations provide important insights into what that they are facing. After these conversations, we were able to work with the entrepreneurs in a more effective and concerted manner to reduce or remove the pain points that are under our control.

Reduce pain points to allow entrepreneurs to focus on what’s important

One way that FHI Ventures has supported its investee companies during the pandemic is by identifying resources to maintain cash flow. This includes researching calls for grants and COVID-19 related emergency and relief funding, participating in brainstorming calls with other investors and advisors on helping entrepreneurs solidify new product and service ideas, and providing feedback on plans to offer their products and services effectively and safely. We have also found synergies between the companies and the broader programming of FHI 360 and have leveraged them in some of FHI 360’s larger grant applications.

Perhaps even more importantly, we assisted entrepreneurs with reporting required metrics to us and the other investors. In addition to providing greater flexibility with reporting deadlines, we walked them through the reporting requirements and filled in the numbers together.

Moving forward, one of FHI Ventures’ goals is to identify and document specific strategies that our portfolio can use in addressing any future downturns, and we have already begun to look at enterprise resilience strategies from the due diligence stage. Throughout the pandemic, we have maintained our focus on inclusion and equity practices within our investee companies, particularly with regards to gender and minority equity.

Finally, venture capital funds play an important role in ensuring access to equity and debt financing, resources, and mentorship to help early-stage companies rapidly pivot or adapt to changing market, social and economic dynamics during this crisis. Beyond meeting the financing and networking needs of early stage entrepreneurs, funds can also ensure and influence the application of a diversity, equity, and inclusion lens in their investments.

Please visit the FHI Ventures and FHI 360 websites for more information on our approaches to innovative financing and programming.

Thank you for editing contribution from Shikhank Sharma and Rachael Morgan.