How to Integrate ESG and Healthcare Innovation into Venture Capital
Perspective from Neuroscientist & Health Intern, Iman Mouloudi
Iman Mouloudi is passionate about disruptive innovation, people, and impact. As a recent grad from the University of Edinburgh with a degree in Neuroscience, we were lucky to have her as an intern for our Earlybird Health Fund. Iman has an impressive background: she founded the UK’s first student-led social investment (ESG) fund and co-founded an affordable prosthetics company. To continue the theme of International Women’s Day earlier this week, we bring you her personal insights on biotech, healthtech, and women in tech. Please welcome, Iman!
1. How do you define neuroscience and how does that relate to your work?
IM: That’s a great question to kick off! Neuroscience is a truly exciting and interdisciplinary field involving developing therapeutics for the most troubling diseases of our time, such as dementia. It includes inquiry into the human mind where neuroscience overlaps with psychology or philosophy. There’s also computational neuroscience, an exploration into systems wiring and decision-making. So it’s an endless pursuit, great for someone as curious about the world as I am. At its core though, neuroscience is predominantly about the brain — how humans and other mammals are wired, and our interpretation of the environment, which shapes our brain through interaction.
How this fits into my work is also interesting. I’m exposed to, and investigate further, startups who use neuroscience in various ways. There’s also a philosophical aspect. With a scientific background you learn to be critical about intricate things; a flaw in a chain of decisions breaks the whole circuit. What I have learned to focus on from my Earlybird internship, is that this scrutiny on the minutia needs to be balanced with the “big picture” to arrive at a sensible decision. What you see from one opportunity to the next is vastly different and fascinating; you get to apply that lens to something completely new, and so having an open mind is not only necessary, but also humbling.
“What I have learned to focus on from my Earlybird internship, is that this scrutiny on the minutia needs to be balanced with the “big picture” to arrive at a sensible decision.”
The interdisciplinary nature of neuroscience is also useful for evaluating the cohesiveness of an investment opportunity. The science might be great (check), the logic (check), the market-fit (check), but you must also evaluate the team: the founders, the energy, the commitment, and fundamentally their resilience. This adds up to a “big picture” that must make sense to pursue the opportunity, and picking up on these more “human” clues goes a long way.
2. You are also clearly motivated to support ESG initiatives. How do you inspire others around you to act?
IM: I’ve been passionate about ESG since university, though it started serendipitously. I worked in a student-led consultancy specializing in collaboration with charities and social enterprises. It was foundational for me to work with companies whose core business mission was tied to the community or a social cause; it was satisfying to help organizations succeed and serve their communities better.
There I was introduced to the concept of “green finance”- the idea of financially empowering future-forward companies actively concerned about climate change, waste, CO2 emissions, as well as board representation, fair pay, and a transparent supply chain. Although the University in Edinburgh is a progressive hub, many parts of the city outside the university center face poverty and inequality. These circumstances are almost never experienced by the (majority) of the student population. I wanted to create a vehicle to put into practice the principles of ESG, green and social finance, and actively contribute to the community.
“I wanted to create a vehicle to put into practice the principles of ESG, green and social finance, and actively contribute to the community.”
I started a social investment portfolio called Prosper Social Finance, with a group of like-minded students, aimed at investing- real money(!)- in public equities using our own ESG philosophy, and essentially “putting our vote in” for companies we felt were actively contributing to a better world via their business, rather than through Corporate Social Responsibility (CSR). All profits would then be donated to the local community via grants. Ultimately, I wanted to show a pound (£) — as I’m a Brit- for a pound, that by investing in companies we believed in, as opposed to solely their financial health, we could champion a better way of doing business, and a shift in the way public stocks are valued, as well as using the outcome to facilitate a local change.
For my mentor, I was lucky to have Cary Krosinsky, an advisor, author, and educator on the theory and practice of sustainable investment; this opened my eyes to ‘impact investment’. In an age of green-washing, it is important to ask how fundamentally values such as E (environmental), S (social), and G (governance) are embedded into the operations of a company. All evidence suggests that taking into account measures such as ESG can provide the same, if not superior, investment returns — which was my experience with Prosper.
“In an age of green-washing, it is important to ask how fundamentally values such as E (environmental), S (social), and G (governance) are embedded into the operations of a company.”
2020 has brought so many social causes to the forefront: BLM and climate-change to name a few, but we have also lived through the important “me-too” era, plus the recent and ongoing farmer’s protest in India. This makes ESG a fundamental requirement for businesses going forward, and if we can finance those we believe are valuing these issues, alongside their financial health, we can start to make these values mainstream, ineluctable, and secure.
“ESG (is) a fundamental requirement for businesses going forward, and if we can finance those we believe are valuing these issues, alongside their financial health, we can start to make these values mainstream, ineluctable, and secure.”
4. You were a founder yourself. How did you get interested in interning at a VC? What inspires you about entrepreneurship?
IM: Yes, despite my degree in Neuroscience, I wasn’t made for the lab; it was never my plan to be a career scientist. With a love for oddities and artefacts about medical history and science, I considered a curatorial role in museums. However, the closer I came to the startup world, the more I saw the opportunity to combine curiosity with entrepreneurship — two things I value.
I took a summer course with FutureVC, designed to increase the diversity of candidates in venture, and to provide an introduction to the industry. It’s an extremely difficult place to enter early in your career, but I was drawn to venture in healthcare specifically as a way of innovating technology in this space. It’s incredibly cool to be at the forefront of how we do surgeries, administer therapeutics, or treat diseases — I wanted to contribute to that.
Many founders forget VCs have their own responsibilities and mission which means not every opportunity aligns. What I love about VC is that every project is different: there is a different problem, team, industry, solution, and journey. Being part of the Earlybird Health Team, I saw that every single project introduced wanted to serve patients better and innovate the healthcare system in different ways. It is both humbling and invigorating to be trusted with this responsibility.
Entrepreneurship is inspiring because it brings out people’s dedication, resilience, and ingenuity in solving problems, to improve and change the world. In healthcare, where it is so difficult to translate results between the lab and the patient, you need this in abundance to succeed.
“In healthcare, where it is so difficult to translate results between the lab and the patient, you need (dedication, resilience, and ingenuity) in abundance to succeed.”
5. What common hurdles have you detected that digital health, healthtech, or medtech founders face when approaching VC? What mental framework can facilitate their wins?
IM: For me, it seems that the VC process is still overly mystified. I empathize with founders seeking more feedback and personally strive to offer that whenever requested. However, in screening hundreds of potential deals a week, there are not enough hours in the day to provide in-depth feedback.
During my time at Earlybird, I formed three personal observations regarding reasons that likely contribute to rejection from VC fundraising. I hope sharing my opinions here is helpful to those proactively planning startup solutions:
a) The technology is evolutionary rather than revolutionary
This is a big one, and especially difficult in the health/biotech space. Much of what we see comes from the brightest and best founders who also tend to be specialists in their field. They create something that is scientifically interesting (i.e. it’s intellectually valuable), but it won’t translate well as a real life product.
A relevant example is if someone created a slightly better way of imaging bones. We use technology for this all the time is healthcare (check), so there is a real patient need. But while this new technology may be fascinating, if a bog-standard X-ray (for example) works just as well to assess whether or not someone has a broken leg, it won’t be investable, because it’s evolutionary rather than revolutionary.
b) There isn’t enough or convincing data that your solution works
Once more, healthcare is one of the few industries where you can’t really “try-it-and-see”; you cannot have an untested surgical tool or drug treatment (nor would anyone want to). Therefore, it’s worth founders investing time and resources to ensure that they have conducted the appropriate trials and ascertained a convincing result. This can be a catch-22 (you need money to get data but VCs want to see data), so the more attention that founders put into this at the beginning of their venture, the more compelling the project can become.
c) It isn’t protectable
Perhaps the most subjective point, but many projects are rejected on this basis. Certain areas of health (such as digital health) are more susceptible to this. Digital health is an overwhelmingly crowded place for a startup to exist, and while good data and a revolutionary proposal can get you really far, the final step to consider is how you can protect your IP. Ask yourself: What stops someone bigger and better-funded from replicating the same thing? Truly, there is no one single answer, but again, it is worth founders investigating their IP well in advance.
6. Why do you personally think it’s important to have women in VC, and as decision makers to support entrepreneurs?
IM: It is absolutely fundamental. The fact that FemTech is so overlooked is evidence enough. I remember seeing only a handful of projects in this space out of the almost hundreds of decks I saw. This is for a number of reasons, starting with women’s (and women of color especially) access to capital and resources that would enable successful entrepreneurship. Then, even if that hurdle is crossed, there is a lack of women in VC on the receiving end, to review these opportunities, to make the case for investment, to testify that these industries exist and are needed.
For me, the issue extends beyond FemTech or women-led startups. Ideally, I’d like to see a point where women in VC and women in entrepreneurship have the same platform to provide their insight on markets, their commentary on industry trends as many male VCs are able to. Since women in VC (especially at partner level) remain seemingly a rarity, we have a long way to go. Recent successes in the startup space give cause to celebrate: Whitney Wolfe’s Bumble IPO backed by Serena Williams’ Serena Ventures. So I’m keen to see similar progress in the healthcare industry, especially as by overlooking ~50% of the population, this can only serve to perpetuate inequity in healthcare outcomes.
7. Where will you grow next?
IM: I am lucky to be working more closely with one of the Managing Directors of Earlybird to put together a strategy for ESG implementation in VC and private investments. It’s an emerging field as it’s lagging behind the progress being made in public assets, so it’s an incredibly exciting project to take on!
Thanks, Iman. We appreciate your unique perspective and will gladly follow your journey. Readers can keep up with Iman here. This interview was edited and condensed by Elisheva Marcus. Feel free to 👏🏽 for it, so more readers discover it. 🙏🏽
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