Surprising Take-Aways from an Impact & NextGen Investing Webcast

Last Thursday we hosted an event for Impact and NextGen investors, with over 100 joining from 10 countries over three hours via Zoom. Most of the discussions veered toward the current Coronavirus crisis, which is changing the world rapidly, in ways that will last long after this fog has lifted.

That's the focus of our webcast on April 2: Coronavirus: Investment Perspectives Across Continents, Industries & Assets. We have a lot to learn right now from other countries, other industries and each other. As such, register here and suggest others to include as speakers and invite.

Impact and NextGen investors are already adapting quickly as we saw Thursday. Keynotes started with a macro view and dove into healthcare before Michele Demers (Boundless Impact) and Aaron Desatnik (Ceres Partners, a sustainable Food & Agriculture PE manager) set the stage for impact measurement. That led to panels and roundtables on investing in Impact and NextGen (including VC/tech and cannabis). Here are some take-aways.

1. History shows that this is the exact time to invest. "Many of the best companies we know today were formed in hard times (with better DNA, more cost-conscious)...and we will see a raft of great companies born in these times”, noted John Backus of Proof Ventures. Backed by Blackstone, this VC fund is partnering with early-stage funds to co-invest in later rounds for companies like Beyond Meat. "Investments in these times generate peak vintages for funds," said Scott Sadler, Head of Impact Investing at Altera, a $3B Registered Investment Advisor (RIA). Both family offices and funds are on their toes right now, working with portfolio companies but also looking for new winners, including startups, with refreshingly lower valuations and more time to do due diligence. Eric Lindberg, CIO of the Knowlton Foundation, sees periods of great dislocation as the best time to put money to work, but advised against the media's herd mentality and to look beyond what is reported on the surface to underlying data." Ben Topor of Catalyst, a fund focused on direct secondaries from founders of Israeli tech companies, sees opportunities to secure much larger discounts today.
2. Yet the worst is yet to come in the short term. This group had different opinions on how long it will take before this fog will lift. Some are bullish, echoing Elon Musk's expectation for a radical rebound and noting fewer new cases in China. However, most foresaw 3-4 months, with tens of millions unemployed. They are also watching for signs of a second wave of infections. A vaccine may take a year to develop, but some are more bullish on that too.
3. Which industries are best positioned now? Healthcare should be a big winner (attracting capital), according to Gene Huang of Cap Zone Healthcare with health-tech at the forefront but nursing homes potentially taking a hit (expect new models including a new breed of homes using tech to deliver a better quality of life). The Coronavirus crisis has exposed weaknesses in the system and will force governments to invest in healthcare infrastructure, which according to Bill Gates’ 2015 Ted Talk, was (is) unable to support “the next outbreak". Stephen Burke of ARS, a $1.2B asset manager based in New York, said tech and healthcare should be the big winners from this crisis as well as quality growth companies and those with strong balance sheets and safe dividends. Technology is helping drive down costs in healthcare as evidenced by the steep drop in genomic sequencing (from $14M to $1K). Winners and losers will be a key topic in our April 2 webcast.
4. Impact investing is here to stay. Key drivers behind sustainable investing are here to stay, with growing demand (driven by NextGen and regulations) and cost advantages (such as waste-to-energy/products, although low oil prices will push back the clock again on some cleantech). Toren Kutnick lauded Program-Related Investments (PRI) which he uses in parallel when investing from his family's foundation. Jeff Anderson shared how Manus Bio, a synthetic biology company out of MIT, benefitted from tens of millions of PRI from the Gates Foundation and others. Many, like Maurizio Totta, an active impact investor, pointed to synthetic bio as an eye-opening take-away from the day. Maurizio shared his plan to acquire and steward more of the Amazon rainforest. Andrew Howell of Ceres Partners showed how automated indoor farming reduces the spread of bacteria from human touch, helping to avoid outbreaks and food recalls. Barry Adams of Prairie Crest Capital highlighted Impact Innovations that have been developed in Midwestern Universities that reduce plastics, eliminate additives in food, and impact the global supply chain. I see fascinating research now coming out of my alma mater University of Michigan's Tech Transfer Office and thanks to strategic relationships, we will start working with the Ohio State University (yes, this is a time for building bridges, including in the Big Ten).
5. What about NextGen themes in VC/Tech and Cannabis? When I visited the NextGen VC Roundtable, I heard a lively discussion on potential long-term shifts as a result of the Coronavirus. These included increased entrepreneurship, founders doing more with less, many other emerging spaces and new uses of "virtual" in education, healthcare, and most industries. The only roundtable I didn't visit was Cannabis, but my colleague Joe Azzaro reported that the themes included how synthetic biology could impact the cannabis space (Manus Bio uses bacteria instead of yeast fermentation) and how important branding will be in the space (there is no Coca-Cola of cannabis yet, but major F&B brands are taking advantage of the CBD boom). Lack of bankruptcy protection and federal prohibition are still holding back US industry development though.
6. Web meetings work and are becoming the norm. Our latest events show that Zoom breakouts by video can be rather engaging. Chats can be useful too. We still give everyone a choice to turn video off or just join by phone, but I'm a fan of video...until the kids barge into the room! Even when we gather in person again, we will use webcasts more to bring in more people from around the world into the conversations.

Where do we go from here? Zoom + Real-Time Surveys + Groups.

Based on positive feedback, we are doubling down on Zoom and will launch a series of web events and to gather our ecosystem to keep discussing the evolving investment landscape.

These will be combined with flash surveys, e.g. our March 2020 five-question Asset Re-Allocation Survey The sixth question asks what information you seek from our network as these can be a tool for our ecosystem to learn from each other.

And next month we will launch 10 more virtual Global Roundtable Groups, which will be led by/for respective "members", including by:

• Interest: Impact, NextGen, Opportunity Zones, and Philanthropy
• Industries: Agriculture, F&B + Healthcare + Tech
• Region: Israel, Asia and Ohio (where we host a "red carpet" event)

As for events, as I promised last week, on April 2 we will host a major global webcast focused on collaboratively shedding light on how the virus is impacting different regions (learning first-hand from those across Asia), industries (from supply chains to delivery), and asset classes.

We have not only CIOs allocating capital and funds deploying it but also entrepreneurs who are poised to change the world. Some are focused on bringing vaccines or other solutions to beat this pandemic, others are simply helping to hold their communities together. This is the time for connecting and collaborating. We are still tweaking the Agenda but it will kick off at 8am ET (8pm Shanghai) with a Pan-Asian Panel, moving to an All-Continent Panel (including investors in the Middle East, Europe, and Africa), then panels focused on the virus, assets classes, and industries followed by Roundtables (two rounds) and a final De-brief. 

We have a lot to learn right now from other countries, other industries and each other. 

In that spirit, click here to register and make suggestions for the Agenda and people to include (as keynotes, panelists, moderators) or invite.

Plus, April 2 is my birthday, and I can't go out, so I may as well gather hundreds of people to join me...at the end, you can raise a glass (or cup of tea/coffee, depending on your time zone) for a toast.