Virgin's first official impact investment
One of the many things I love about working at Virgin is how we approach new business. We have always entered markets looking at how we can have a positive impact and what value it would bring to consumers, employees, community and the wider world. The term “Impact Investment” is a more formalised way of doing just that.
When I first went to our Board with the idea of introducing an “impact investment fund” at Virgin, I was met with genuine interest and a desire to find out more and in this abridged extract from my new book, WEconomy, I introduce three brilliant colleagues who worked with me to secure the very first impact investment we made at Virgin.
“Given our history, we knew that Virgin was well-positioned to explore the growing sector of impact investment further. We’re working to ensure new investments align with the goals and objectives around impact investing, but also that our existing companies incorporate social and environmental goals through our Purpose work. That way we learn from each other and bring everyone into the conversation."
Let me introduce you to our impact investment team: Edouard, George, and Bruno, who are better placed to take you through Virgin’s first official impact investment: mOm Incubators.
Edouard Muuls, George Howard, and Bruno Igreja:
The first challenge was to find investment opportunities that met our criteria. In short, and in true WEconomy style, our selection needed to link purpose with profit. To build a pipeline of opportunities, we started meeting entrepreneurs and like-minded investors, joined impact aggregator networks, engaged with external advisors, attended conferences, but also picked up the phone to call management teams of businesses that struck us as great impact businesses.
'When we discovered mOm Incubators (mOm), it was immediately clear they were unique and had the potential to be an ideal first investment for us. We had discussed with Holly, a trained doctor, our potential to do something game-changing in the area of infant mortality, particularly given the migrant crisis across Europe. At first glance, mOm seemed to bring a solution to a dire problem along with the market and product potential to grow into a significant and profitable venture.
James Roberts created mOm after watching a documentary on Syria in which he learned that the stress of war has caused infant mortality rates to soar. He saw this as an opportunity to make a difference and invented mOm in a Design Engineering course at Loughborough University, where he went on to win the Sir James Dyson Global Prize for Innovation in 2014.
mOm is a collapsible, portable infant incubator – much lighter and cheaper than traditional models – that provides a regulated environment to keep babies warm every bit as effectively as the incubators in well-equipped neonatal intensive care wards.
The genius of mOm is that it’s designed to be used anywhere, from rugged, harsh environments in rural Africa to time-sensitive neonatal transport in the developed world – and everywhere in between. mOm provides high quality, durable infant care conditions to service the most challenging settings.
First steps at Virgin were to meet the team behind mOm. James and his partner Matt Khoory jumped at the chance to show off their product and to talk about seed funding. It took only a single introductory meeting, in which James demonstrated the functionality of a prototype unit, to get us jumping straight into our due diligence process.
Emotionally, we were sold. But we needed to create more rigorous parameters for it to be a true impact investment. If we didn’t define our returns, it would just be a donation. We concentrated on the following key areas:
Nature and measurability of impact, and how this might evolve
Achievability of the go-to-market strategy, particularly across developed and developing markets
Intentions and motivations of our co-investors, particularly the lead investor in this seed funding round
We also had to get up to speed with mOm’s business and impact model. To do so, we spent time with James and Matt to go through some of our key due diligence questions. We needed to make sure they had a strong plan to scale and therefore achieve the impact that we all desired.
We focused on determining the financial viability of mOm, just as we would any other Virgin Group investment. But what set our impact investing process apart is the time we spent researching the extent of the problem that mOm was looking to solve. We wanted to truly understand the level of impact mOm could have. What we uncovered was eye-opening.
mOm had invented a lightweight and compact incubator for five per cent of the cost of a conventional model, which was 100 per cent as effective at regulating the thermal environment.
To underscore our commercial due diligence, we needed more firsthand intel on mOm and its product. We learned that a critical problem in the developing world was that existing technology, if it was even available, was not understood, maintained, or used. Simply put, the market was crying out for a simple piece of technology that would meet this growing need at an affordable price - seemingly a perfect backdrop for mOm to make a difference.
The final piece of the puzzle was to speak with our co-investors, and in particular MaSa Partners, the lead investor. We were encouraged by MaSa’s and UNICEF involvement, and certainly saw the strategic opportunity and connections they could bring to mOm at board level.
Importantly, we agreed to embed a statement on impact objectives in MaSa’s Articles of Association, thus establishing a degree of “mission- lock” for the company and ensuring impact would always be front and center in its goals.
Reassured by MaSa’s commitment, and alongside our other due diligence efforts, we sought formal Virgin approval to proceed, and met with Holly to get her views.
The rest is history! With one investment under our belt, we’re looking for other impact investment opportunities. It’s true the first is often the hardest. We’ve learned lessons we’ll bring to our next venture. mOm is a very early stage investment, and carries with it all the risk typical of seed companies.
For mOm, the journey is just starting. Like any other company, it will undoubtedly encounter hurdles along its development path. Our role, as a key shareholder and investor, is to support management as the company matures, lend a hand when needed, but above all to allow James and Matt to get on and build a great business that could lower infant mortality rates.”