“How does it feel as a human being to have half the world’s population not able to use your stuff?” asks Kathryn Gleason. This was the question posed to Tim Ring over dinner in 2015, back when he served as the chairman and CEO of C.R. Bard (a market-leading, publicly traded medical device company acquired by Becton Dickinson in 2017).
Gleason, an attorney (and also Tim Ring’s spouse), had founded and ran Morgan Lewis’ life sciences practice for 28 years. Upon her retirement, she joined the board of a social entrepreneur foundation. “As part of that orientation, the board went to New York and attended an event at the United Nations (U.N.) and another hosted by J. P. Morgan, which had been in the impact investing space for a long time,” Ring recalls. “She said to me, ‘I’ve gone to a couple of these events, and I’ve seen consumer products and financial services companies, but no medtech. Why is that?’” Ring responded that it was going to take a while before companies in those spaces could make money in certain parts of the world. This was when Gleason hit him with the, “How does it make you feel …?” question. Ring responded, “As a human being, not great, but as a public company CEO, this is what I get paid to do.” Not satisfied, Gleason went on to suggest it was time they try to have a bigger impact and to find others who feel the same way.
Challenge laid down, the two went to meet with one of the world’s leading consulting firms. “We told them some of what we were thinking, and they connected us with a person to help,” he relates. From there, they proceeded on a listening tour, for about a year, speaking with other funds, medical device companies, biopharmas, governments, current and former ministers of health, nongovernmental organizations, universities, and public and private sector global health organizations. The goal of the tour was to find the gaps to discern the real problem so it could be solved. One of the things they learned became a keystone of the organization. “We met a retired tech VP,” Ring recalls. “He commented to us, ‘It’s easy for people to write checks, but being able to give back using knowledge and experience accumulated over a 30-year career is extremely fulfilling.’” That sentiment really resonated with Ring and Gleason.
One of the first listening tour visits was to Stanford-India Biodesign, where they heard a presentation by Rajiv Doshi, M.D. “He described how there was a bit of a medtech pileup in India,” Ring recalls. Apparently, a lot of medtechs were getting started in India with money from friends and family, but once that ran out, there were limited sources available thereafter. “Doshi opened our eyes to the funding-gap problem, and as we continued the tour, we dug deeper to understand how big that problem actually was,” Ring contends. “Then you look at the health issues in these parts of the world, and you see what’s described by many as an epidemic in noncommunicable diseases [e.g., cancer, cardiovascular and respiratory diseases], an area where most medtech plays a role (i.e., diagnosis and intervention).” According to Ring, while noncommunicable diseases account for 85 percent of mortality in low-resource setting geographies, it commands only 1 percent of all global funding. “This, combined with our med device background, helped us rather quickly identify where the unmet medical and financial need was (i.e., sub-Saharan Africa and India).”
Upon completion of the listening tour, the couple concluded that to have the greatest probability of impact while being based in the United States, they needed the combination of a for-profit and a non-profit working together. “We then went to two law firms, Simpson Thacher & Bartlett for the nonprofit work, and White & Case for the for-profit work, and laid out our concept,” he continues. “That’s how TEAMFund got its structure, and that’s what got us into the impact-investment space.”
THE BUILDING OF TEAMFUND - A BIGGER CHALLENGE THAN ANTICIPATED
Ring admits that setting up and running TEAMFund turned out to be more work than anticipated. “There’s a big difference between three people trying to do something versus the 20,000 employees I had as a CEO,” he relates. The structure of TEAMFund is unique in that TEAMFund Inc. (a 501(c)(3) nonprofit) is the general partner to TEAMFund LP (the impact investment fund) “It’s running two entities simultaneously — with the same mission, but separate nonetheless,” Another challenge resides in where TEAMFund is focusing its efforts (i.e., sub-Saharan Africa and India). “In general, startups need a lot of help,” he states. “But startups in these parts of the world need an awful lot more.” This is why TEAMFund has taken a very hands-on approach. For example, the managing partner, the cofounders, and maybe an advisor or two, will meet with companies they fund in person at least once a year to develop and review strategy. “We were constantly on the phone, so we built a network of 54 advisors to assist,” he shares. “Last year, we deployed around 15 advisors supporting these companies for 363 hours.” In other words, TEAMFund provides more than just money. “Deciding where to invest is important; however, for us the hard work really begins after the investment is made,” Ring clarifies. And though these startups can be situated anywhere in the world, an important part of their commercial strategy and business must be sub-Saharan Africa and India. These companies operate more like minimultinationals than a typical U.S.-based medtech startup.
Tim Ring, Cofounder/Co-chairman, TEAMFund
Once the issues were identified, Gleason and Ring took to building the TEAMFund board. As a former CEO of a public company, Ring had spent a great deal of time putting boards together. “I consider a board of directors like a series of Venn diagrams connected with a commonality in the center; however, you want them all to be a little bit different when it comes to background skillsets,” he elaborates. For example, Doshi is an M.D. with an MBA who has worked as an engineer, venture capitalist, and entrepreneur. “Christopher ‘Edge’ Egerton-Warburton is in private equity with significant African investment experience plus, was co-CEO of the Global Health Investment Fund (GHIF),” he adds. Leith Greenslade has been involved with the U.N. for years, mainly in maternal and infant health. Chuck Fleischman was cofounder and CEO of a diagnostics company called Digene (now part of Qiagen), the first cervical diagnostic company. Kristoffer Gandrup-Marino is the chief of innovation at UNICEF, which is a huge player in global health. And Gbenga Ogedegbe, M.D., is a cardiologist and vice dean of global health at NYU, who spends 25 percent of his time in Africa. “These were the types of diverse yet synergistic backgrounds we sought,” he notes.
Next, they filed for a 501(c)(3) (portion of the U.S. Internal Revenue Code allowing for federal tax exemption of nonprofit organizations). While waiting for it to be approved, Gleason and Ring met with medtech companies to get seed money for the nonprofit. “The nonprofit was built mainly with the help of the medtech community,” Ring attests. “To date, between the nonprofit and for-profit fund, we’ve had 11 multinational medtech companies and 13 former medtech CEOs participate financially.” After constructing the “Fund,” they did a search for a managing partner. “We hired a great guy in Yousuf Mazhar, who’s been with us two-and-a-half years to lead this effort,” he mentions.
FINDING THE CONVERGENCE OF AI AND MEDTECH A FULL TIME JOB
Ring notes that TEAMFund is a full-time job for him and Gleason, while also being 100 percent philanthropic. “We give all of our time, and actually, it costs us money to do this,” he laughs. “And when you do something with your spouse, there are no Saturdays and Sundays off. Because when you wake up at 5:30 in the morning, if it’s not the first thing you’re talking about, it’s in the top five. Same thing when going to bed at night.” This type of commitment is why TEAMFund has grown to a $30 million fund. “We did a first close of $18 million in September 2018 and will do a final close within one year of that. It’s never easy to raise money,” Ring admits. “But we’ve been successful, perhaps because of our unique for-profit and nonprofit model that is highly targeted to medtech in low-resource settings for global health, focused on noncommunicable diseases.” Further, he expects the Fund to achieve both meaningful impact and market-rate returns.
What about executing in sub-Saharan Africa and India and picking the companies in which to invest? Turns out selecting the companies had not been the challenge Ring would have guessed. “The question I had when we started this was if we were going to be able to find enough good investable companies? But we’re finding great companies,” he attests. This is just one of the reasons why Ring has become convinced that the convergence of AI and medtech will happen first in these geographies. “There are not enough doctors, nurses, and healthcare workers in these areas to treat the population,” he explains. “In fact, I’ve heard that there are more doctors from Ethiopia in Chicago than there are in Ethiopia.” Ring believes that the convergence of AI and medtech will solve a lot of healthcare problems in parts of the developing world by enabling access and improving care, resulting in better outcomes. Now extrapolate these technologies into some of the developed markets, such as the U.S. “Here you can improve efficiencies and save money by enabling a lower-skilled healthcare worker to be able to do more things,” he concludes. “If we can find those technology platforms that can do both, that’s the win-win of TEAMFund to achieve significant impact with market returns.”
This is part two of a three-part series. In part three (January 2020), we will learn how two Big Pharmas are investing for impact.