Borrowell: Why We Invested

By Ander Iruretagoyena and Priya Parrish

COVID-19 has exacerbated economic inequalities globally and the need for consumers to have healthy credit profiles in order to achieve economic stability and mobility. While some consumers have been able to build stronger balance sheets amidst lessened spending opportunities, that has certainly not been the case for all, especially for those underserved by the financial ecosystem. Many impact investors are aware of the need for financial inclusion strategies in emerging economies, but the size of the under/unbanked in developed economies is also notable. Take Canada, for example, where approximately 9M Canadians (close to 1/3 of adults) have non-prime credit scores (credit scores under 660). Consumers in this cohort face constraints accessing affordable credit, which can put additional pressure on already tight budgets. 53% of Canadians live paycheck-to-paycheck and 27% still don’t have enough money to meet their needs. Outside of predatory lenders, there are few options for this group of financially insecure consumers.

Solution

Borrowell Inc. is a leading Canadian online lending platform designed to offer personal loans and free credit scores. The company's platform utilizes free credit scores and monitoring services to make AI-powered product recommendations, including money management solutions, bill alerts, and predictive cash advances. Users benefit from access to low-interest loans and financial education tools while financial partners benefit from high intent pre-qualified leads. Borrowell aims to be the go-to platform for anyone looking to see their credit reports, gain financial education, and have access to budgeting and capital products aimed at improving financial stability and mobility. This should make a difference for the more than 25% of Canadians who feel overwhelmed by debt.

Why We Invested

Borrowell’s acquisition of Refresh Financial (a fintech company enabling credit rehabilitation through its credit builder loan and secured credit card products) represents a compelling opportunity for the company. With the funding in place to finance this acquisition, Borrowell will be able to expand its product line and build out a multi-product strategy that can produce stronger financial stability for their target customer while increasing their lifetime value. Upon close, the company will immediately realize gains through cross-selling opportunities, improved unit economics related to decreased loan origination costs, and significant synergies. Having a strong first-mover advantage, Borrowell is the clear leader in the large but relatively uncompetitive (when compared to the United States) Canadian financial origination market. The Impact Engine team has conviction in Borrowell’s management team and their systematic and comprehensive plan for integration that includes continued focus on driving measurable improvements to their customer’s financial health.

ImpacT

The combined entity will target the underserved subprime credit population. 53% of Borrowell users have credit scores of less than 659 and the average starting credit score of a Refresh Financial client is 500. However, through engagement with the Borrowell platform, users are able to improve their credit score by a demonstrated 171+ points in 24 months. Borrowell has already demonstrated its ability to establish financial prosperity for its user base through raising the credit scores of its users, lowering their cost of borrowing, making budgeting more manageable, and increasing their savings. This acquisition and round of funding will amplify that impact by enabling the company to serve more non-prime credit seekers and to provide a broader suite of products and services that meet the diverse needs of each user.

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Clinify Health: Why We Invested

By Tasha Seitz and Elizabeth Coston McCluskey

Healthcare represents 18-20% of GDP in the US, and $1 out of every $6 spent on healthcare is through Medicaid programs that serve 75 million individuals in low-income households (almost $600 billion in fiscal 2018). Regulations and the Centers for Medicare and Medicaid Services are shifting the system towards value-based care, and providers will have to adapt or drop out of the system. 

The transition from fee-based to value-based care has not taken place in underserved communities where many patients are covered by Medicaid and Medicare. Value-based contracts still only represent 20-30% of the market, and adoption has come primarily from large physician groups that have the capital to invest in technology, quality experts, and customized interoperable technology platforms. 57% of the market opportunity lies outside of these large provider groups.

Physicians are time-strapped and likely to treat patients for acute symptoms and thus overlook other underlying common chronic conditions and prioritize preventive services at a population health level. Physician practices managing multiple value-based plans can find it challenging to determine which plans prioritize which cost and quality measures for which patient, and when there are more than two recommended measures per patient, compliance drops to 20%. In addition to the challenges of effectively managing patient encounters, the process to get reimbursed under value-based care programs is cumbersome, and it can take up to six months  for providers to be paid for their services.

Solution

Clinify Health supports providers and practices in underserved communities to transition from fee-for-service to value-based care by automatically risk stratifying a practice’s patient population, guiding medical staff as to which patients they should be proactively reaching out to, and providing recommendations to physicians on what actions to take during their patient engagements based on the cost/value of services in addition to clinical utility. Clinify is embedded in clinical workflows through the electronic health record; it pulls clinical data and compares it to value-based contracts to see what services to provide to the patient as part of a complete check-up based on that patient’s needs. In the future, Clinify will enable immediate verification of contract milestones and improve the cash flow cycle for providers serving Medicaid patients.

Why We Invested

Physician practices have been hit hard both emotionally and financially during the COVID19 pandemic, which has had a disproportionate impact on underserved populations. Keeping providers in business and serving their local communities is critical, and Clinify is aimed at supporting these practices to deliver high-quality care, in a cost-effective manner. With the drop in fee-for-service revenues due to the pandemic, there is a near-term opportunity to aid provider groups in shifting to value-based care contracts. Clinify’s recommendations are based on state-by-state guidelines and can give guidance on a contract-by-contract basis across multiple payers, and the company’s business model aligns values and incentives across key stakeholders.

The founding team at Clinify reflects the community the company aims to serve and has deep experience in healthcare, including primary care, value-based care and Medicaid populations. The team also has strong connections to payers, who are interested in accelerating the shift to value-based care but have struggled to get providers on board.

Impact

By enabling physicians serving Medicaid patients to transition to value-based care, we believe that Clinify will improve outcomes for patients while reducing overall healthcare costs and improving the financial viability of physician practices in underserved communities. Access to quality care is an important dimension of health equity, and Clinify will assist physicians in identifying high risk patients and proactively reaching out to those individuals to ensure they are receiving the appropriate care. The company will track quality metrics that are foundational to longitudinal care (for example, BMI and A1C for diabetic and pre-diabetic patients). In the longer term, we expect Clinify to reduce emergency visits, increase post-discharge follow-ups, and lower the overall cost of care. 

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PosiGen: Why We Invested

By Ander Iruretagoyena and Priya Parrish

With 2020 being deemed the worst year for climate change, now more than ever it is important to ensure the businesses which are combating it have enough capital to scale swiftly and efficiently. According to NASA, responding to climate change involves two possible approaches: reducing and stabilizing the levels of heat-trapping greenhouse gases in the atmosphere (“mitigation”) and/or adapting to the climate change already in the pipeline (“adaptation”). Solar panels on residential rooftops contribute towards mitigation by fulfilling the electricity needs of households with 80% lower emissions than fossil fuels. For the average household, this 8,460 pound reduction in C02 is equivalent to 432 gallons of gas (UC Berkeley). Typically, these environmental and financial ($17,000 over the life of a solar system) savings have been reserved for high income households due to the upfront investment required. There are 30+ million low-to-middle income (LMI) households in the U.S., representing 42% of the total potential for residential solar, yet they only represent 30% of installations annually. Serving these communities could create meaningful cumulative reduction in carbon emissions while driving additional benefits of economic empowerment through household savings.

SOLUTION

PosiGen, Inc. (“PosiGen”) is a developer of solar power systems intended to reduce household energy consumption and generate power. The company's solar power systems enable customers to achieve greater fiscal autonomy and energy independence by lowering their utility bills. Currently, PosiGen is the only for-profit residential solar platform that focuses exclusively on providing solar and energy efficiency upgrades to LMI households. Over the past 5 years, PosiGen has installed over 15,000 residential solar energy systems throughout Louisiana, New Jersey and Connecticut.

WHY WE INVESTED

PosiGen has a competitive differentiation with a unique product market fit focused on underserved LMI communities (enabled by a competitive moat of having 8+ years of credit history underwriting LMIs with ~100% collections). The company is well-positioned to capitalize on the $67B residential U.S. solar energy industry growing ~30% annually (driven by rising awareness of climate change, state tax incentives, and utility costs). PosiGen’s approach is fundamentally designed for affordability: standardized kit models, project clustering, and subcontractors decrease installation time/costs while a cost savings only approach to underwriting drives referrals and lowers customer acquisition costs. This allows the company to install solar systems for ~40% less than competitors.

IMPACT

We believe that PosiGen has the ability to make a positive impact on climate change and the environment by mitigating emissions, increasing efficiency, and democratizing energy independence. Management, which includes a founder with 25+ years of entrepreneurial and senior management experience and a CFO with over 20 years in renewable energy, is committed to measuring and continuously reporting impact metrics centered around energy efficiency and economic empowerment of customers served. PosiGen is democratizing access to clean energy and its related benefits by focusing on LMI communities, which account for 73% of their installations to date. In FY ‘20, the company is on track to produce over 70mm KWh of clean energy.

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SupplyShift: Why We Invested

By Tasha Seitz and Chris Wu

Companies are increasingly shifting to responsible sourcing policies. This is due to multi-stakeholder pressures from consumers, investors, NGO’s, and employees, as well as a growing awareness that active management of social and environmental issues in supply chains can decrease risk and create new opportunities.

Deloitte estimates the market for responsible supply chain tools will reach $2.7 billion over the next five years. However, 65% of procurement leaders say they have limited or no visibility beyond their tier 1 (direct) suppliers. Information they do have is often siloed in legacy systems or in unwieldy spreadsheets. Buyers need a system that supports multi-tier networks, provides superior data management and visibility through transparent reporting, benchmarks supplier performance, and facilitates engagement so that suppliers follow-through and act to make business improvements.

Solution

SupplyShift is a supply chain ESG (environmental-social-governance) data management platform enabling customers to trace, assess and manage impacts in their supply chains. It helps buyers efficiently and securely gather and analyze data about supplier performance to any level in their supply chain. SupplyShift’s platform streamlines the process of engaging the supply chain, giving buyers an end-to-end view of supplier sustainability performance. Through its focus on collaboration and shared value, the technology helps buyers and their suppliers make the fundamental shift from simple data management and reporting to active supply chain improvement. It delivers insights that enable buyers to elevate sustainability as a factor of purchasing, risk management, and overall business resilience. The SupplyShift platform makes it seamless to gain the insight needed for a more responsive, responsible, and productive supplier network.

Why We Invested

We believe that SupplyShift’s platform will enable buyers to proactively engage, understand, and improve supplier ESG performance, in turn creating a virtuous cycle that will drive sustainability throughout global supply chains. SupplyShift has demonstrated the ability to sell to large buyers, like Walmart and The Sustainability Consortium. The team also has deep subject matter expertise; the co-founders Alex Gershenson and Jamie Barsimantov both have PhD’s in Environmental Studies and have over 12 years of professional experience in the space as the co-founders of EcoShift, an environmental and sustainability focused consulting company.

Impact

Responsible sourcing plays a key role in ensuring the long-term sustainability of businesses. Global production and use of food and consumer goods accounts for more than 80% of water usage and 67% of tropical forest loss globally, and more than 75% of the greenhouse gas (GHG) emissions associated with many industry sectors come from their supply chains. An EY survey of UN Global Compact participants ranked supply chain practices as the biggest challenge to improving their sustainability performance. In order for companies to address environmental and social issues such as deforestation, human rights, and animal welfare, they must know where their inputs come from and how they are produced. SupplyShift has an opportunity to shift the level of transparency and engagement industry-wide.

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Afresh: Why We Invested

By Elizabeth Coston McCluskey and Tasha Seitz

Global grocery spend is approximately $7.5 trillion annually, and sales of fresh products (produce, meat, seafood, bakery) are rising as a percentage of that spend. Just under half of a shopper’s cart consists of fresh products. However, existing technology solutions focus on “middle of the store” non-perishable items. Because fresh food is perishable, non-uniform, and merchandised in an extremely dynamic fashion it is difficult for stores to predict and manage their inventory. This leads to 10+% “shrink”, or waste, in fresh categories. Produce waste alone is estimated to cost $10B a year in the US and close to $100B / year globally. In addition, significant (harder to quantify) waste occurs in consumer households due to food spending excessive time in the supply chain — losing precious days of shelf life that could be given to consumers. With supermarkets’ thin net margins of 2–4%, they are looking for solutions to help them reduce waste and improve profits.

Solution

Afresh’s AI-powered software enables department managers to generate waste-minimizing and profit-maximizing order quantities for items in fresh departments. The company’s machine learning model takes into account factors that drive demand such as weather, day of the week, mix of items in store, promotions, and competitive activity. It also accounts for supply considerations such as shelf capacity, shipment frequency, and existing inventory. Afresh’s tablet-based app guides the manager through an ordering workflow for each item, whereas they had previously ordered based on the produce department manager’s best guesses recorded using pen & paper. Afresh is currently serving produce departments, with plans to support meat and food service in the near term, and distribution centers in the future.

Why We Invested

Afresh has demonstrated the ability to sell to large, regional chains including Fresh Thyme, headquartered in Chicago. Early customers are committing to chainwide rollouts, with expansion from produce departments into meat and bakery products. Leaders in the industry have validated Afresh’s solution, and are demonstrating their support by investing in this round. In addition to a sizable market opportunity estimated at over $10B per year, we believe there is substantial impact potential, and the team has a strong commitment to impact.

In these challenging times, we are critically examining the potential impact of the COVID crisis on both our portfolio companies as well as new investments, and we believe that Afresh will continue to be a valued solution in the event of a protracted recession. We expect grocery retailing to see steady demand through difficult economic times. Because Afresh enables grocers to reduce waste and thereby increase profitability, we believe the company has the potential to improve the financial health of grocers during a downturn in the economy. Current customers are pushing to accelerate their deployment of Afresh’s solution, which is a positive indication of the company’s value and potential.

Impact

Food waste in the US consumes 21% of all freshwater, 19% of all fertilizer, 18% of cropland and 21% of landfill volume. Retailers throw away 40+ billion pounds of food annually, equivalent to 10% of the total food supply at the retail level. This problem is most pronounced in fresh produce, which consistently sees 12% losses. Afresh has been able to demonstrate 25% food waste reduction with initial customers, which at scale could have massive environmental impacts. Additionally, if the Afresh solution can enable retailers to make better margins on fresh food, it should become more available and affordable to consumers.

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Insight+Regroup: Why We Invested

By Catherine Lien and Priya Parrish

In the United States, 51% of counties do not have a psychiatrist and 37% do not have a psychologist. Meanwhile, ~20% of the U.S. population suffers from a mental health condition at any single time (Association of American Medical Colleges). With similar rates of mental health illnesses and substance abuse across urban and rural populations, there is a need for mental health care nationwide.

Solution

As a combined company, Insight+Regroup is the largest and most comprehensive telepsychiatry service provider in the U.S., connecting behavioral health providers to patients and eliminating barriers of geography by providing virtual telehealth services. Insight+Regroup has the unique capability of providing services both on an on-demand basis for emergency cases or scheduled basis for more chronic issues. The combined company serves over 250 different facilities across 35 states and employs a provider base with hundreds of clinicians including Psychiatrists, Psychologists, Licensed Clinical Social Workers, and Advance Practice Nurses.

Why We Invested

In December 2019, we invested in InSight+Regroup at it represents a compelling opportunity to (i) improve outcomes for patients with mental/behavioral health issues, (ii) reduce the cost of care for patients with comorbidity (chronic disease + mental or behavioral health condition), and (iii) decrease the negative effects of mental/behavioral health issues such as homelessness and violence. Due to its breadth of telepsychiatry solutions, Insight+Regroup is well-positioned to capitalize on a large and growing market ($40bn global market size, with 25% CAGR since 2014) with favorable industry tailwinds due to rising mental health awareness, increasing government support, and advances in communications technology.

Impact

Research from the Association of American Medical Colleges concludes that “The United States is suffering from a dramatic shortage of psychiatrists and other mental health providers. And the shortfall is particularly dire in rural regions, many urban neighborhoods, and community mental health centers that often treat the most severe mental illnesses”. Insight+Regroup’s platform helps address the shortage and mental health professionals by offering access regardless of location. As of 1H 2019, most of the combined company’s billable patient hours took place in provider shortage areas defined as correctional facilities, critical access hospitals, outpatient/behavioral clinics, and Native American organizations.

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TimeDoc: Why We Invested

By Elizabeth Coston McCluskey and Tasha Seitz

The number of chronically ill Medicare patients is expected to double from 40 million to 80 million by 2030. Insurers are pushing providers to manage their chronically ill populations via lower cost staff and digital health tools. Condition monitoring, care coordination and disease education for patients with multiple chronic conditions is estimated to represent a $15 billion market.

At the same time, many patients want to age in place with convenient, personalized healthcare. However, adopting new care management programs requires change. Healthcare providers need people, processes and tools to transform from episodic and reactive in-person care to continuous and proactive virtual-based care.

Solution

TimeDoc provides a virtual care management platform to Federally Qualified Health Centers (FQHCs) and provider groups with 10+ physicians. Their initial focus is on Medicare patients with chronic conditions that qualify for reimbursement for remote care, and they are piloting a behavioral health integration component for screening.

TimeDoc’s differentiation is that they offer a hybrid solution for virtual care management, meaning they have a SaaS solution that enables the provider’s staff to document the time they spend on working with and for patients and get reimbursed for that time, plus they can supplement the provider’s capabilities with TimeDoc’s own care managers. This makes it easier for providers that are cash-strapped and resource-constrained to launch virtual care programs and gradually transition their staff to take over the management of patients as they have capacity, while getting reimbursed for the work that they do with patients.

Why We Invested

We believe TimeDoc offers a very pragmatic solution with a combined software and services model, making it easy for providers to launch a virtual care program. The company has demonstrated an ability to generate strong revenue traction despite a small sales team and limited investment capital to date. We have also been very impressed by the company’s high customer win rate, patient enrollment and retention metrics.

COVID-19 has changed the landscape for the delivery of healthcare in the near term, if not the foreseeable future. We believe that TimeDoc is well-positioned to help providers increase their virtual and remote patient management practices. Additionally, the company itself is structured well for these uniquely challenging times. The company utilizes an inside sales model, and care managers are already accustomed to working remotely.

Impact

By providing consistent virtual care management for patients and building relationships over time between managers and patients, we believe that TimeDoc will improve outcomes for patients while enabling financially-strapped clinics to receive reimbursement for the time they spend managing patient care outside of office visits. TimeDoc has collected some early impact data from customers on the impact of patients enrolled in its virtual care management programs. One community health center found a 70% improvement in the number of diabetic patients coming in for testing, and a 16% improvement in the number of patients successfully managing their diabetes. Another customer more than doubled the growth in the number of patients coming in for primary care visits and tripled the number of patients completing depression screenings.

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Footprint: Why We Invested

By Catherine Lien and Priya Parrish

The Packaging sector is the largest user of plastics, producing ~150M tons of plastic packaging waste annually (Citi). In the U.S. alone, 80M tons of packaging waste is produced per year, 40% of which ends up in a landfill (EPA.gov). It is estimated that half of all packaging waste is produced by the food and beverage industry. Single-use plastics are especially problematic because most products cannot be recycled or composted. Additionally, from 2019 through 2050, CO2 emissions from plastic production and incineration could equate to 56 billion tons, or almost 50 times the annual emissions of all of the coal power plants in the U.S. (NPR.org)

Solution

Footprint International Holdco, Inc (“Footprint”) is one of the market leaders in biodegradable, fiber-based food packaging. Its packaging solutions eliminate single-use plastics in the food and beverage sector with products such as protein trays, shelf-stable cups, produce tills, straws, beverage rings and lids, and frozen food packaging. Footprint’s products are oil & water leak proof, freezer & microwave & oven safe, water resistant, and shelf-stable as well as 100% compostable, recyclable and repulpable, biodegradable, and ocean safe.To-date, Footprint has been issued 6 patents and has submitted 18 U.S. and international patents.

Why We Invested

Footprint’s IP-backed solutions demonstrate superior product performance for the most challenging food applications. We believe Footprint is poised to grow as their customer base includes the largest CPG and Food companies who are all large end users of single-use plastic food packaging. Footprint’s leadership team brings a culture of innovation — the Company’s founders Troy Swope and Yoke Chung were previously engineering managers at Intel and its Board of Directors includes leadership with backgrounds from Sproutz, Salesforce, and Intel.

Impact

We believe, based on company-provided information, that Footprint has the ability to make a tremendous positive impact on climate change and the environment by replacing single-use plastics. Since its founding in 2013 through December 31, 2018, Footprint has (i) replaced 50M pounds of plastic, (ii) saved over 38M kilograms of CO2 equivalent emissions, and (iii) saved over 1.4 billion megajoules of energy. Upstream in its supply chain, Footprint obtains its feedstock from sustainable North American fiber sources certified by the Sustainable Forestry Initiative and Forest Steward Council. At the end of life, Footprint’s products are 100% biodegradable, recyclable and repulpable in a modern landfill or water.

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