Medical student Medha Sharma joined the Fund for Health to support Penn’s investment in the social determinants of health. She shares her methodology for finding and investing in companies that make a difference.

What do a local barbershop, financial database, and LinkedIn message have in common? All three are sources through which I found companies working to improve the social determinants of health (SDOH) of local Philadelphians.

The Department of Health and Human Services defines the social determinants of health as “the conditions in the environments where people are born, live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks.”

As a student associate for the Fund for Health (Wharton and Penn Medicine’s collaborative impact investing program), I reviewed hundreds of companies to help find promising investment opportunities. Here’s my framework of best practices for sourcing high-impact investment opportunities.

Start by finding the real need.

A company may sound like a great impact investment, but unless its solution directly addresses the needs of your intended community, your efforts may be akin to fitting a square peg into a round hole.

I begin by prioritizing subject areas for investment by ranking the most relevant social determinants of health in Philadelphia. The medical literature is a great place to start. The University periodically publishes Community Health Needs Assessments, ordering social determinants of health based on what community members self-identify as most important for their neighborhoods.

I then triangulate these reports with third-party research. The Center for Disease Control reports which health issues are the most prevalent by zip code and which conditions demonstrate the highest health disparities. Cross-checking these reports with local health news ensures that the social determinants of health identified for improvement match with reported gaps in health outcomes.

For example, in Philadelphia, substance use disorder ranks number one in Community Health Needs Assessments and overdose rates are frequently published in the Philadelphia Inquirer. One of the first companies to receive investment from the Fund for Health was RecoveryLink. RecoveryLink is a start-up providing peer support to individuals recovering from substance use and mental health disorders, thereby addressing a major social determinant of health in Philadelphia.

Source creatively.

How exactly does one find companies that meet the identified needs of a community?

I begin with the basics: databases such as PitchBook or CrunchBase and articles on the web mentioning budding new start-ups. Reliable sources for articles featuring social determinants of health start-ups include MobiHealthNews and FierceHealthcare. I query these databases and article archives with specific search terms based on the social determinants of health prioritized for investment.

However, these resources are limited and biased towards more established companies and connected founders. It is important to expand the search to start-ups that are earlier-stage or lack the resources or connections to be included in major databases or news articles. Often, these are companies and entrepreneurs that could benefit most from impact investing.

To find these earlier-stage companies, it is necessary to think outside the box.

Sometimes, it’s as simple as asking the community members — some may be working on grassroots solutions that could use funding. I found out about a company a barber founded after mentioning the Fund for Health to him during a haircut.

Attending university-run pitch competitions and case competitions is also an efficient way to find very early-stage companies, particularly spinouts from academic research labs.

Periodically, I reach out to other local investors/VCs — particularly those not focused on impact investing or those who may be looking for later-stage companies. I ask if they’ve come across any good companies that maybe didn’t fit their investment thesis, but could potentially fit Fund for Health’s thesis.

Finally, don’t be afraid to let companies come to you. I posted about Fund for Health on my LinkedIn and received direct messages from founders who lead social impact enterprises.

Be respectful of others’ time — and your own, too.

There is likely a long list of companies to choose from at this stage in the process. Instead of spending time reaching out to all of them, it’s helpful to prioritize start-ups that are likely to be actively raising funds and are at the right stage for the check size you can deliver. If the company is listed on PitchBook and CrunchBase, the last funding date and investment stage are useful indicators when prioritizing.

Strategies exist to maximize response rates. For instance, I have found much more success in emailing founders or CEOs directly rather than a general company address. Guessing or searching online to find the format for emails (e.g., is one approach. In rare cases when a personal email address can’t be found, LinkedIn messages to founders can also be successful.

When I asked several founders what factors they prioritize in an investor, the most common answer was “respect for a founder’s time.” In initial emails to founders, I am up-front about the fund’s impact thesis, typical check sizes, and timeline to investment. This allows founders to self-select early on if they are a good match for the fund, thus avoiding unnecessary meetings.

Put the team first.

A company meets the fund’s basic criteria for investment and has responded with interest in setting up an introductory meeting and learning more. Now what?

It is easy to focus on the product and the financials in initial meetings, but the importance of the team cannot be underestimated. A study by the National Bureau of Economic Research found that the quality of a founder is the most important factor for the success of an investment. Given that the majority of early-stage start-ups pivot their idea, it makes sense to invest in the entrepreneur over the enterprise.

Responsiveness and clear, honest communication are important factors for any management team. When I think about a successful team specifically for impact investment, I focus on how passionate and impact-driven they are — do they keep an eye toward generating robust quantitative or semi-quantitative outcomes data to evaluate their impact? I also assess their experience.

For example, Kinvolved is a company focused on combating chronic absenteeism in underserved schools. I was highly impressed by the experience of Kinvolved’s founder Miriam Altman not only in business, but also in decades working as a teacher in schools that immersed her in the problem she was working to solve.

The Renée, another company I sourced for the Fund for Health, works to tackle the issue of Black maternal morbidity by building peer support networks through pregnancy and postpartum. I was inspired by founder Whitney Robinson’s intentionality about choosing a core team comprised of women of color that have lived the pregnancy experiences that The Renée is committed to improving.

Sifting through the universe of start-ups influencing the social determinants of health during the sourcing phase of investment can seem daunting. Yet, amidst the practical tips and tricks, what stands out to me the most are the intangibles. If the promise of a strong intervention and a team’s confidence in its execution energizes and inspires you, that company will bubble to the top — even at places as unexpected as a barbershop.

— Medha Sharma

Posted: January 25, 2022

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