Family offices increasingly seek impact through investments in categories as wide-ranging as education, agriculture, and financial inclusion. Indeed, with an estimated $5.9 trillion in assets under management globally, these investors have the opportunity to provide critical support to socially responsible ventures and establish a tradition of impact for generations to come. As the COVID-19 pandemic continues its spread across the globe, one trend worth considering is family offices investing in healthcare.
Why Is Healthcare a Fit for Family Offices?
Half of family offices surveyed in the 2020 UBS Global Family Office Report listed healthcare as an impact investing priority. Among family offices overall, 60% preferred healthcare as a sector for private equity investing.
According to Blue Haven Initiative’s Liesel Pritzker Simmons, family offices are unique in their flexibility to invest across the returns spectrum. This flexibility is valuable in the healthcare sector, where startups may succeed only after “test[ing], fail[ing], and iterat[ing],” as one United Nations Foundation report explains. Sustainable and impactful investments are also available in the broader equity markets, as the pharmaceutical industry has raced to find treatments, vaccines, and antibody tests for COVID-19.
As donors, many family offices have histories of supporting healthcare initiatives; the 2019 UBS report found that education and health were their top philanthropic causes. This familiarity may set the stage for for-profit investments in healthcare as impact investing gains mainstream recognition as a way to create social and environmental benefits while earning a financial return.
Healthcare also overlaps with other areas of interest to family office impact investors, from agriculture to housing and even climate change. While the 2020 UBS report noted a strong interest in digital transormation technology among family offices with younger generations, the 2019 report highlighted a particular focus on artificial intelligence—an innovation closely tied to emerging disruptive healthcare startups, as Dr. Annalisa Jenkins explains in a recent interview on family office healthcare investing.
Family Offices Investing in Healthcare
Family offices are investing in startups at a much higher rate than traditional venture capital firms, and many of these investments are in healthcare. Healthcare and biotech investments comprise a core pillar of San Francisco family office Baruch Future Ventures‘ portfolio. One example is BiomX, a microbiome company developing therapies to target and destroy bacteria that drive chronic diseases. Hedgewood is a family office that makes both small and large investments on its own and through venture funds. One Hedgewood healthcare holding is Avro Life Science, which makes skin patches to deliver therapeutic drugs more effectively to children and the elderly.
Dr. Jenkins advises caution for family offices new to healthcare, as they may have neither the contacts nor the scientific background to begin conversations with managers in the field. One way to get started is through an outside advisor, whether current or prospective. Another option is through peer-to-peer networks like Toniic, which offers webinars and virtual community support, or the Global Family Office Bioforum, which assists family offices in finding and vetting healthcare technology investments. The Omidyar Network’s 2018 guide to building an impact investing team provides advice for family offices interested in taking the first steps, from looking at their existing structures to building specialized teams.