From the Gates Foundation, Direct Investment, Not Just Grants

Friday, March 13, 2015

The Ebola crisis underscored a problem that vexes experts in global health: Vaccines are one of the most cost-effective ways to save lives, especially in developing countries, yet traditional vaccines can take years to develop.

So when the Bill & Melinda Gates Foundation came across CureVac, a biopharmaceutical company working on technology that could produce vaccines faster, cheaper and more effectively, it not only took note — it took a stake in the company.

The foundation, which has distributed billions of dollars in grants to improve health and living conditions in developing countries, is increasingly expanding its tool kit, using some of its capital to invest directly in companies that could help advance its goals.

The foundation has made about a dozen direct equity investments in companies over the last couple of years under the umbrella of program-related investing, as it is called in foundation circles. It backs ideas that others might deem too risky, or gains access to technology that might otherwise bypass the needs of the poor. Whereas most foundations use this kind of investing to provide loans for nonprofit entities, the Gates Foundation’s investment interests are primarily in the private sector.

“Early-stage investing allows us to tackle problems that we couldn’t tackle before,” said Julie Sunderland, who heads the program-related investments, which is run independently of the foundation’s $43.5 billion endowment.

Last week, the foundation made its largest such investment, a $52 million equity stake in CureVac, a 15-year-old company backed by Dietmar Hopp, co-founder of SAP. It has been developing a technology that uses the biomolecule mRNA to give the body instructions for creating its own proteins to fight cancer and infectious diseases. Cancer has been the company’s primary focus; it has a prostate cancer therapy in Phase 2 development, in which it is tested in patients for efficacy and safety. The foundation wants to ensure that the technology can be put to work preventing diseases that disproportionately affect the world’s poor.

Source: The New York Times (link opens in a new window)

Health Care
impact investing, infectious diseases, vaccines