Innovation as a concept is defined as the introduction of a “new idea, method or device,” effectively creating something new that has not existed before.
It is also a key economic force, but one that is often overlooked. Done right, innovation can deliver better, cheaper and more sustainable solutions to the world’s big problems than government policies alone can. In that, it is a deflationary force. It increases productivity, boosts overall GDP and contributes to broad social good.
Best of all, innovation delivers this value whether markets are either up or down.
At iSelect, we view innovation as an asset class of its own and one that calls for the integration of capital, markets, talent and customers. It involves equity, debt and project finance – not just venture capital – transcending the start of a new business through the first few years after an IPO or acquisition. For that reason, we typically originate investments at the Seed or Series A stage, investing in equity or debt convertible to equity. We work with other firms that provide growth capital, debt, project finance and revenue finance to capture the entire lifecycle of innovation as it applies to our thesis.
Because disruptive innovation occurs in a transitional period during which the market changes what it expects from new entrants. We once all wanted faster computers, then endless digital storage, then portable devices with long battery life. Each of those kicked off a period of disruptive innovation.
It is during these times that we find the maximum opportunities to improve productivity, improve product quality, reduce the cost to consumers and maximize returns to investors. And it is why we say that iSelect invests in disruption.
Our Investment Themes
iSelect invests in three verticals: the agrifood supply chain, health and wellness with a focus on cardio metabolic disease, and “Food is Health,” how we can use nutrition to prevent cardiometabolic disease.
The U.S. spends $1.7T on food each year. It spends $1.9T on the healthcare costs related to poor nutrition. This out of control healthcare spending is a result of our poor nutrition. In addition, global population growth and the increase in the middle class is driving a need to nearly double protein output by 2050.
Food is Health is clearly designed to tap into this period of disruptive innovation. The food and health systems represent a $3.6T market in the U.S. alone, with trillions more in work to be done around the world. iSelect sees this as an opportunity to invest in the key building blocks that will redefine the food and healthcare systems. Our goal is to unlock the innovations that will lead to beneficial changes in agriculture, food, and health, with added positive externalities on key ESG factors.
To this end, we invest in three primary areas: soil health, human health and food is health
Food System Innovation: We seek to simultaneously solve for 1) doubling protein production, 2) improving the taste, affordability and nutritional quality of the food we eat, 3) improving the environmental sustainability of our agricultural system and 4) increasing farmer profitability. This includes supporting the development of more and better protein sources from multiple sources (animal, plant-based, fermented, cultivated, etc.) to support the global shift to protein, as well as improvements to yield, taste and overall crop biodiversity. None of this is possible without better economic incentives for growers and an overall improvement in food security.
Our specific sub-themes in food and agriculture include:
- Data-Driven Agriculture: Crop analytics and precision agriculture are changing what is possible on the farm, with remote sensing technologies providing localized crop and climate data and eliminating the need for manual sampling and testing, even among livestock. This shift to in situ measurement is enabling farmers and ranchers to do more with less, delivering better products at scale for lower cost.
- Scaling Protein: As the world’s population grows, demand for greater protein access is growing as well. That is why iSelect is supporting what we view as the three pillars of protein to meet this demand: Animal protein, plant-based protein, and cultivated / fermented proteins. Innovation in this area is not only about health but providing more and more people with access to the proteins they need to thrive.
- Synthetic Biology: Innovation around biology, particularly as it pertains to redesigning existing natural systems, is enabling a wide range of capabilities on the farm, in the food system and beyond. iSelect is targeting syn bio segments such as precision fermentation as a service, modular small reactor fermentation and biologics production primarily for use in fermented or cultured proteins, as well as secondary applications in agriculture for genetics and crop protection.
- Maximizing the Human Microbiome: iSelect takes a holistic view of the microbiome, understanding that gut health is important to overall health and is intimately related to a healthy diet in many instances. Our goal is to help support a healthy microbiome through diagnostics and new treatments, with a particular focus on the certain prebiotics, probiotics and postbiotics that have important and outsized positive effects in certain populations.
Human Health Innovation: Our goal is to empower the patient to make better, more impactful decisions that improve their health. To this end, we invest in preventative healthcare tools like those used for diagnostics, personal health devices that support measurement & management and the lifestyle change technologies that help people eat and live better. We are also investing in genomics and personalized medicine technologies that offer easier access to personal health data and the help needed to interpret those findings and take action.
- Improving Human Health: Chronic cardio-metabolic diseases such as Type II diabetes, cardiovascular disease and obesity are among the most costly to treat and are indicative of the increasing linkage between disease and our metabolism. Often, these diseases are directly related to the food we eat and associated inflammation in our bodies. iSelect is committed to addressing these conditions through the combination of food and health system innovation.
- Data-Driven Health: Data systems are serving to educate patients and increase self care, while advanced analytics are accelerating the research and discovery processes for new drugs and treatments, leveraging AI and Big Data to make sense and correlate disparate systems.
- Enabling Technologies to Support Healthcare Innovation: Somewhere we also need to weave in our “enabling technologies story” to explain things like Flywheel, Molecular Assemblies and Cyrus.
Where We Don’t Invest
On the whole, iSelect invests in new business models, data-driven business and teams with experienced leaders in their markets. We aren’t scared off by things like GMOs, CRISPR, or other technologies, but we do tend to avoid therapeutics, companies that are using equity for capital intensive spending, as well as business cases that are built solely on outside incentives such as carbon credits. We prefer a base case that is profitable without incentives.
That said, we are not yet ready to invest in:
- Controlled environment agriculture such as vertical farming operations. The models are simply too cash intensive at this point.
- Direct to consumer models. Again, high levels of competition and lots of cash needed to break free from the pack.
Change our mind?
Finally, we do not invest in cannabis or industries outside of agtech or health. Our team is built around health and ag, so we stay in our lane.
Are we missing anything?