Investing in the climate x health nexus presents a unique challenge: solutions often fall between traditional VC, infrastructure, and impact investing frameworks.
Conventional diligence methods are often insufficient because they fail to account for external factors like regulatory momentum, public sector readiness, and blended capital requirements.
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To address this fragmentation, the ‘Unlocking Capital For Climate x Health: The Investment Landscape in Asia’ report introduces a fit-for-purpose climate x health investment toolkit, designed to balance analytical rigour with market flexibility.
The 5-step investment decision framework
The toolkit rests on a structured, five-step assessment process:
Step 1 & 2: Calculating the venture score (VS): This involves a rigorous, four-quadrant assessment framework, scored out of 5, which focuses on internal venture quality:
- Solution (30 per cent weight): Assesses problem fit, traction, and scalability. Key cue: look for “land-and-expand” potential, starting with one acute problem.
- Team (25 per cent weight): Focuses on execution capability and founder-market fit. Key cue: early-stage success is 80 per cent the team; bet on adaptability and clarity.
- Ecosystem (15 per cent weight): Evaluates external enablers like policy alignment, institutional demand, and de-risking architecture.
- Market Model (30 per cent weight): Determines the path to returns, capital efficiency, and exit potential. Key cue: look for non-linear liquidity paths such as B2G contracts or DFI buyouts.
Step 3: Setting the risk-adjusted baseline (MVS): The minimum viable score (MVS) establishes the required baseline score for a venture to be considered investment-ready. This score varies significantly by solution category to reflect inherent execution risk.
For example:
- Digital health infrastructure (low risk) requires a base MVS of 3.2.
- Parametric health insurance (moderate to high risk) requires a base MVS of 3.7-3.8.
- AI surveillance (high risk) requires a base MVS of 3.9-4 due to long development cycles and high reliance on government integration.
Step 4: Adjustment for macro risks: External market realities are applied using four coefficients to refine the scores:
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- Sector beta modifier (SBM): Adjusts the MVS upwards for sectors with high operational complexity and regulatory hurdles (e.g., deeptech).
- Tailwind coefficient (TWC): Reflects market momentum based on policy environment, capital flows, and consumer demand. Strong tailwinds allow for a more generous evaluation.
- Investor risk appetite coefficient (IRAC): Personalises the MVS based on the fund’s strategy (e.g., bold, balanced, or cautious), ensuring the threshold matches the investor’s risk tolerance.
- Exit market health coefficient (EMHC): Applied as a multiplier to the final venture score to reflect liquidity and return outlook, such as M&A or IPO activity.
Step 5: Investment Decision: The final decision compares the adjusted venture score (VS × EMHC) against the risk-adjusted MVS (RA-MVS). This systematic approach ensures that capital is deployed where ambition and realism are aligned, moving beyond mere product quality to factor in ecosystem maturity and policy fit.
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