Hi everyone, I am Jia, co-founder of Shamiri Health, an affordable mental health start-up in Kenya. I am thinking of writing up something on the DALY cost-effectiveness of investing in our company. I am very new to the community, and I wonder if I can solicit some suggestions on what is a good framework to use to evaluate the cost-effectiveness of impact investment into Healthcare companies.
I think there could be two ways to go about this: 1) take an investment amount, and using some cashflow modeling, we can figure out how many users we can reach with that investment and calculate based on the largest user base we can reach, with the investment amount; or 2) we can do a comparative analysis with another more mature company in a different country, and use its % of population reach as our “terminal impact reach”. Then, use that terminal user base as the base of the calculation.
The first approach is no doubt more conservative, but the latter, in my opinion, is the true impact counterfactual. Without the investment, we will likely not be able to raise enough funding since our TAM is not particularly attractive for non-impact investors. The challenge to using the latter is the “likelihood of success” of us carrying out the plan to reach our terminal user base. How would you go about this “likelihood number”? I would think it varies case by case, and one should factor in the team, the business model, the user goal, and the market, which is closer to venture capital’s model of evaluating companies. What is the average number for impact ventures to succeed?
TLDR:
What is the counterfactual of impact investing? The immediate DALY that could be averted or the terminal DALY that could be averted?
What is the average success rate of impact healthcare ventures to reach their impact goal?
Curious to see how you consider AI safety vs extreme poverty to arrive at a reaction to not want the OP to leave Kapu! To hear your perspective might help OP with their own framework (and also myself) when considering which cause area to work in