Consumer attitudes toward IVF have changed fundamentally over the past 10-15 years. Dr. Mary Wingfield, one of Ireland’s foremost fertility experts, notes: “There has been a huge change in the acceptance of IVF generally in the community. When I started in practice, people often didn’t want to tell their parents they were having IVF… [there is] certainly a lot more acceptance of it today.” This change in sentiment is borne out in IVF statistics. Between 2009 and 2014, the number of IVF treatment cycles globally increased by 9.1% CAGR, which is 3.5 times higher than the 2.7% annual growth rate between 2004 and 2009.

In more liberal markets such as the U.K. and Spain, the fastest growing consumer segments for IVF are single women and same-sex couples. According to the U.K.’s Human Fertilization and Embryology Authority (HFEA), the number of single women choosing IVF in 2015 grew by 22% compared with 2006. In 2012, women in same-sex relationships conducted 766 cycles of IVF, up by 36% as compared to 2011 ¹. However, regulations in more conservative jurisdictions, such as Germany, continue to make it difficult for LGBT couples or single parents to obtain IVF treatment. In Italy — where the Catholic Church is openly against fertility treatment and heavily influences the policy agenda — reproductive therapies are not widely available or used. This often forces individuals to travel outside of their own country for fertility care.

Stark differences in attitudes, regulations, and price have incentivized consumers to shop around globally for the best money value in fertility treatment. In the U.S., the cost for one cycle averages $15,000. A comparable procedure costs just $3,300 in India, $6,600 in Thailand and $7,800 in Mexico ². Not surprisingly, medical tourism has grown exponentially in this segment of healthcare. In Europe, Spain has been a major beneficiary of overseas patients, accounting for over 40% of IVF procedures performed with donor eggs on the continent.

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Aging is advancing dramatically in high- and middle-income countries across the world. By 2030, the demographics of 34 countries are expected to see more than one in five of the population aged 65 or over. Leading the pack will be Germany, Japan, and Italy.

Total Fertility Rate (TFR) — the average number of children borne by a woman — is the key indicator of the rate of aging. Worryingly, there are countries with even lower TFRs than Germany (TFR=1.59) and Japan (TFR=1.44). Singapore’s fertility rate stands at 1.20 while South Korea is even lower at 1.17. Populations are plunging at alarming rates in these East Asian countries.

The dive in fertility rates is typically driven by the higher age of mothers giving birth and soaring cost of urban living. Due to the huge influx of women into the labor force across all developed countries in the last 70 years, women are getting married much later — if at all. The net result is that women are having children later. On average, the mean age at which women first get married in the rich countries of the OECD is now 30, while for men it is 32.3. Yet at the start of the 1990s, the marriage/children mean was much lower — between 22 and 27 (women) and 24 and 30 (men). Much of the decrease in fertility rate and increase in the mean age of mother at first birth in the United States can be accounted for by lower birth rates in the 15-19-year-old age group, as well as, to a lesser extent, the 20-24 age group. For the first time in history, mothers in their 30s are having more children than women in their 20s.

In advanced economies, intense economic competition in the labor market means fewer parents have the time or money to have children. Relatively flat wage growth in many developed countries (e.g., U.S. real wages were only 10% higher in 2017 than in 1973) has combined with the increasing cost of urban living and parenthood. Adults are being pushed to reconsider having children. The average couple in the U.K. pays an astounding 34% of their family income on childcare, and the U.S. over 25%, compared with 13% as an average across OECD countries.

Nations have made a wide variety of efforts to boost fertility rates, including cash payments for births, tax incentives, generous parental leave, free childcare, free healthcare, and other inducements. Germany has had some success in boosting fertility rates, with 2016 seeing the highest fertility rate since 1973, pushing TFP up to 1.59 from 1.5 just a year earlier. Increased migration contributed, but it does not explain all the increase — a series of childcare reforms have been powerful drivers, including the tripling of childcare facilities over the last 15 years. In South Korea, couples pay nothing for childcare since it is provided by the state as part of its efforts to improve the low fertility rate. Russia recently expanded its program to encourage births in spite of its fiscal troubles.

The higher age of women giving birth and the growing incidence of infertility in general — a trend ascribed to smoking, alcohol, obesity, falling sperm counts, and various environmental issues – are highly supportive of market growth in-vitro fertilization (IVF) treatment. In addition, the falling cost of fertility services and the higher rates of insurance coverage are making IVF treatments more affordable. As a result, the global IVF market is expected to grow at CAGR of 12% [^9] from roughly $410 million in 2015 to $880 million in 2022.

Back in 2004, Japan started offering subsidies for IVF with couples eligible for ¥150,000 ($1,362) towards their first attempt and a limited number of follow-ups. Couples with higher incomes are not covered, but the government is considering expanding the benefit to all. Japan has the highest rate of IVF treatments but the lowest success rate due to the higher average of the mothers. It is hoped that the universal coverage will also encourage some mothers to avail of the benefit at an earlier age.

In the U.K., four out of every ten IVF cycles is funded by the National Health Service (NHS) and the national healthcare guidelines agency recommended the NHS fund three full IVF cycles per patient. German, French, and Spanish governments also fund IVF treatments, with Spain having a particularly liberal regime and lower cost of treatment which attracts meaningful medical tourism.

In the U.S., IVF is not subsidized by government programs, but a growing number of companies offer it as an employee benefit. Spotify, for example, offers unlimited coverage, while Pinterest and Facebook offer coverage of up to $100,000 for up to four cycles and preimplantation genetic screening.

The post Why Are Global Fertility Rates Decreasing? appeared first on Karma Impact.

Innovation is moving fast in the bike-sharing segment. The first large citywide schemes in Paris, London, and New York used docking stations. But dock-based rentals have two key disadvantages over free-floating fleets: they are less convenient and much more expensive. In the Washington D.C. program, it costs $3,700 for each bike and its dock. By comparison, dockless e-bikes cost a few hundred dollars, with prices declining rapidly.

Furthermore, docked bikes are far more susceptible to technical malfunctions. Last year, bike-share riders plummeted from 290,000 to 220,000 in Paris after an “upgrade” to the fleets of bikes and docking stations went poorly. The new operator, a French-Spanish consortium called Smovengo, fell months behind schedule in installing the 1,400 new stations – many of which were beset with electrical and software problems.

The shift to dockless bike-sharing also allows the possibility of much larger fleets. While about 100,000 docked bikes were in use in U.S. cities by the end of 2017 ¹, the two largest companies in China operate 20 million dockless bikes combined.

Innovation is also enabling the industry to overcome some of its challenges. GPS tracking devices on bikes are helping to reduce theft and recover abandoned bikes, while geolocation through customers’ mobile phone signals is being used to offer small incentives to bring back bikes left in remote locations. All these issues will become moot when work that is already under way to make self-driving e-bikes (think Segway on steroids) comes to fruition.

Perhaps the greatest new opportunities, however, lie in the data associated with e-bikes. In the future, these bikes could become mobile sensors, collecting data on everything from pollution levels, traffic patterns, and street conditions. Cities might feed the data into municipal mobility platforms to plan new transport initiatives, divert traffic flow to relieve congestion, or allow citizens to switch optimally between different modes of transport. Retailers may use location data from bikes to send e-promotions to riders in the vicinity of their stores.

The post How Bike-Sharing Companies Are Staying Innovative appeared first on Karma Impact.

In major urban centers around the world, bicycles seem to be taking over the roads. Eager citizens unlock bikes from docking stations in city-sponsored schemes in Paris, London, and New York. In China and Singapore, the fashion is to go “dockless” – simply unlock a bike with a code on a mobile app. Not to be outdone, California is leading the charge with electrically-powered bikes (e-bikes) and e-scooters. What’s driving this latest incarnation of the digitally-connected sharing economy?

The rapid pace of urbanization is a phenomenon that will continue for the coming decades. In order to become competitive socioeconomic hubs, cities must attract the best creative and technology-savvy workers by offering liveable spaces and a high quality of life. Few things frustrate this cause more than congestion in city centers. Travel by road and rail increased by 40% globally between 2000 and 2010. By 2050, it is expected to be twice as high as in 2010.

In extremely congested cities, such as Istanbul, Bangkok, Moscow, Rome, and London, commuting times can more than double during peak hours, which translates to more than 100 extra hours stuck in traffic every year. This represents a significant economic burden. A recent study estimates the cumulative cost of congestion between 2013 and 2030 to be a staggering £2.3 trillion ($2.8 trillion) in the U.S. and £386 billion in the U.K.

Congestion is also a major contributor to pollution. Transport accounts for 23% of global CO2 emissions, more than one-half of the world’s oil consumption, and one-quarter of all energy use.3

At a time of shrinking government budgets and large gaps in infrastructure spending, transport departments at both the city and the national level are looking at alternatives to big transportation projects. Not only do mass transport schemes weigh heavily on public finances, but they are very difficult to implement. They frequently conflict with other possible uses of land and run into vocal objections from local residents whose neighborhoods may be disrupted by new roads, rail tracks, or stations.

Even when new public transport systems are built, they typically charge low fares to make it affordable for lower income segments of the population. However, this usually induces high demand leading to overcrowding.

To date, the most effective solutions for reducing congestion have been to levy congestion charges on car traffic in urban centers. Pioneered in Singapore in the 1970s and deployed in many other cities such as London, congestion charging schemes bring about 40%+ reductions in car traffic almost immediately. Some cities, such as Paris, are now going further with plans to phase out polluting vehicles entirely.

But if private vehicles are pushed out of city centers, alternatives will be needed to pick up the slack. Shared, self-driving electric cars may be part of the solution. The City of Pittsburgh believes so and is already running pilots with Uber and Lyft. But, only a limited number of autonomous cars can be deployed before congestion issues resurface.

As a result, many urban planners are turning to bike-sharing as an important piece in the urban transport puzzle of the future. Not only do bikes provide a nimble means of transport over short-to-medium distances, but they also help to address the “first mile-last mile” problem associated with public transportation systems.

The post Bike-Share Boom: Where Did They All Come From? appeared first on Karma Impact.

The extraordinary growth of bike-sharing operators, especially Chinese and U.S. firms, has been fueled by a wall of venture capital (see table below) investment. The top companies have reached unicorn valuations and have attracted the interest of strategic acquirers. M&A has been particularly frenzied in China with Ofo and Mobike being acquired by large financial conglomerates. Uber and Lyft have also entered the space through acquisition of some large U.S. operators. Uber acquired Jump for $200 million and Lyft took over Motivate for about $250 million.

Most companies claim to be able to break even on the cost of the bikes within a few months. None of the companies are profitable since they are ploughing all their capital into global expansion – a land grab while the market is nascent. However, it seems that on an operating basis, the most profitable segment may be e-scooters because they can command higher prices such as $20 per day in California. Pricing on docked city schemes tends to be about $2 to $4 per ride to cover the cost of the docking stations. Dockless bikes appear to be operating on the thinnest margins due to much lower pricing driven by intense competition.

What makes this market exciting, however, is that most of the upside is yet to be realized. Even the top companies have barely monetized their customer eyeballs with digital advertising and promotions, layers of digitally-enabled gig businesses, not to mention the value of the data the bikes could eventually render.

The post The Profitability of Bike Sharing appeared first on Karma Impact.

So, let’s consider what happens when a company decides that they want to sell goods abroad. As it turns out, it can be quite expensive to achieve financing because there are so many risks involved in trade.

So what drives up the costs of trade finance? In order to mitigate the risk of non-payment, sellers want to get paid as soon as they ship. But, buyers, on the other hand, want to mitigate the risk of non-delivery and wish to pay only after receipt. And, along the way are a host of risks ranging from natural disaster, piracy and outright fraud to contend with.

In order to adequately underwrite these various risks appropriately, an army of people must do a number of manual tasks to verify the existence of the goods, verify that the goods are being shipped, verify when they go arrive and go into customs and verify when they get out of customs and make it to the final destination warehouse. This heavily manual process takes time and costs money.

Historically, banks only disintermediate approximately 36% of total trade finance transactions with the remainder as cash-in-advance transactions or open account transactions ¹. These other methods shift the risk to either the buyer or the seller. Bank disintermediation is a way to reduce these risks by bridging the gap between the shipment and the receipt of goods. By providing credit, payment guarantees, and insurance, suppliers of trade finance facilitate trade. Currently, there are two primary forms of trade finance: intercompany credit and letters of credit.

Intercompany credit accounts for open account transactions where one company provides credit to another company based on their relationship or ability to extend credit. Letters of credit require a bank. This segment of the market has grown over the years, primarily because most trade credit is short term in nature. It is less than 90 days and carries a lower risk of default and a higher recovery rate. But, while this business model is attractive, the ability of banks to service the growing needs of the market has been hindered by regulatory and compliance limitations. Specifically, because of the way that Basel III continues to treat trade finance on the balance sheet, banks are less able to provide this relatively low risk service, pushing other institutions and shadow banks to step in to provide this important service ².

A 2017 survey by the Asian Development Bank suggested a gap in global trade finance of $1.6 trillion annually, which would be needed to service the growing volume of trade ³.

The post Client Challenges of Trade Finance appeared first on Karma Impact.

The main pain points of trade finance today include manual processes, outdated tracking systems, multiple international platforms for trade, and money laundering and fraud prevention.

Distributed ledger technology, more broadly known as blockchain, offers solutions for several of these challenges ¹. To begin with, contract creation and invoice factoring are currently manual process that require the trading entity to provide financials and other documentation to the bank, which must then be reviewed and validated. Blockchain can effectively record and validate contracts such that the manual validation efforts should be dramatically reduced along with the associated costs. Moreover, because the blockchain is decentralized and disintermediated, it can also reduce fraud risk, such as bills of lading, which can currently be financed multiple times.

A 2015 survey by the International Chamber of Commerce showed that almost 20% of banks reported an increase in fraud, driving the major international banks to evaluate blockchain for use in trade finance and other banking applications ². In addition, tracking and validation of delivery can reduce the time delay in payment because blockchain can provide proof of delivery and ownership.

Finally, blockchain can help solve the issue of regulatory transparency for the purposes of anti-money laundering enforcement. This push to adopt blockchain has driven the world’s largest banks to form investible consortiums such as R3, which launched in May of 2017. R3 successfully launched its trade finance platform Marco Polo in partnership with TradeIX and seven major banks. A rival trade finance platform called we.trade has partnered with nine banks to offer a “faster-to-market” solution built on Hyperledger Fabric. Marco Polo is focused on ensuring that new systems can talk to each other in order to fulfill their promise to remove frictions from global trade created by the multiple platform problem. We.trade is focused on the need for speed in order to bring new banks onto the platform more quickly. This allows the platform to be more nimble.

The post Simplifying Trade Finance with Blockchain appeared first on Karma Impact.

The first child conceived via IVF turned 40 this year. Since Louise Brown’s birth in 1978, however, innovation on the core technology has been incremental. A series of improvements in storage media and incubation of the blastocysts have led to progressively higher success rates. However, in the past 20 years, there has been little change in the IVF procedure itself or in the patient experience.

Instead, technological innovation has centered around cryo-preservation of eggs and genetic testing. Cryo-preservation helps women preserve their fertility and reduce the chance of miscarriage and birth defects which increase with age. According to the U.S.’s Society for Assisted Reproductive Technology (SART), 7,000 women froze their eggs in 2016 – five times the figure in 2009. Genetic testing to screen for potential defects in the fetus has also risen substantially in popularity over the last five years.

Innovations have also permeated the business model of fertility treatment. As the number of fertility clinics has grown, they have also begun to consolidate into corporate chains. Of the 4,000 clinics operating worldwide, 1,000 are in the U.S.; 600 each in EU, Japan, and India; and 400 in China. The fastest growth is in India and China, with China adding 100 clinics in the last three years alone.

Private equity is playing a prime role in the industry’s consolidation. For example, Lee Equity Partners has funded the expansion of Prelude Fertility into a network of 109 clinics in the U.S. The network is now responsible for over 40% of the donated eggs in the country.

This trajectory in the industry has even catapulted some chains across borders. For instance, IVI RMA Global was founded in Spain but now operates worldwide following a string of acquisitions in the U.S. and India. Medical tourism is also on the rise, with customers eager to take advantage of the lower cost of treatment cycles in countries such as India and Thailand.

Companies such as Prelude and Glow are focusing on improving customer experience. Glow brings transparency and choice to the fertility market by helping customers access clinics with the highest IVF success rates at the lowest possible cost. Meanwhile, Prelude offers a subscription model to cover a customer’s entire fertility needs. For a monthly fee, a customer signs up to “The Prelude Method,” which leads them through the journey of egg freezing, IVF, genetic testing, and childbirth.

The post Fertility Market Innovation: Testing & Payments appeared first on Karma Impact.

The rapidly growing fertility market has created several attractive investment opportunities. We are particularly bullish about the consolidation play around fertility clinics and business models that improve customer experience and choice.

Private equity investment into fertility clinic chains is an established global trend. Consolidation is a sound value play. Typically, increased revenues flow from a more centralized approach to marketing and customer acquisition, while a corporate brand commands a price premium. Chains are alsoable to drive cost reductions by training pools of lower-cost nurses and lab professionals to take on more routine labs and clinicals. Meanwhile, physicians are freed up to focus on customer interaction and reputation-building for the network.

In the U.S., Prelude Fertility — funded by Lee Equity Partners — acquired Reproductive Biology Associates of Atlanta (the largest IVF practice group in Georgia) and Vivere Health (with a U.S.-wide network). Prelude now has estimated revenues of $35 million. The Colorado Center for Reproductive Medicine (CCRM) has opened or acquired IVF clinics in nine cities across the U.S., and the Boston-based TA Associates has raised over $18 million for its expansion. However, there is still ample room for consolidation left in the market since the largest corporate chain, IntegraMed, holds only 7.7% market share of total treatment cycles.

In Europe, Waterland Private Equity has invested in VivaNeo Investments to create the largest fertility clinic group in Central Europe. Asia’s low fertility rates have drawn interest as well. Quadrant Private Equity owns Virtus Health, the first IVF specialist to list on a stock exchange. Virtus plans to tap vast potential in countries of low fertility such as Singapore, South Korea, Japan and India, as well as those with decreasing fertilitysuch as Indonesia, India and Vietnam. Virtus International, which has assets in the U.K., Ireland, Denmark and Singapore, saw its EBITDA grow by 30% in 2017-18. The Indian market is already well-covered with corporate chains such as Fortis Bloom Fertility and Indira IVF. It has been reported that Warburg Pincus is looking to plough almost $100 million into Indira’s growth.

Of the major markets, only China remains challenging to invest in. IVF is relatively less common (although growing rapidly) and is handled by fertility departments in huge regional public hospitals — some that are 5-10 times larger than their largest U.S. counterparts.

Among the companies improving customer experience, we believe that Glow and Prelude have high growth and profitability potential. Having started off in the Bay Area, Glow has since expanded its presence to the rest of California, as well as New York and 15 other states, in just a few years. It now uses its scale to negotiate lower pricing across a variety of fertility services such as egg freezing, intrauterine insemination, and medication. Through Glow’s portal, customers can shop around to find the clinic with the best outcomes for the best price. This is a simple, high-value service that will gain significant traction.

Prelude has innovated a new service model that it calls “The Prelude Method.” Instead of offering its services individually; the company only offers “The Prelude Method” — a complete package that includes egg freezing and preservation, “pre-implantation” genetic screening, and IVF. Customers subscribe to the “The Prelude Method” through monthly payments which can be kept quite low because only about 15% of women who freeze their eggs actually go on to use them in IVF.

The post The Profitability of Fertility Services appeared first on Karma Impact.

The sheer number of rides speaks volumes for the popularity of bike-sharing with consumers. Today, more than 40 companies offer dockless bike share services in China. The top two alone, Mobike and ofo, handle more than 50 million rides every day [^1]. As of April 2018, ofo claims to operate in 21 countries and over 250 cities while Mobike operates in over 190 cities across China, Singapore, Italy, Japan, the U.K., and U.S. Bird and Lime, two California-based e-bike companies, are both in 100 cities.

Bike-sharing is also opening up welcome new opportunities in the gig economy. Bird pays freelance “bird-hunters” between $5 and $25 for charging one of its e-scooters, depending on how hard it is to find. Charging mostly happens at night and the vehicles must be back on the street in specified locations before 7 a.m. the next day. For the budding entrepreneur, crowdsourced local deliveries and logistics is another emerging gig on e-bike platforms.

However, bike-sharing is not completely without its problems. Haphazardly parked bikes often result in stacks of bicycles in the streets and annoy citizens. Several Chinese cities are investing in more bicycle parking bays to avoid bikes being left in public spaces.

At rush hour, e-bike congestion is also a rising concern. San Francisco banned them altogether last summer. It is now introducing a 24-month pilot program in which the city will only issue permits to a maximum of five companies that will be allowed to operate a maximum of 2,500 scooters in total.

Higher densities of e-bikes are also leading to more accidents. Last year, the Netherlands reacted by classifying e-bikes that can go faster than 25 kilometers per hour as mopeds. Faster e-bikes now require a license plate and riders have to follow the same rules as those of mopeds, such has wearing a helmet and having insurance.

Notwithstanding these challenges, consumer adoption of bike-sharing is strong, particularly in the e-bike and e-scooter segment. 40% of Dutch e-cyclists use them to replace car journeys. Businesses are also joining in. Deutsche Post, a logistics giant, owns a fleet of around 12,000 e-bikes and e-trikes (three-wheeled ones) in Germany.

The post Consumers Are Going Crazy for Bike-Share Programs appeared first on Karma Impact.