Author’s note: As an undergraduate studying economics and entrepreneurship, I was surprised to discover that very few people were leveraging the power of for-profit companies to make necessary social change. Uniting business acumen with personal values seemed like a natural fit to me, and a desire to prove the hypothesis right set me off on the journey that led me to write the words you’re about to read.
In the interest of transparency, I devoted the following pages from my new book, The Little Book of Impact Investing: Aligning Profit and Purpose to Change the World (excerpted here with permission from the publisher, Wiley), to exploring what happens when impact investing doesn’t achieve the hoped-for goals, when no matter how good the team or innovative the idea, the project just isn’t a success.
This sort of outcome isn’t unique to impact investing, of course, but in cases where it does happen, detractors hold them up as evidence of the commonly held, incorrect belief that doing good and financial returns can’t possibly go together. They absolutely can, but unfortunately that’s not always the case. I hope what I have to say will provide food for thought without diminishing inspiration. I’m a believer, and my wish for the book is that it helps you become one, too.
I want to be honest with you—despite the best intentions and plans, impact does not always translate into a competitive advantage, better margins, new sources of capital or revenues, enhanced brand recognition, or better talent. The same is true for every company, impactful or otherwise. The best plans with the best teams do not always result in success.
However, impact investors have a harder job because when a business is going through a rough patch, they have to help management get through it while holding them accountable to the mission. Let’s look at a few common situations I’ve observed.
A Business Model Shift and a Leadership Transition: OnlineMedEd
Victor Hu’s Lumos Capital Group is an investor in OnlineMedEd (OME), a global medical education platform that helps students master medical knowledge, pass exams, and succeed in residency with easy-to-digest content. He cofounded the company with Jamie Fitch, a data-driven CEO, trained as a clinical epidemiologist.
OME’s impact thesis centered on decreasing health outcome disparities by geography, race, and ethnicity. In the United States, 6% of active physicians are Latino, 5% are Black, and 36% are female. By providing a limited free version of OME’s curriculum, they believed that the diversity of medical practitioners and the quality of medical practitioners coming from diverse educational backgrounds would improve.
At the time of investment, OME had users in 191 countries and was used by more than 80% of US medical students. Part of the growth strategy when Lumos invested was to expand a business-to-business (B2B) model, selling to medical schools to provide OME’s complete curriculum for free to all medical students, and not just those with the financial capacity to pay.
Unfortunately, the B2B offering cannibalized the B2C subscriptions more than anticipated. As an impact investor, Lumos had to develop a strategy to get the company back on track. This involved some tough decisions, including changes to its subscription pricing and a leadership change to navigate the challenges ahead while staying true to OME’s mission. With each decision, Lumos had to consider the impact on multiple stakeholders versus simply maximizing their returns.
Now things are on the right track with the new CEO that Victor and his team identified.
Mergers and Acquisitions: Regroup Therapy
Mergers and acquisitions are common strategies at the growth stage, when a company has reached the limit of organic growth. Impact Engine had to decide whether a merger would maintain, improve, or harm the impact for Regroup Therapy, a telehealth company.
When founder David Cohn created the company pre-pandemic, telehealth for behavioral health was not as widely adopted despite the clear need. When David observed that more than 50% of the counties in the US don’t have a mental health professional, he developed a secure, Health Insurance Portability and Accountability Act (HIPPA)– compliant, virtual care platform for health systems, clinics, corrections facilities, and other institutions in rural areas to offer to their patients. Notably, more than 80% of the patients lived in counties designated as Provider Shortage Areas. This B2B model also enabled insurance coverage in most cases.
After roughly five years of operations and significant growth, Regroup had an opportunity to merge with a competitor. Insight Telepsychiatry operated a similar telepsychiatry business; however, it managed a more concentrated business in emergency situations. The promise of the combined entities was a larger, more diversified business and the largest staff of psychiatrists in the United States. However, Insight didn’t have the same origin story, focus on impact, or patient population as Regroup.
Despite the difference in intentionality, Impact Engine decided that the business was aligned with Regroup and that shareholders and directors around the table would try to grow Regroup’s impact business model.
COVID-19 hit the US less than six months after the companies merged (and rebranded as Array Behavioral Care). Despite the fast growth seen by other telehealth providers, Array’s scheduled and emergency services were negatively impacted as the risk of exposure to the virus from a visit to the hospital or clinic drove many patients to defer care. The company had to decide whether to expand into an “at-home” delivery model that could fuel the growth of the business but would serve a demographic of patients outside of Provider Shortage Areas.
The board and management team decided that the benefit of diversification outweighed the risk. The growth of teletherapy at home presented an opportunity to Array without compromising the company’s B2B focus. Today, the number of patients served in Provider Shortage Areas continues to grow while Array has also successfully diversified the business.
Exits: Edovo
Exits are another moment in a company’s life cycle that exposes impact risk. Edovo was founded by Brian Hill in 2013 to reduce recidivism rates, or the number of formerly incarcerated who return to prison. Research indicates that access to education leads to 43% lower rates of recidivism and to 8–28% increased odds of obtaining post-release employment. Yet Hill saw firsthand, through personal experiences, how limited access to education was holding inmates back from the necessary economic and social connections and experiences once they left prison.
Edovo introduced the concept of bringing secure wireless networks and tablets into the prison dayrooms to deliver daily access to self-improvement content. Edovo curated a platform that could reach individuals at any learning level, from GED curriculums and vocational training to anger management and parenting courses. The business model relied on correctional facilities using education dollars to pay for the infrastructure and license the software.
Edovo was successful after an initial launch in Philadelphia’s prison system. By 2023, Edovo was available in more than 400 sites, serving nearly 500,000 incarcerated individuals a year with nearly 60 million hours of engagement time on the platform to date. This resulted in more than 4 million education, job training, and social/emotional courses completed annually.
While the company created tremendous impact, it came through many pivots as correctional institutions proved unwilling to pay for the infrastructure, and eventually leaned on entrenched prison phone companies to install the hardware. Edovo constantly wrestled with the balance of scaling the impact or profitably delivering to a fraction of the market. Despite clear demand from the end user (the incarcerated learner), the correctional facility’s demand and willingness to pay never reached a level that would enable education for all but the same small portion of the population it was currently reaching.
While the company was able to generate several millions of dollars in annual revenues, and even achieve profitability, its board had a decision to make about the future trade-offs between scaled impact and necessary investment with fairly flat financials. Ultimately, the board decided to return capital and convert to a nonprofit to keep its impact intact.
Priya Parrish is a Partner and the Chief Investment Officer at Impact Engine, an institutional venture capital and private equity investor driving positive impact in economic opportunity, environmental sustainability, and health equity.
Excerpted with permission from the publisher, Wiley, from The Little Book of Impact Investing: Aligning Profit and Purpose to Change the World by Priya Parrish. Copyright © 2025 by Priya Parrish. All rights reserved. This book is available wherever books and eBooks are sold.
