While attending Stanford, the Embrace team developed an idea for an innovative infant warmer to help low-birth-weight infants. The early prototype looked much like a sleeping bag for babies. While the form factor was unique, the real breakthrough was a reusable pouch of phase-change material that could be heated to 98-degrees Fahrenheit and maintain that temperature for several hours. When inserted into the sleeping bag, it would safely and reliably keep the baby warm. As designed, the warmer was small and light, transportable, and easy to use. Importantly, it also had the potential to be produced at a fraction of the cost of available incubators, even those already designed for the developing world.
Enthusiastic about the possibility of helping millions of low-birth-weight babies, the team decided to pursue their idea beyond the end of the course, creating a nonprofit called Embrace Global to further develop and commercialize the technology. Over time, however, the team discovered that it had underestimated the amount of time required to raise the needed capital to transition from a prototype to a market-ready product. After consulting with its board of directors, other advisors, and legal experts, the team thought that, at this stage in its development, becoming a for-profit or hybrid organization could position it for faster growth and greater scalability because it would be able to access larger sums of money in the form of equity investments. However, Embrace realized that as a company with private investors, who would be seeking a financial return on their invested capital, it could be more difficult for Embrace to justify targeting markets and customer segments that were considered small or otherwise unattractive by commercial standards. This mini-case study explores how Embrace decided to pursue a hybrid structure and the steps it took to balance these competing priorities in devising the new model.
This story is part of the Global Health Innovation Insight Series developed at Stanford University to shed light on the challenges that global health innovators face as they seek to develop and implement new products and services that address needs in resource-constrained settings.
Acknowledgements: We would like to thank Jane Chen of Embrace for her participation. This research was supported by the National Institutes of Health grant 1 RC4 TW008781-01.