Why We Chose To Build Ananya Health as a Delaware Public Benefit Corporation

Originally posted to LinkedIn.

When we incorporated Ananya Health in 2020, our goal was clear. Cervical cancer is highly preventable and has been for decades, but early intervention doesn’t reach most of the women who need it. We built Ananya Health to close that gap and bring cervical precancer treatment to more women.

Before we started building the device, we had to decide what kind of company we would be. We wanted a structure that would protect our commitment to access as we raised money, scaled, and eventually changed hands. We debated building this technology through a nonprofit organization, in order to preserve the access mission and ensure that the technology could be made widely available when it was ready. But two things changed my mind.

The first: In early 2020, at the JPM conference, I happened to meet a lawyer who specialized in startup incorporations, and she encouraged me to look into a public benefit corporation (PBC) structure. According to the state of Delaware, this is "a for-profit corporation intended to produce a public benefit and to operate in a responsible and sustainable manner. PBCs are intended to balance the stockholders’ pecuniary interests, the best interests of those materially affected by the corporation’s conduct, and the public benefits identified in its certificate of incorporation."

The second: I remember two phone calls to two good friends and seasoned medtech entrepreneurs. They had each backed us in late 2019, donating to a nonprofit entity so that we could do our initial preclinical study to show proof of concept. When I asked them, “Is it crazy to instead incorporate this company as a public benefit corporation?” neither of them balked at the idea. In fact, Allen Chang gave me some advice that has stuck with me ever since:

“The only way you get to make the impact you want is by getting the product out the door first. Do what it takes to get the product out into the world.”

Allen not only became our very first investor; a year and a half later, he joined as our CTO as well.

A conventional C-corporation directs its board to act in the financial interest of shareholders. A public benefit corporation is a for-profit company with a second obligation written into its charter, directing its board to consider a stated public benefit alongside that interest. We incorporated as a public benefit corporation because we wanted that commitment to be a matter of record, not memory. But it also earns its place in how we run the company every day.

It keeps us focused

Startups win by knowing when to say yes or no. For us, one question does a lot of that work: Does this expand access? It’s a forcing function to sort the features that are worth building from the ones that aren’t, and the countries worth entering from the ones that can wait. When we have a hard call to make, we can run it through this filter. Our whole team is aligned on the importance of access, and our board has to account for it.

It’s why we make design calls that don’t always look obvious from the outside. Last year, I asked the team to redesign the probe to incorporate features that make it easier for clinicians who don’t do this procedure every day to visualize the cervix during treatment. Choices like these cost time and money to get right (and adding them late in the development cycle doesn’t make me popular with our engineering team). But we all agree that they’re worth it because each one helps us treat dramatically more women with our device.

It helps us build the right team with the right partners

Our team is stellar because stellar people want to know that their work matters in the world. That’s a big part of why we’ve been able to recruit the incredibly high-caliber people we have. We’re clear about our mission, and we actually follow it. That matters to talented people.

And it’s the same for external partners. Manufacturers, distributors, clinicians, and eventually patients find it easier to trust us when they can see how seriously we take our mission. Clinicians especially are sometimes wary of the business of medicine, and I understand why. Nearly every gynecologist we’ve talked to is driven by the same goals we are: to reach more patients, more affordably.

Being a benefit corporation signals something to everyone our work depends on. Expanding access is baked into the DNA of how we design devices.

It lets us make a deliberate bet

In Reimagining Capitalism in a World on Fire, Harvard professor Rebecca Henderson says:

“That’s the nature of shared value — it’s all about addressing the big problems while simultaneously building a business case. It’s not a question of purpose or profit. It’s about using the broader view that a larger purpose provides to find these kinds of opportunities — and then embedding purpose into the organization that enables the firm to execute them.”

Ananya Health is still effectively a C-corporation. We’re taxed the way any fast-growing technology startup is taxed. We raise money with the same agreements and on the same terms early-stage investors have seen before. Being a public benefit corporation puts no ceiling on returns and gives no one a discount. Nothing about our cap table is different. When it comes to the math an investor actually cares about, we’re like any other startup.

Discussing design for access with our clinical, regulatory, and engineering teams in late 2024.

People sometimes conflate a public benefit corporation with a certified B Corp. They’re similar, but not the same. A B Corp is a certification, awarded by a nonprofit that audits a company's practices across areas like supply chain, labor, and environmental impact. We’ve chosen not to pursue B-Corp certification. In medical devices, the Venn diagram between finding certified vendors that can deliver the quality and precision we need versus the vendors that can meet the audit guidelines of B-Lab certification are two separate circles. Our vendor selection process has to be driven first and foremost by the regulatory requirements of designing safe and effective devices — that’s the way we get to expand access to care and make the impact that we want in the world.

When people look for proof the public benefit structure works, they point to Patagonia, which builds products aligned with its mission and charter, and makes plenty of money doing so. Patagonia’s alignment of its business with its mission creates a huge amount of trust for its customers. People want to buy from companies that they trust to do the right thing.

I’m always candid that this structure is brand new. Delaware Public Benefit Corporations were structurally created in 2013, so there isn’t a long line of medical device companies ahead of us that have raised, scaled, and exited this way for me to point to. Ten years from now, we’re excited to be the example that other medtech companies can point to.

Access is the business

We care about expanding access. This is not in tension with our business – it is the business. More than 25 million women each year have cervical dysplasia. The market we're building for is as large as it is precisely because so many of them cannot get treatment today. The competitive advantage is in making sure these patients can get treatment, and in addressing it, we become a much bigger company.

Writing Ananya Health’s mission into our charter is how we keep a promise to the investors who fund us, the employees who work for us, the manufacturers and distributors who partner with us, and the clinicians who bring our device to patients that we will not talk ourselves out of precisely what makes the company worth building.

If you're interested in joining us on the journey to end cervical cancer in our lifetimes, we'd love to hear from you: invest@ananya.health