Acumen (formerly known as Acumen Fund) is a non-profit impact investment fund with almost 15 years' experience in small and medium-sized enterprises (SMEs) that serve low-income communities in developing countries primarily in Sub-Saharan Africa and South Asia. Acumen brings a venture capital sensibility to aid work. It aims to demonstrate that small amounts of philanthropic capital, combined with large doses of business acumen can result in thriving enterprises that serve vast numbers of the poor. Over the years, Acumen has invested $83 million in 73 companies and has had a successful track record in sourcing and executing investment opportunities in the clean energy, health care and agriculture sectors. Acumens efforts help in reducing the carbon footprint of manufacturing energy efficient products alongside providing home improvement micro loans to low income women in the developing countries in the Sub-Saharan Africa and Asia.
Video Acumen (organization)
Philosophy
Acumen's philosophy is that a bigger impact can be made on poverty by giving people the chance to earn their living by investing in goods, structure and human capital rather than straightforward philanthropy. This vision evolves into investing in companies whose products and services enable the poor to transform their lives, people who have the ability to lead and ideas that innovate and accelerate solutions to poverty.
Maps Acumen (organization)
History
Acumen was founded in 2001 by a 25 year old banker named Jacqueline Novogratz who gave up her job in Investment Banking to work in International Development. The idea of Acumen started from one of Novogratz's trip to Central Africa, back when she was still in the banking industry with Chase Bank (formerly Chase Manhattan Bank), where she noticed that banks did not lend to poor people. Soon after, she quit her job, relocated to Rwanda and opened Duterimbere, the first micro-finance bank in the country. It started as a money-lending venture where it provided women with small loans to promote women's entrepreneurship at the grass-root level with an aim to contribute to the income of low-income working women. Novogratz's biggest challenge was convincing women that it was an authentic venture alongside explaining the ways in which it could increase their income and pull them out of poverty. Her cause was strengthened when she got 3 women parliamentarians to back her project and it grew to 2000 members from five provinces in 11 districts across Rwanda.
After Duterimbere, Novogratz wanted to do something bigger. At the apex of her imagination was an entity that would provide social enterprises with the tools to empower the working poor. In 2001, with help of Seed Capital from the Rockefeller Foundation, Cisco Systems Foundations and 3 individual philanthropists, she founded Acumen. Acumen uses a business mechanism to fight poverty, investing in for-profit businesses that treat the poor as customers.
Investment Model
Acumen's investment model is to invest as equity or debt in enterprises, either for-profit or non-profit organizations, that are serving Bottom of Pyramid Markets. In choosing these organizations, Acumen focuses on companies working on one or more of the five portfolio areas namely water, healthcare, housing, energy and agriculture. It invests not only in the form of financial capital but also its human and knowledge capital through assistance in business areas including business strategy, planning and performance management.
Innovative Companies:
At Acumen, investment is made in companies that statistically have the greatest chance at lowering poverty by manufacturing and subsequently selling goods or services. Those companies are provided the seed capital that maximizes their reach in order to get to the most amount of poor people alongside providing the flexibility and security to grow their businesses.
Human capital:
Acumen has developed a Global and Regional Fellows Program that provides individuals with the knowledge, guidance and practical techniques to drive social change in developing countries to eradicate poverty and build a more tolerant world.
Impactful Ideas:
Acumen has a carefully coordinated way of measuring and evaluating ideas and how much they hit the target they set out to achieve. Aligning business priorities with impact priorities allows it to have social impact in the sector.
Investments
WaterHealth International:
In 2004, Acumen invested in WaterHealth International, a for-profit organization that supplies clean water to the poor population in rural India, Ghana and the Philippines. Acumen partners with the International Finance Corporation of the World Bank and Dow Chemical Venture Fund to supply, people in rural areas of third world countries, clean supply of water alongside earning a substantial gross margin that keeps these hybrid enterprises thriving.
Social Return on Investment
When investing in businesses, Acumen measures success in the number of lives reached in bottom of pyramid markets. For them, success is correlated with the social change that occurs in people's lives. For example, when looking to invest in a company that makes and distributes anti-malarial bed nets, Acumen uses numbers to measure the social impact of this company. This means that the more number of anti-malarial beds manufactured and distributed, the more impact the company made. If a company builds toilets and shower facilities in urban slums and business districts, the success of this is measured by the number of times the toilet and shower facilities are used.
Acumen measures the immediate output and considers it when looking for businesses to invest in. It doesn't go further in investigating whether these social changes is contributing to decrease in malaria or improvement in health and environment. Its former CEO, Brian Trelstad argues that the latter approach is complicated, expensive and impractical for emerging companies. Instead, Acumen measures between output and impact i.e. distribution of beds to reduction of malaria.
Measurement in Venture Philanthropy
Pursuing Venture Philosophy, Acumen's Modus operandi is investing in enterprises that are innovating with an intent to eradicate poverty, with a potential for growth and return on investment. Investment in companies pursuing these ideas would yield below-market financial returns and therefore the returns are pooled back into Acumen's financial resources for future investments alongside enabling the investments to stand on their own. These financial returns, although not substantial, are critical in pursuing the organization's objectives of supporting significant social impact. Another way Acumen measures growth is thorough the impact of venture philanthropy by investing in companies that have a sustainable business model while having the ability to support its operating expenses with operating revenues within a 5-7 year period. Another investment criteria that an organization is scrutinized with is the ability to have its product reach a million end customers within the same 5-7 year period.
Grants
Bill and Melinda Gates Foundation:
- In November 2015, the Bill and Melinda Gates Foundation granted over $2 million to Acumen to invest in Ethiopia's poultry market as a means to improve the lives of smallholder farmers.
- In November 2008, the foundation granted $2.6 million to Acumen to develop and produce a system to provide safe water to the world's poorest people by applying a human-centered approach to innovation and design.
- In November 2008, the foundation granted $6.7 million to Acumen to support its mission of providing agriculture inputs to smallholder farmers to better the lives of poor farmer families
- In January 2006, the foundation granted $4.2 million to Acumen to support its mission of providing safe water and sanitation services on a fee for service basis.
Cisco, Sapling Foundation
- In 2005, Cisco Systems and Sapling Foundation matched donations up to a total of $1 million during the Clinton Global Initiative Inaugural meeting. It was used to deliver clean water, health and housing through investment in innovative, social entrepreneurs.
Partnerships
The Clinton Foundation:
- In 2015, Acumen, Unilever and the Clinton Guistra Enterprise Partnership, an initiative of the Clinton Foundation, launched an initiative called the Enhanced Livelihood Investment Initiative to improve the lives of farmers and their communities in Africa, South Asia, Latin America and the Caribbean. Th initiative involves a 3 year, $10 Million commitment to improve the economic lives of farmers by creating and scaling up privately held companies which links the farmers to Unilever's global supply chain and distribution network. This increases the social and economic impact of these businesses alongside sustaining them.
The challenges in this initiative involve difficulty in accessing and adopting beneficial agricultural innovations as well as the company's challenge in providing it and still remaining profitable. This partnership helps in overcoming these challenges by developing repeatable models to scale the adoption of agricultural innovations.
Other projects
LifeSpring Hospitals:
LifeSpring hospitals is a joint venture of Acumen and Hindustan Latex Limited to provide women with a cheaper and accessible way of childbirth. It started in 2005 when Anant Kumar, CEO of HLL (now known as HLL Lifecare) travelled to hospitals to talk to women about family planning practices and contraceptive use. Kumar found out that most women were unsatisfied with the level of care at public hospitals, some were so frustrated that they would take out loans to finance visits to private facilities. Kumar took the idea of opening a high-quality maternal care institution to low-income families in the sprawling Hyderabad urban slums. The concept involved provision of high quality pre and post natal health care services priced at 50-70% the price of private clinics. The concept was welcomed among the poor population and it was expanded to 9 hospitals in low-income areas by 2009. Its narrow specialization in maternal health care has been instrumental in lowering costs and increasing productivity in its locations. By limiting capital expenditures such as renting hospital buildings on multi year leases, outsourcing pharmacy and laboratory services and reducing the amount of machinery to only those necessary in performing a safe normal delivery, LifeSpring hospitals has brought the cost down to make it accessible to the poor population.
Through its process-driven model, LifeSpring has filled a void in the Indian healthcare landscape. Its developmental goals are to reduce maternal and child mortality while achieving financial sustainability. It ensures that more babies are born with qualified physicians rather than at home in high-risk situations. Additional income generated apart from deliveries is attributed to family planning services, consultation fees and rent from outsourced laboratory and pharmacy.
Raising money for expansion
In December 2013, LifeSpring Hospitals decided to raise $3.2 million to fund its expansion plan and to set up another maternity home.
References
External links
- Acumen Fund website
- Investing in the World's Poor Stanford Graduate School of Business, May 2007
- Developing Entrepreneurship among the World's Poorest The McKinsey Quarterly, March 2009
- The Patient Capitalist The Economist, May 21, 2009
Source of article : Wikipedia
0 Comments