Acumen Fund - Moral Leadership for a more Inclusive Future - Design At The Edge

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Moral Leadership for a more Inclusive FutureJacqueline Novogratz, CEO, Acumen Fund

Opening Points I. Dignity is more important to the human spirit than wealth. Think more broadly about what poverty means.

II. Charity and aid alone will not solve the problem of poverty.

Charities "create dependency rather than dignity."

Jacqueline Novogratz describes Acumen Fund as a "non-profit Venture Capital fund for the poor investing in companies, leaders and ideas."

"Investing philanthropic funds." "Think much more seriously about our systems" "At Acumen it always starts with the people." "Can take five to fifteen years for the [financial] returns to come back"

Acumen Portfolio Examples Ex 1: Husk Power Systems - Bihar in India http://www.huskpowersystems.com/ Many of the people have been profiled as "economically impossible to reach economical means" "gasifiy the rice husks" "via minigrids that can reach 10,000 people" made with bamboo sticks and "strings" as electric lines. currently reaching about 170,000 people with Husk Power [singlepic id=874]

Ex 2: http://www.1298.in/ In India 90% of people in ambulances are dead. Taxis are used more often for ambulances Ambulances are not regulated, It took private initiative an private capital to build it.

brand image differentiation - yellow color, unique phone number 1298 avoid corruption - not taking bribes. ethos - service for all - patients are taken to free clinic marking - subsidizing their costs, they display advertisements on the side invested - started with 9 ambulances in 2007, a year before the Mumbai terrorist attacks, and will soon reach 1,500 ambulances [singlepic id=875]

"create systemic change" "We're already seeing it replicated in other countries"

Ex 3: d.light http://www.dlightdesign.com/ consumer product instead of Kerosene lamps [singlepic id=876] "in the 80's and 90's it was top down." "you'd come in and" say "here's this solar plant" [hard to diffuse]

Ex 4: Housing - Jawad Aslam blank land outside of Lahore Pakistan Javat - a year to register the land because of the corruption [diffusion problem] - no one trusted that there would be jobs around [meta-system problem] -it's connected to status, wealth, beauty [the opposite of Tata car]

Ex: 5 Western Seeds http://www.westernseeds.com/ sells hybrid seeds in Africa [singlepic id=877]

Acumen in Kenya -fortified porridge -public toilets - previous attempts at innovation here have not diffused

Future "The Road of Fear" -"evident in terrorism, business" The other road...

"Road of Justice of Love" -"the only road that takes us where we need to go." -takes us into a "single tribe"

This is a time of "great instability and great opportunity"

"Using the power of the markets and smart design"

Investing Model: "Scale - we don't want to invest in anything that will reach 1M people" "typical capital commitments range from $300,000 to $2,500,000 in equity or debt with a payback or exit in roughly eight to fifteen years." (AcumenFund.org)

Even though their investment period is about eight to fifteen years, Acumen Fund considers their investing to be venture capital because they invest in early stage companies. Their exit may consist of: the management of the company they invested in buying back shares, or selling to a strategic investor, or continuing to earn dividends.

They also engage in what they call "Lab Investments," which "are smaller-scale, high-risk experimental investments, where funding can be disbursed rapidly and lessons can be learned in the short-term."

Primary Investment Criteria: Potential for Significant Social ImpactCompanies need to make a product or deliver a service that addresses a critical need at the BoP in the areas of our strategic and geographic focus. Delivery of the products or services should generate social outputs that compares favorably with products or services either currently available on the market or through charitable distribution channels. Potential for Financial SustainabilityA clear business model that shows potential for financial sustainability within a five to seven year period, including the ability to cover operating expenses with operating revenues. This period corresponds to the tenor of most commercial loans, and positions entrepreneurs to access commercial finance in the future. Potential to Achieve ScaleAn objective of reaching approximately one million end users within a five year period with the benefits of the product or service. If the entrepreneur's business model does not aim to reach one million consumers, does it have:

* The potential to grow by an order of magnitude (i.e., 10x) within five years? * Potential for material impact on the social problem it is trying to solve? * A position as one of the leading service providers in the market in which it operates? * A strong and experienced management team with the skills and will to grow a sustainable enterprise at the BoP? * The presence of a strong management team that has the requisite skills to execute the business plan and a clear and compelling vision? * A management team with the will to work with the market to achieve the goal of serving the BoP? * A management team with positive ethics? (via AcumenFund.org)

Insurance Models -does not work if when everyone gets sick.

Working at the macro-mezzo and micro level -to set up a much more robust system.

Speaking about the current insurance model in the US. "in some ways, we'd have to burn down the health insurance system"

Resources and people mentioned: Innocent Anthropologist Buckminster Fuller


This lecture is part of Bruce Nussbaum's Design At the Edge lecture series.

Notes taken on a mobile device. Pardon any auto-corrections or incorrection.