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Letter from Jacqueline Novogratz – Winter 2014

During Chinese New Year celebrations just a few weeks ago, I walked through the streets of New York as colorful confetti mingled with white snowflakes: beautiful fragments, a fluttering, harmonious welcome to the Year of the Galloping Horse. Indeed, Acumen is moving apace. January brought a trip to India; February, Pakistan. Both experiences have reinforced a sense of optimism amidst global challenges.

India’s trip focused on diving deep into a few investments, some new, some old, including Ziqitza Healthcare Limited (ZHL), an ambulance company that has served more than 2 million people across India. When we first invested, the company had 9 ambulances with a purely private business model based on a sliding scale pricing structure. Over the past 7 years, partnership with government has driven the company’s growth. Scale and sustainability are possible – and so is a commitment to ethics. At the nexus of both is the constancy of moral leadership.

Before ZHL, a state like Odisha, India’s fourth poorest, provided little in the way of emergency services.  On my recent visit to Bhubaneswar, the state’s capital, I met numerous people who shared horror stories of trying to get loved ones to hospitals using rickshaws, taxis, even bullock carts. Now, by dialing 108, any person with an emergency can expect a quick pick-up and delivery to a public hospital. What is most surprising to users is that the 108 services are actually effective. Average delivery times are less than 25 minutes, despite the fact that 80% of users live in rural, underserved areas with inadequate infrastructure. Prashant, a fish farmer who lost an uncle while trying desperately to get to hospital said that this new ambulance company was like “the gods coming to help the poor people.”

If free, quality services are a surprise, so too is the absence of corruption: bribes are not tolerated.  To ensure this, a quality team is tasked with calling users regularly to inquire: 1) whether the driver has asked them to pay; 2) whether they’ve paid something, even voluntarily; and 3) how they would rate the quality and speed of service. The group also monitors daily calls, currently coming in at 10,000 a day. By year’s end, ZHL in Odisha alone will transport more than a million people to hospitals, proving the potential of a public-private venture to serve the very poor.

The company’s leaders focus vigilantly on re-enforcing its values-based culture.  Sumit Basu, Regional Head for East India, tells the story of the Emergency Medical Technician, Pratap Kumar Sethi, who noticed a wallet containing 21,000 rupees (about $350) beside a roadside accident’s unconscious victim. The driver insisted on bringing the wallet to the hospital and holding it until the man regained consciousness, not trusting doctors to be honest. ZHL ensured the local newspaper covered this act of integrity. The driver earned respect. The idea that good service is possible was reinforced. Everyone gained in dignity. If scaled and buttressed by transparency and ethics, a single company can impact an industry.

This is the idea: patient capital is vital for early-stage investing when the company must confront significant challenges to disrupt an industry. At this stage, few other than philanthropy-based patient capital will take the financial risk the company needs for experimentation. As new standards and practices are established over time, the company serves as a model for others. If all goes well, it moves to profitability and sustainability, so that the company can raise more traditional capital. The poor thus have greater access to freedom, to dignity. How this translates into lives impacted is something we are studying along with the Grameen Foundation, so stay tuned.

This past quarter, our team has focused largely on enhancing the impact of existing investments. In Pakistan, our team just signed a $3.5M memorandum of understanding with the Punjab Board of Investment & Trade to partner with two companies, Pharmagen Healthcare Ltd and SRE Solutions to provide clean drinking water and solar systems to underserved communities. We are working with Bain & Company to gain insights into the factors which drive adoption of agricultural innovation by farmers. Our partner Dow Chemical and their Sustainability Corps are working to bring supply chain and operations expertise to 2 of our investees. Additionally, we’ve made 6 new investments globally in the last 6 months in our health, agriculture, education, sanitation and housing sectors.

As we invest in companies, we learn continually how leadership matters more than structures when it comes to making solutions to poverty work. We thus have doubled down on our leadership investments. This past week, I helped moderate three days of discussions with our 2014 class of Pakistan Fellows. The Fellows are an extraordinary representation of the country’s vast potential, a complex mix of class and religion, ethnicity and geography. We debated Plato, Rousseau and Hobbes, Aung Sun Suu Kyi, Lee Kwan Yew, Martin Luther King, Jr., Gandhi, Jinnah. Through every conversation, our Fellows confronted issues of identity, their own and one another’s. They honored one another by the acts of seeing, of listening, of practicing moral imagination.

Thrillingly, we are adding two more cohorts of Regional Fellows – our first from India and third from East Africa – to our community by next month. These 62 will join our 12 Global Fellows this year. All will become part of our larger ecosystem, helping one another, supporting Acumen’s companies, and strengthening our collective abilities to tackle poverty.

Our Fellows will hopefully bring forth the wisdom of both East and West. A soft-spoken, deeply thoughtful Fellow, a Pashtun from Pakistan’s FATA region shared his thoughts on prayer and peace in a violent world. When he bows his head gently to the ground, he said he is reminded to pause and feel gratitude for the earth, for all we are given. In this I heard echoes of an Indian teammate, a Jain who shared her family’s tradition of starting each day by feeding pigeons outside their home, offering a bowl of seeds, a reminder of our connection to all living things. We have the whole world to gain by honoring those practices that remind us of our shared humanity and connection to the planet itself.

Such cultivation is even more critical in this time of growing inequality. Acumen’s work and vision is one that insists on technical excellence to make good on our promise to build companies that serve the poor. This is our commitment to operational execution.  Equally, at our core is a philosophy and practice of leadership grounded in respect for all, starting by standing with the poor. It is only by fusing the two, by a willingness to embrace both love and power, that we can dare dream a world in which all of us can live with dignity.

Hoping the wind blows at your back and fills your days with possibilities in this year of the Galloping Horse,

Jacqueline

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