Letter from Jacqueline Novogratz – Spring 2012
In the past couple of months, I was lucky to travel to both India and Pakistan to spend time with our team, advisors, investees, and the people they serve. In Peshawar, Pakistan, a place known mostly for destruction, burkas and suicide bombers, I met with an extraordinary group of young, twenty-something leaders. They want to see a different future – and they’re intent on creating it, despite the risks of speaking out, despite the risks of collective action. They used Facebook and other social media to inspire more than 4,000 people in Peshawar to pick up litter, paint over graffiti-laden walls, and clean up and green their city. They are not waiting around for political leaders to show them the way.
I can’t get those young people out of my mind, nor can I stop thinking about the Teach for India teachers I met in Pune, the young leaders starting the MUMBAI+acumen chapter, or the many young farmers and students I met in both countries. Everywhere there is a hunger to change systems, and Acumen’s sense of urgency has never been greater. We also realize we have to continue evolving as an organization to do what is necessary to make the greatest impact possible. It is this that has made the past months feel even more intense than usual.
Our portfolio continues to grow. We have now approved more than $78 million of investments in 70 companies that have reached more than 90 million individuals and created and supported 57,000 jobs. A number of those companies are scaling. Ziqitza Health Care Limited now runs more than 870 ambulances in India and employs more than 4,500 individuals. The company has served more than a million people. d.light has brought affordable solar light to 7 million and is currently selling 100,000 solar lanterns every month. Change has never felt more possible.
We’ve expanded our investing to the education sector as well. In a rapidly developing economy like India, more than 50 percent of children aged 15 – 19 are out of school or lack formal training. We see similar figures in many of the places where we work. Acumen Fund’s new Education Portfolio aims to expand access to high-quality learning and employability services for the poor. Together with Lok Capital, we made our first education investment in Hippocampus Learning Centres, an education service provider in rural India that offers kindergarten and after school services and employs local women as teachers. We are thrilled to be learning alongside the company and thank all of our education portfolio supporters for making this possible.
In sectors where government is active — like education, energy, healthcare, and agriculture — experimenting with new models for delivering basic services takes high risk and a tolerance for failure. Acumen makes investments in all of these sectors. Financing this effectively requires a combination of grant funding, patient capital, and impact investment.
This past quarter, we launched “From Blueprint to Scale: The Case for Philanthropy in Impact Investing,” a research study produced by Monitor Group in collaboration with Acumen Fund that has helped us more fully understand the spectrum of capital needed to build our sector. The authors point to a mismatch between the number of funds seeking commercially-viable opportunities and the number of social enterprises ready for commercial capital, identifying the need for more risk-tolerant funding for inclusive businesses at early stages. This missing link is what we call the “Pioneer Gap,” the period when early-stage businesses need grants and philanthropically-backed funding to experiment, innovate, and prepare new markets. Why the need for more patient, risk-tolerant capital? The entrepreneurs we work with are often trying to sell products and services like affordable electricity and water for the first time in distorted markets with poor infrastructure, talent shortages, and nonexistent supply chains. These challenges take time — and the right kind of financial support — to understand and to innovate around.
“From Blueprint to Scale” corroborates our own experience over the past decade of investing. It has also strengthened our resolve to do what it takes to stand with the poor. We started Acumen to change the way the world tackles poverty. We have never believed that the market is the only solution; indeed, we’ve believed since our inception that neither market forces nor charity alone would or could solve poverty. At the end of the day, what the world needs are new models not only for the kinds of companies we build, but also for the way those companies are financed. The impact investing sector is noisy and chaotic because it is so new. It is critical that all players keep their eyes on the impact and not just on the investing, that we recognize that investing must be seen as a means–not an end–in our efforts to end poverty. That won’t happen at scale until there are better measures for impact that can tell the full story of how a business uses resources to create real, sustainable change. A lot of good people are working on better metrics, and great strides have been made, though there is a long road ahead of us.
The second critical variable to scaling impact investing is leadership. The good news is that so many individuals around the world, including the young people in Peshawar, want to step up and lead. I feel blessed to meet them wherever I travel. I see them in the 1,000 applications we received for our Global Fellows program. This year, we selected ten fellows from eight countries, including Japan, Saudi Arabia, Nigeria, the Philippines, Hong Kong, and Pakistan. Our current fellows are also on the move: Tamsin Chislett worked with entrepreneur Bruce Robertson in the Gulu region of northern Uganda to improve the operational efficiency of the Gulu Agricultural Development Company‘s cotton ginning operations by more than 20 percent. Cherian Joseph led the launch of our ambulance company’s IT restructuring at their dispatch call center, the nerve center of the business. The East African Fellows are also flourishing, and we look forward to launching a regional fellows program in Pakistan by the end of the year.
We see leadership throughout our team and our community as well. Garrett Moran, former COO of Blackstone’s Private Equity group, and Kweku Bedu-Addo, CEO of Standard Chartered Ghana, joined our global Investment Committee. Rohini Nilekani, Chair of Arghyam in India, hosted the book launch of the Indian version of The Blue Sweater and wrote the foreword to the book. Indeed, the list of those who have given their time and energy is long, and we couldn’t be more appreciative.
I was privileged to give commencement addresses at Gettysburg College and Fordham’s Graduate School of Business last month. Again, young people expressed their desire to live lives of purpose and meaning and to create the world they dream. Many in our community are already taking action as part of our growing +acumen network, and just this month we’re excited to welcome RIYADH+acumen as our 17th +acumen volunteer chapter. There is nothing more radical than hope to inspire a cynical world, and daily I see evidence of that hope.
The entire team at Acumen joins me in thanking you for being part of that same inspiration. The world has never needed each of us more.
Jacqueline Novogratz is Founder and CEO of Acumen Fund.