Systems versus pilots and the lessons of WaterHealth International
Acumen Fund investee WaterHealth International (WHI) announced earlier this week that it had closed a $15M round of financing from the International Finance Corporation. The financing – combined with WaterHealth’s Series D round of funding – will enable the company to bring purified, disinfected water to 3 million more people in more than 600 Indian villages (in addition to the 200 in which they currently operate).
Naturally, we at Acumen Fund are excited to see WaterHealth continue to grow up and out, serving more and more base of the pyramid customers with a critical service. But what’s even more interesting – and encouraging – is the range of co-investors that have stepped forward to support WHI. There’s Dow Venture Capital and SAIL Venture Partners; Johnson & Johnson Development and Plebys International; Dr. Anji Reddy and Acumen Fund. And now, with another huge commitment, the IFC.
We believe in building systems rather than one-off solutions or projects. Who doesn’t? Unfortunately, the process of international development aid grantmaking and monitoring seems to lend itself better to “new” and “pilot” projects – a grant to support something “innovative” or “paradigm-shifting” has a better chance of winning than one to support a “small, struggling – but growing – business”. Donors tire of the same old, boring projects – they want new ideas! – and funds shift around to the cause du jour.
Not so with investing, at least not in this case. WaterHealth International has been at this for 12+ years (it was founded in 1996). If WHI were a traditional development project, it would have had to re-apply for funding at least 4 times (the average development aid grant runs for 3 years). But as a company, WHI has been able to raise angel, Series A, Series B, Series C and now Series D rounds of funding, all based on financial and operational results. And after 12 years of learning, re-learning, adapting, adjusting and innovating – a process that continues – WHI is beginning to reach real scale.
Is WaterHealth International perfect? Some argue that its UV Waterworks technology is too expensive, and that reverse-osmosis filtering is a better BoP-oriented solution. But you can’t argue with results – millions of customers today, millions more in the next few years. And with the IFC dedicating $100M to “infraventures” (infrastructure projects in low-income communities), we’re beginning to see real progress in a space formerly dominated by top-down government and aid projects. I’ll raise a glass to that.