This story begins with Jacqueline Novogratz’s favourite blue sweater…
Jacqueline Novogratz: Founder of Acumen Fund
And so this amazing tale inspired Jacqueline’s ambitious venture into social good with her creation of Acumen Fund: an organization dedicated to investing in social entrepreneurs and enterprises focused on providing critical goods to the world’s poor.
Investing Patient Capital in Social Entrepreneurs
By using the idea of patient capital (where investors are willing to make a financial investment in a business with no expectation of turning a quick profit) and investing this into people trying to solve vital problems for the poor in their region, this essentially creates a system that combines both businesses (whose bottom line is profit) and philanthropy (a focus on creating a positive impact on society), ultimately breaking the cycle of poverty.
Since a social entrepreneur’s model is based on not one but three bottom lines – People (society), Planet (the environment) & Profit (scalable income to create sustainability and growth) – this ensures that their focus would be on a win-win situation for everyone involved.
With these emerging businesses looking to provide things like affordable health, water, housing, energy, and agricultural solutions – the often neglected (bottom of the pyramid) poor begin to regain their self-esteem (since the mindset of someone not having access to these necessities leads to feelings of being “lower” than the rest of society) ultimately giving them the choice to live a better, more dignified life.
The Initial Capital
Acumen Fund itself is entirely non-profit and relies on partnerships, donations and self funded initiatives. However, by functioning as a social venture capital firm, they’ve created an enormous amount of leverage in creating economic impact.
Operating in complete transparency, on their site you can access the breakdown of Acumen Fund’s different portfolios, information to all the emerging businesses they’ve invested in along with the tools and evaluation models that Acumen Fund are using to measure them.
This in turn has led to significant partnerships and large investments from an amazing range of organizations including the Skoll Foundation, Google.org and the Bill & Melinda Gates Foundation.
Success and its Process
Acumen Fund has a well rounded evaluation system to ensure that the social businesses that they invest in have the best shot at succeeding.
Firstly, they’re quite selective in whom they help.
The entrepreneur or social organization they are investing in needs to have business model that aims to:
- Reach one million consumers
- Have the potential for a significant impact on the social problem they’re trying to solve
- Look to create a position as one of the leading service providers in their operating market
- Encompass a strong management team with positive ethics and a goal of serving the BoP (people at the Base of the Pyramid)
In return, Acumen Fund provides them with a significant loan ($300,000 to $2,500,000 in equity or debt with payback or exit in roughly five to seven years).
More importantly, Acumen Fund provides them with advice and leadership from its experienced team, along with the help of at least one of Acumen’s Fellows (experienced individuals with social & business mindsets who have entered Acumen Fund’s year long fellowship training program).
In the past year alone, Acumen Fund has invested over $50 million of patient capital in over 50 businesses, creating over 35,000 new jobs that have impacted more than 40 million people.
Check out the “on the ground impact” of Husk Power systems, who’ve managed to bring affordable electricity to rural India for less than $2 a month (something that was deemed impossible).
A Globally Inspired Community
Another fantastic aspect of Acumen Fund is their online social good network.
They’ve managed to create a community (across the world) of people who are inspired to change the way the world tackles poverty can connect.
These volunteers not only bring their unique voices to the eradication of poverty debate, but they raise awareness, organize events, forums, celebrations and workshops – learning, sharing and supporting Acumen Fund’s work.
I’ve actually been fortunate enough to connect with the (very active) Dubai for Acumen Chapter, who are organizing an event on Wednesday, June 8th 2011 aptly titled: Social Entrepreneurship: The Social Impact »
On her way through to Pakistan, Acumen Fund founder Jacqueline Novogratz is stopping over in Dubai and will be leading an inspirational panel discussion (along with other leading voices in the region) on the idea of social entrepreneurship in the Middle East.
In addition, Dubai for Acumen will be launching their “Social Business” challenge where the top 2 social business plans will receive grant funding from their partners.
I find it amazing that such a small group of helpers have been able to create such a significant impact.
Want to Get Involved?
- Raise your awareness and sign up for Acumen’s updates
- Attend an Acumen event in your community
- Join one of their local chapters
- Gift your birthday, or make a personal donation
- Apply to become an Acumen Fellow
- Submit your own social business plan
As for me, I plan to re-ignite my passion for social good by reading Novogratz’s book, The Blue Sweater »
Here’s Jacqueline telling us one of her inspirational stories of hope, an encounter in a Nairobi slum with Jane – a former prostitute.
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