A dash of (A)cumen: The recipe behind Acumen Fund’s investment strategy

Yesterday, Acumen Fund‘s Chief Investment Officer Brian Trelstad came to NYU to conduct a live case study on a real company that Acumen Fund invested in, in an effort to educate MBA and other students on the investing strategy and process of this innovative social venture fund. I actually wrote about Acumen’s approach sometime back.

The company under scope was Ziqitza Healthcare Limited (better known at Dial 1298), a for-profit ambulance service located currently in Mumbai aiming to provide ambulance assistance for all in 15 minutes. Using a willingness to pay revenue model, the company subsidies services for the poorest through fees generated from providing care to those that can afford to pay.

Before I jump into the heart of the case study, here is a video that we were shown at the outset of the lunch. In addition to providing ambulance services, the company is now also figuring out innovative ways to power their vehicles with renewables. You can read the rest of the review after the jump.

Continue reading

Advertisements

Op-Ed: Microfinance revisited and its role in reaching the missing middle

Two weeks ago I wrote about James Surowiecki’s article in the New Yorker that brought forward the inherent limitations of microfinance to actually generate a substantial number of jobs in a developing country. Since then it seems as if I was not the only one (surprise surprise) to take notice of Surowieki’s conclusions and it has even brought pioneers like Acumen Fund‘s CEO

Novogratz gave some credit to Surowiecki’s argument that not everyone in society is an entrepreneur and that in fact most people simply want a predictable, stable job with defined roles. Novogratz, however, distinguished her stance through her anectdotal experience with women’s access to credit and how throughout her experience they have overwhelmingly been favorable towards it. She says that this desire for credit provides the rest of us with critical lessons on how to address poverty.

However, the desire for credit on its own in no way makes someone an entrepreneur. Every teenager in America has an affinity for credit, but just because they are willing to spend that money somewhere does not make them some sort of innovator. Likewise, Surowieki’s argument highlights that for the most part microloans are not utilized for business expansion, but rather they help tide businesses over during rougher times, a la a bridge financing round. These funds like simple credit cards are used to cover funds that someone has already spent before — not towards future capital investments. It is that ability to reinvest ones funds towards scalability and expansion that is truly entrepreneurial.

Continue reading

Some more BACO-bits of investing knowledge from Acumen

Previously, ThinkChange India posted on the Acumen Fund’s investing strategy. In that post, we pointed out how a major factor in the Fund’s decision-making process is the BACO, or best alternative charitable option.

Due to a comment posted in response to this article,

Continue reading