Acumen, the venture fund pushing for innovation in developing countries

Poverty, disease, poor access to health care services and basic life necessities are well-known problems in developing countries. Funding in the social entrepreneurship sector is more difficult to come by compared to more lucrative industries like consumer technology. Though the mission of many of these companies have clear and obvious moral underpinnings, the lack of sustainable business models means that many of these companies aren’t able to grow and scale without significant outside investment. The problem isn’t about lack of awareness of these issues, but of the lack of available capital.

One organization that’s tackling this problem is Acumen. They invest in entrepreneurial ventures targeted in developing countries with specific focus in India, Pakistan, East Africa, and West Africa. Most of their money comes from charitable donations, but unlike most non-profits and philanthropic organizations, they provide loans or take an equity stake in the companies rather than distributing grants. Any returns from the investments are used to make new investments.

Some notable investments that they’ve funded include VisionSpring (affordable vision care for the poor), Voxiva (communication services that improve rural health care), and D Light (affordable solar lights). A list of all of their investments can be found here.

Here’s a short video explaining the organization’s manifesto, narrated by the founder Jacqueline Novogratz:

[iframe width="560" height="315" src="//www.youtube.com/embed/vX4mBRshSEM" frameborder="0" allowfullscreen style="margin-bottom:10px"]

Many of these ventures can’t operate on the consumer technology ethos of rapid growth with neglect of monetization until later down the road. Due to the nature of many of these social ventures (most of which involve physical products), high infrastructure and manufacturing costs eat away into profit margins. Cutting costs through economies of scale and exploiting sales through volume rather than high margins are how these companies can grow. It’s clear that easier access to capital will have a big role in helping solve many of the problems in developing countries, although there are many more obstacles beyond the dollars.

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