With a global footprint, Acumen Fund provides a fresh new way of ending poverty; by investing in social enterprises that provide life changing solutions in the areas of sanitation, clean water, agriculture and post harvest handling, off grid power among others. Though the said enterprises offer less costly solutions to serious problems affecting humanity, they struggle with minimum resources to create a sustainable business model. Acumen Fund invests in these enterprises to give them the much needed financial muscle.
Biashara Leo Magazine talked to George Onyango, Managing director of Acumen East Africa about the impact of social enterprises in the local economy and why this breed of entrepreneurs find it hard to attract funding. Excerpts herewith:
BL: What is Acumen Fund doing to create the next generation of entrepreneurs?
Incorporated in 2001 with seed capital from the Rockefeller Foundation, Cisco Systems foundation and three individual philanthropists, Acumen Fund East Africa started operations in East Africa in 2001 with an aim of funding entrepreneurs who had business ideas that could bring sustainable solutions to big problems of poverty.
Since 2001, our East Africa portfolio has grown to be one of our largest under management. Our investments span from solar energy, to mobile-enabled supply chain solutions for farmers, to long lasting anti-malarial bed nets, to cotton ginning, and more.
BL: How does the firm invest in enterprises?
We invest with capital, as well as by buying shares in the companies that we are interested in. We also provide intellectual capital in form of people, by assisting the entrepreneurs access talented individuals through our wide network of people. We also support these enterprises, and expose them to further funding to allow them become profitable.
BL:Why social enterprises?
Although most East African economies have continued to grow over the past few years, income inequality remains high. More than 75% of East Africa’s population lives in rural areas, the majority being smallholder farmers living on less than $2 per day. Urban areas are equally challenging with 60% of Nairobi’s population living in slums and lacking basic services like water, sanitation and electricity.
Social entrepreneurs have less costly ways of tackling these challenges, but they need resources to do that.
For these enterprises, they find it hard to find funding in the initial stages of their business as many investors do not see the feasibility of their ideas at that stage. That is where we come in to fill the gap.
BL: Which criteria do you use to fund social entrepreneurs?
First, the social enterprise should be aimed at resolving poverty in one of our focus areas. These are water and sanitation, health, education, low cost housing among others.
We also look at the ability of the idea to create a valuable impact in society, as well as the idea’s potential to be scaled for profitability in future.
Leadership qualities of the entrepreneurs are also looked at as well as their passion and vison to drive the business.
BL: Which milestones has Acumen Fund East Africa achieved so far?
We have invested over $40 million in 37 companies in over eight years in East Africa. These companies have created over 46000 jobs while creating over 46000 jobs while also impacting over 85 million lives across the region (Kenya, Uganda, Tanzania, Ethiopia).
BL: Going forward, what should we expect form Acumen Fund?
Acumen will continue investing in social enterprises. We will continue creating a significant ecosystem where ideas, resources and experiences are shares. Acumen will continue to invest in 20 emerging leaders in East Africa, who will be a key resource in future.