Post written for Business Fights Poverty by Jacqueline Novogratz, Founder and CEO of Acumen Fund, a non-profit venture capital fund investing patient capital in businesses that serve the poor. Her book, The Blue Sweater, is out in paperback on February 16th. For a preview of the book and sales information, visit www.thebluesweater.com.
The Blue Sweater chronicles my journey from starry-eyed young idealist to a more experienced seeker – someone who still wants to change the world, but now has a much keener sense of what works and what doesn’t.
I was also overseeing two programs within the Rockefeller Foundation and feeling growing unease with a world that turned to traditional charity or philanthropy to solve its problems. At the same time, I’d seen markets ignore low-income people altogether. I needed to put my ideas – and values – into action.
In 2001, with the help of great friends and supporters, I started Acumen Fund, a nonprofit venture fund that would try to turn development on its head with an instrument we now call Patient Capital. Patient Capital forges a third way between the markets and traditional charity, investing in individual businesses with the potential to serve millions of low-income consumers. These investments are high risk, with a long time horizon and expectations for outsized social impact and near-market financial returns. We accompany the investment with a significant amount of management support and a commitment to measuring both social and financial returns. To date Acumen Fund has invested more than $40 million in East Africa and South Asia bringing affordable, quality healthcare, water, energy, housing and agricultural inputs. Nine years in, I feel more convinced than ever of the power of the idea of Patient Capital – and in so many ways, we are just getting started.
I write often in The Blue Sweater that dignity is more important to the human spirit than wealth, and I continue to learn at a deeper level what this means. As a world, we need to find ways to give the two billion people who still live in poverty a fighting chance to follow their own dreams. Now is the time for big ideas, for innovation and for building companies, organizations and systems that help the world extend that fundamental principle that all men were created equal to every human being on the planet.
I hope you’ll join us in an ongoing conversation about these ideas here on Business Fights Poverty and on Acumen Fund’s online community.
Add your comments below. What do you see as the role of "patient capital" to invest in businesses that serve low-income consumers? What other big, innovative ideas are there for harnessing business to fight poverty?