- Value Proposition
Acumen Fund creates value by preserving the dignity of its customers and investing in social enterprises serving low-income communities around the world. They recognize that there is a problem with merely giving away charity aid because it doesn’t empower people to stand up on their own feet and it ignores their dignity. Acumen wants to change that and create value by investing in local businesses that can sustain themselves and boost up the confidence of local low-income communities. By funding these social enterprises, they are developing their customers to become leaders and serve their own communities instead of Acumen Fund doing this themselves. Acumen also provides word-class online courses that aim to educate and challenge people to make an impact. Within their main objective, they have sub-projects. One of their recent ones is the KawiSafi Ventures, in which Acumen strives to provide clean, affordable off-grid energy in Africa. This is just one of the examples that show how Acumen provides the basic resources, such as electricity, necessary for leaders to emerge in low-income communities.
2. Customer Segments
Acumen Fund’s customer segments are driven by their approach to investment of “patient capital.” Patient capital seeks to thread the needle between market-based approaches and pure philanthropy. Rather than measuring success in terms of financial returns, patient capital seeks the goal of maximizing social and humanitarian outcomes and Acumen uses this framework for solving the problem of poverty. The Acumen Fund is seeking to create value for the entrepreneurs and innovators interested in solving poverty in the developing world across Asia, Africa and Latin America. In short, Acumen is attempting to leverage the talent and motivations of social entrepreneurs for the world’s benefit, and to develop large-scale solutions to a problem in one particular country that will likely also be relevant to other countries (Agrawal & Kumar, Social Entrepreneurship and Sustainable Business Models The Case of India). One of Acumen Fund’s main selling points is that they are interested in providing resources for “seed” ventures who are just starting out and envision a long trajectory before their product or service is fully launched. This is an important aspect of the value that Acumen Fund creates because of the flexibility and risk tolerance the investment company is affording a budding entrepreneur or innovator. And Acumen is open to a variety of problems that entrepreneurs are passionate about solving, so long as it fits the organization’s larger mission of reducing poverty – even “fringe” ideas if it displays promise: “The starting point for innovation is an idea of a need that isn’t being met, coupled with an idea of how it could be met. Sometimes needs are glaringly obvious, such as like hunger, homelessness, or disease. But sometimes needs are less obvious or not recognized—for example, racism or the need for protection from domestic violence—and it takes campaigners and movements to name and describe these” (Mulgan, The Process of Social Innovation, MIT Press Journals). While the end goal, of course, is to reduce poverty and increase access to clean water, health services, education and housing, Acumen Fund focuses on leveraging their resources to provide value to the entrepreneurs who are set on accomplishing this mission.
The main way that Acumen reaches its customers is through “partners,” or donors, who financially contribute to the organization. Acumen prefers this term because their partners are also relied on heavily for important expertise and perspective who share the same goal of reducing poverty worldwide. Because Acumen is an investor in social and humanitarian entrepreneurship, these channels through which Acumen operates are vast, varied and diverse. The organization functions through banks, health clinics, agricultural fields, schools and the energy sector. Acumen prides itself on working in some of the most challenging parts of the world with some of the world’s poorest people.
4. Customer relationships
Acumen Fund is a company that is dedicated to establishing working business relationships with its investees, the governments that the investee will be building capacity in and corporations or co-investors when necessary to benefit the low-income customer. And all three are equally important to Acumen’s success. A level of trust, oversight and due diligence must be afforded to the investee, who must state their case and explain why their product or service will help achieve Acumen’s overall mission of reducing poverty. They must also devise their own pitch for why their business model will be sustainable over a period of time and create real impact and prove a worthy investment for Acumen. Governments must be looped in to the partnership as well in order to receive state support and ensure that all marketing and business dealings are done correctly, professionally and in accordance with state procedures and regulations. The government will likely not be a costly customer, however, they may request certain certifications or accreditations in order to operate in an open and legal manner. “Social entrepreneurs add new actors to an existing system: customers and government” (Osberg & Martin, Two Keys to Sustainable Social Enterprise, Harvard Business Review).Relationships with co-investors are more on the terms of the entrepreneur, but Acumen Fund will have a vested interest in the other sources of funding a product or service is receiving.
5. Revenue streams
Acumen is reliant on its partners for donations, advice, expertise and leadership to be able to carry its mission forward. Acumen attempts to walk that fine line between pure philanthropy and market-based approaches. One social entrepreneur described this same process: “This has been achieved, not by asking for charitable support (there is little of that sort of money left anyhow) but by offering products and services that they want, which we can deliver on, while also meeting and funding our social objectives” (Daniel Snell, Building sustainability into your social enterprise). Acumen ranks its donors in a hierarchical system to display both the quantity of donors that have contributed to Acumen’s cause as well as the quality, notoriety and level of commitment that the organization’s donors have demonstrated. Acumen’s “stewards,” those corporations, institutions or individuals who have donated over $5 million to Acumen, include the Bill and Melinda Gates Foundation and the Metlife Foundation. “Leadership” donors, like Barclays and USAID, have donated over $1 million to Acumen. “Keystone partners,” those who have donated at least $500,000, include American Express and the Woodcock Foundation, and the list goes on up to note those donors who have contributed at least $10,000 to Acumen.
Acumen Fund doesn’t simply supply their leaders and companies with money that gives them flexibility and security to grow. They also provide access to expertise and networks of advisors who have deep sector, channel and customer experience. Moreover, Acumen also offers active post-investment support and guidance in the areas of strategy, governance, customer insights and fundraising. By engaging a large network of advisors and support systems as well as the funds, Acumen provides the essential resources needed to empower local communities to start their own businesses. In addition to business start-ups, Acumen offers a Fellows program and +Acumen, both educational programs that aims to build global leaders with the potential to positively impact their community.
Acumen’s partners/donors include organizations such as the Bill and Melinda Gates Foundation and other individuals who financially contribute to the social enterprise start-ups between the range of $10,000 and $5,000,000+. Their partners also include the passionate and ambitious leaders they fund to start their breakthrough companies and develop it into a profit-making business that will serve their low-income community.
Acumen’s key activities are providing a platform and a network of social entrepreneurs and partners who will provide the basic resources needed to help businesses start. These resources include funding through patient capital, access to expertise, early-stage investments, and post-investment support. While they help guide these leaders through their company’s growth and development, they are mostly hands-off because they want to challenge the leaders from low-income communities to become confident in their own abilities to make a positive impact in a sustainable way. Of course, Acumen does not just fund anyone, but they pay attention to the character and motivation of their social innovators and help fund their social enterprises and new technology that could assist them in developing their business. Some examples of the businesses they fund include “its health portfolio, which supports a low-cost hearing aid project, a telemedicine network connecting four private eye hospitals in India, an anti-Malaria bed net project in East Africa, and development of a portable, low cost point-of-care device that is capable of detecting dengue fever (and could be developed to detect other diseases in the future, such as HIV, malaria, and measles)” (Meehan, Kilmer, & O’Flanagan, Investing in Society, Stanford Social Innovation Review).
9. Cost Structure
Acumen’s costs involve reaching out to donors and other partners who can provide other resources such as education and financial/business advising. They are more value-driven organization rather than a cost-driven because they want the businesses they fund to contribute back to the low-income communities so that the company leaders are motivated to do things for the good of the community as a whole. I believe the founder used her own money from working in investment banking to start the non-profit organization that could lend money to poor people which is the fixed cost. Acumen’s variable costs are the people they hire along the way and the money that may be needed throughout the company’s growth and development. Acumen is also an economy of scope because they leverage resources for a diverse range of companies that can help their communities with the variety of products and services they produce.