The Best and the Brightest

Posted on February 21, 2013 by admin

Since its inception a few years ago, the Unreasonable Institute has diligently encouraged ground-breaking and even disruptive business models as a means of finding solutions to poverty around the globe.

With its ‘class of 2013,’ UI has learned from its own experience to assemble its most ‘unreasonable’ group of business talent yet. From over 200 applications, 14 were chosen for a summer’s work of refining business models, strategizing with experts, and seeking investment. Although these are early stage companies with much untapped potential, they have business savvy, genuine revenues, and the ability to scale in addition to compelling social missions.

It’s often difficult and time-consuming for impact investors to source quality deals with social impact. Unreasonable helps to shorten and lessen that process. Each of these companies needs to raise “tuition” money to attend the Unreasonable Institute program this summer. Investors and advocates can help both themselves and these promising entrepreneurs by showing their support at UI Marketplace.

17 Triggers (Mike Rios and Lilly Diaz) Cambodia: 17 Triggers does marketing for good causes. They help social enterprises and non-profits market their products and services so their beneficiaries can improve their lives. For example, WaterSHED (an organization that sells toilets in rural areas), previously had sales agents generate 2,000 latrine sales in 5 months. After working with 17 Triggers, WaterSHED generated 17,000 latrine sales in 12 months.

Chaupal (Aloka Singh) India: Chaupal is building a network of hospitals to serve lower-income populations in India. They combine these hospitals with a mobile health clinic and temporary health camps that set up in villages to extend the reach of healthcare deeper into rural India. They have so far provided healthcare access to 650,000 people in India.

MANA Nutrition (Mark Moore and Troy Hickerson) Global: MANA Nutrition manufactures and sells Ready-to-Use-Therapeutic-Food (RUTF) Peanut Butter to UNICEF for distribution around the world. So far, they have generated $6 million in revenue and their peanut butter has been delivered to over 100,000 youths.

Nisolo Shoes (Patrick Woodyard and Zoe Cleary) Peru: Nisolo connects Peruvian shoe-makers with the US market for their high-quality leather shoes. In their first year of operation, they generated $220,000 in revenue from over 4,000 customers and increased the incomes of 30 Peruvian shoe-makers by 6x.

Greenway Grameen Infra (Neha Juneja and Umang Maheshwari) India: Greenway Grameen designs and distributes biomass-fueled clean cooking stoves (see above photo) to rural India. They have generated $300,000 in revenue, selling their stoves to 10,000 rural households. They have reduced fuel consumption by 60% and emissions by 80%. Their cooking stove was recently named one of the top 14 design stories for 2012 by Fast CoExist!

OurSay (Eyal Halamish) Australia: OurSay empowers citizens to hold their leaders accountable and ask the important questions by connecting them virtually, forcing politicians to keep promises beyond sound bites and putting communities back in charge of their own destinies. They have over 50,000 members, have generated over $400,000 in revenue, and are pioneering innovative ways to engage with politicians like Google Hangouts with the Australian Prime Minister. OurSay is planning a pilot in India for 2013.

Agrilab Technologies (Brian Jerose) United States: Agrilab Technologies makes composting and integrated thermal energy/heat recovery systems for farms, businesses, and communities. They produce a system that captures heat released by agricultural waste and turns it into energy, giving farmers another significant revenue stream. In the past two years, they have generated nearly $70,000 in revenue, working with farms and dairies throughout the northeast, including the University of New Hampshire’s research dairy farms.

Prospera (Gabriela Enrigue) Mexico: Prospera trains women entrepreneurs in Mexico (predominantly in the food industry) with the designing and branding of their products. Then Prospera connect these micro-enterprises with markets to sell their goods so these women can move out of poverty. So far, they’ve increased sales by 300% for 3,000 micro-enterprises and provided training and mentoring through their 200 volunteer mentors.

UpEnergy (Nicole Ballin and Edward Lubega) Uganda: UpEnergy distributes $12-15 clean cookstoves throughout Africa, increasing the availability of clean energy home appliances to underserved populations. They have sold over 13,000 cookstoves to 11,000 customers, offset 30,000 tons of CO2 emissions, and generated $170,000 in direct sales and over $400,000 in carbon revenues via selling carbon credits.

Sudiksha (Naveen Peddalagalla and Nimisha Mittal) India: Sudiksha runs 18 affordable, for-profit, pre-schools for the poorest children in the slums of Hyderabad and the rural areas Andhra Pradesh. They have provided a high-quality pre-school education to 1,500 low-income children, charging each student $8 per month, and generating $75,000 in cumulative revenue.

Voltzon (Pepijn Steemers and Sjoerd Spaanjaars) Tanzania: Voltzon is undercutting the price of diesel generators in east Africa by providing a solar energy solution to off-the-grid communities. They lease out a mobile solar energy container to hospitals and schools, installing 16 systems so far in schools and healthcare institutions throughout Tanzania. They have generated $662,000 in revenue in the last four years and are exploring new financing models to make solar more affordable.

Trash to Cash (Madhumita Puri) India: Trash to Cash trains adults with a variety of disabilities in India to collect trash and turn it into beautiful products that can be sold in India and elsewhere. Since 2008, they have generated $220,000 and employed 87 women with disabilities who would otherwise be without employment.

MPrep (Toni Mariviglia and Chris Asego) Kenya: MPrep uses mobile phones to prepare underserved Kenyan students for their primary-school exit exams. So far, they have over 4,500 students at 90 schools using their SMS-based study tools, which have led to students who previously underperformed on test-scores to exceed class averages after using MPrep.

The Good Life Organization (Roberto Rivera) United States has created curricula that equip educators and mentors across the United States to engage effectively with youths for the purpose of transforming communities. Their impact spans from leadership training to increases in student GPA to higher graduation rates at high schools. After GLO’s involvement in one mid-western high school, the school reported its first ever 100% graduation rate.

Hippocampus Learning Centres

Posted on February 13, 2013 by Social enterprise

Nelson Mandela once said that education is the most powerful weapon you can use to change the world. If that’s the case, then a new (adorable) arsenal of change agents is being created in rural India, thanks to Acumen’s investee company Hippocampus Learning Centres (HLC).

Children enrolled at Hippocampus Learning Centres display their colorful creations.

In India, like many countries in the world, there is a severe need for quality early education, especially in rural areas. Hippocampus solves this need for low-income families by providing pre- and after-school programs at an affordable monthly rate. The company also creates local employment opportunities for women who become teachers. These teachers use international best practices to foster curiosity and critical thinking skills instead of rote memorization, which is common in most public schools.

In 2012, Acumen made a $700,000 equity investment in HLC to help them develop this innovative, low-cost model for providing better learning outcomes. The company aims to serve over 7,000 students in 100 villages over the next two academic years, transforming access to high-quality education in rural India.

[Adapted from an article appearing on Acumen's blog.]

Islamic banking and its values

Posted on December 17, 2012 by Social enterprise

[This post originally appeared on the blog of the Acumen Fund.]

One of Acumen’s portfolio companies in Kenya is currently going through a capital restructuring. The entrepreneur is Muslim and at some point during the negotiations, the request to explore sharia-compliant financing came up. Not knowing much about Islamic banking, I did a bit of research. What I learned really impressed me. Sharia forbids of all forms of riba, or interest, on monetary loans—and the reasoning behind this is quite profound.

The Islamic financial model works on the basis of profit sharing, in which investors and investees share the risks of an investment and divide any profits or losses between them. This participatory arrangement reflects the Islamic view that the borrower must not bear all the costs of a failure, which is intended to lead to a more balanced distribution of income and a more open economy. I am accustomed to a lending system in which the distribution of risk among the haves and have-nots is disproportional: those with less money, the more vulnerable, have greater risk. Sharia financing shifts the risk across the strata of society.

Unlike conventional banking, Islamic banking selects projects on the basis of profitability and not creditworthiness, which further leads to an emphasis on stability and growth. When investors are more concerned with interest rates and guaranteed returns than they are with operations and the use of funds, they lose out on the opportunity to add value and provide much-needed guidance to the investee.

At Acumen, we invest for impact. Islamic banking therefore seems to fit our approach of treating the entrepreneurs as partners, and being concerned with the success of the company as a whole. We’re not just interested in whether we can recover our investment. We invest to help ensure that our portfolio companies grow and are able to reach more of the world’s poor.

This diagram on Islamic banking refers to Musharakah (joint venture), which more closely resembles Acumen Fund’s investment approach.

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Nicolás Argüello is an Agriculture Portfolio Associate in Acumen’s East Africa office.

Brian Trelstad on Acumen Fund, Innovation, and Impact

Posted on February 27, 2012 by Social enterprise

Brian Trelstad, Investment Committee, Acumen Fund, talks to Daniel Epstein of the Unreasonable Institute on the following topics:

- Debt and equity Investments in water, energy, agriculture, and more in emerging markets
- Converting compelling ideas into investment propositions
- Entrepreneur-friendly source of funding
- Open source sharing of knowledge
- Character of the entrepreneur
- What the impact really is and why it matters
- Telling the story of innovation
- Breakthrough around business model innovation

Water Challenges in Rural India

Posted on January 27, 2012 by admin

Sarvajal’s innovative business model makes clean, affordable drinking water accessible in rural India.

Water delivery by Sarvajal franchisee

In an ideal world, centralized utility systems pipeline affordable, drinkable water to every household in the rural Indian landscape. Reality, however, is different: building utilities is expensive and time-consuming, especially for dispersed, heterogeneous, rural populations. The long payback period deters the private sector from taking on the challenge. In the absence of pipelines, transporting water—a low-cost and heavy substance—is expensive. With diesel prices rising and pothole-ridden roads abounding, last mile distribution is difficult, and adding long distance trucking costs to the price of water immediately puts it out of the poor’s reach.

Sarvajal (“Water for All”) addresses these issues in several ways through [its] franchise business model that decentralizes water distribution. Sarvajal’s rural entrepreneurs, or franchisees, purify local water within local villages and, in doing so, reduce transport costs and adulteration of distribution systems. To incentivize distribution, franchisees are allowed to keep 100% of the revenues they receive from doorstep delivery. They typically own lightweight, three-wheeler trucks called “tempos,” designed to handle rural roads and be affordable to rural entrepreneurs. To access the previously unreachable rural hamlets surrounding larger villages, [Sarvajal] developed a “water ATM”, or a radio-frequency identification (RFID)-based water-dispensing unit. By placing this point-of-sale device in a central area, customers have 24/7 access and Sarvajal can track individual-level water usage.

With 700 million people living in rural areas, India will remain a predominantly rural nation even in the face of growing urban migration. Given that water quality affects academic attendance and performance, India faces potential opportunity losses in GDP and deficiencies in leadership. Until governments and public-private partnerships are able to provide clean drinking water, other models are needed to bring the solution to rural India. Sarvajal is one answer.

Jay Subramaniam, CPA, is CFO of Piramal Water Private Limited, a for-profit business working on viable mass-market solutions to India’s water crisis. Sarvajal is the brand under which Piramal’s water is sold. Reprinted from Beyond Profit which is published by Intellecap.

Scaling Up Impact Investing In China

Posted on January 13, 2012 by Social enterprise

Scaling Up Impact Investing In China

Authored by: Tracy Elsen

Editor’s note: This post was originally published on the WRI Insights blog.

Opportunities in China for impact investing are growing, where investors look to create positive social and environmental benefits alongside returns. Impact investors actively choose to put their money into companies that address social and environmental issues through their business models. Tao Zhang, the Chief Operating Officer of New Ventures, WRI’s center for environmental entrepreneurship with local operations in China and five other high growth markets, answers questions on the country’s current investment climate for environmentally-focused small and medium enterprises (SMEs).

Is there a culture of impact investing and impact-focused companies in China?

Zhang: Impact investing is a very new concept in China and most companies remain very commercially focused. Many companies with environmental and social benefits inherent in their business models are not yet familiar with the impact investing concept, and thus are not in a position to present themselves as “impact” companies. At New Ventures, which is led in China by Country Director Walter Ge, we have worked with companies that have only realized the environmental impact they create after they have gone through an exercise to help them manage their environmental performance. In this exercise, New Ventures helps companies to quantify the positive impacts of their products and services, such as reductions in greenhouse gas emissions.

However, on the other hand, there are many companies that provide real environmental solutions in China, such as those that we work with in the energy efficiency, water quality, and recycling sectors.

How big is the impact investing opportunity in China?

Zhang: There is abundant opportunity in China for impact investing, particularly relating to the environment. A lot of the big business decisions in China are driven by government, not by the private sector. However, there is a huge demand and room for the private sector and investment, particularly SMEs, to help implement the government’s goals for environmental protection and poverty reduction. The government has a “top down” approach, and it makes sense to add in a “bottom up” approach, which is where SMEs and their investors can play a significant role.

Who are the investors in China right now putting money into companies creating impact?

Zhang: Right now it is very much commercial capital, as I don’t think there are many self-declared impact investors. There are a few trying to gain traction, but they face challenges building capacity on the ground to source deals and interact with entrepreneurs. These developments will require significant time commitment from investors. Impact investors from more mature markets in the U.S. or Europe do not have enough resources to set up an office or hire staff on the ground in China. And it’s hard to find and hire the right type of people in China because qualified investment professionals tend to choose to work for more traditional investors.

What needs to take place in China for impact investing to grow?

Zhang: Given the need for China to create sustainable economic growth over the decades to come, impact investing has an important role to play and should gain traction in the country.

The government has an opportunity to develop policies that encourage more investment into Chinese impact companies both internationally and domestically. Specifically, policies relating to foreign investments in Chinese start-ups need further clarity. Investors have been finding it challenging to convert their money into local currency upon entry and vice versa when they repatriate the capital upon a successful exit.

Meanwhile, organizations that promote impact investing can do a better job marketing its potential benefits. When one talks to different stakeholders in China, including government officials, about impact investing, time and energy is required to explain to them what it is all about.

The good news is that some Chinese cities, like Shanghai, are starting to pilot foreign limited partner-friendly policies to improve the investment climate for international investors. This growing trend in China will potentially make international investors feel increasingly comfortable investing in local companies.

The government is also starting to take notice of impact companies. At the recent China New Industrial Development Forum in Shenzhen, China’s Ministry of Industry and Information Technology (MIIT) announced a report on the “Green Impact of Chinese SMEs”, which is scheduled to come out in March 2012. The report, which makes extensive use of the environmental performance indicators that New Ventures uses, will collect and analyze the financial, environmental, and social performance of Chinese green SMEs, highlighting their environmental and social contributions to the economy.

What is New Ventures planning to do in China to grow the impacts of the environmental companies it works with?

Zhang: New Ventures China recently received funding from a Hong Kong-based foundation to look into the feasibility of creating China’s first genuine environmental impact fund. The objective of the study is to look at the macro picture and figure out how to take advantage of New Ventures China’s portfolio of environmental enterprises to either set up or help facilitate a fund.

Hopefully, New Ventures can help provide these companies not only with technical assistance but also the necessary financing to help them scale up to the point where they are sufficiently attractive to traditional venture investors.

We will also work with the Information Centre of MIIT to tackle the barriers to the growth of environmental entrepreneurship in the country. By sharing best practices from New Ventures China’s high-impact environmental SMEs, we are well placed to develop recommendations for policy-makers and investors to accelerate environmental entrepreneurship and green investment in China.

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The View from Canada: Impact Investing 2.0 – Your Money, Your Way

Posted on January 12, 2012 by Social enterprise

The View from Canada: Impact Investing 2.0 - Your Money, Your Way

Authored by: Carmelina Macario

When you start to think about investing your money to save for retirement or to grow your net worth, you are faced with a lot of questions:

How much do I put aside every month? Who do I trust with my money? I am a high- or low-risk investor? What do I want to invest in? Enter the financial advisor – they can help answer those questions, set up a portfolio for you and give you piece of mind. But what about when they can’t offer you something you want to invest in? What happens with even Socially Responsible Investment (SRI) funds don’t met your needs?

Enter impact investing. Of course it isn’t a new concept (NextBillion has covered it extensively) but it is a concept that is gaining popularity in the investment community. For the uninitated, impact investing is the act of investing your money into projects that will have a positive social or environmental impact and getting a return for it. Impact investing experts credit the gain in popularity to among other things: the instability of financial markets, the creation of a common framework for reporting on impact investments and to the shift of donors lending money to causes rather than giving money to causes.

Continue reading this story…

Indian innovators (from NY Times)

Posted on November 16, 2011 by admin

[Reprinted from the New York Times, November 5, 2011, by Thomas L. Friedman]

The world hit seven billion people last week, and I think I met half of them on the road from New Delhi to Agra here in India. They were on foot, on bicycle, on motor scooters. They were in pickups, dented cars and crammed into motorized rickshaws. They were dodging monkeys and camels and cows. Somehow, though, without benefit of police or stoplights, this flow of humanity that is modern India impossibly went about its business. But just when your mind tells you that this crush of people will surely overwhelm all efforts to lift the mass of India out of poverty, you start to notice a pattern: Every few miles there’s a cellphone tower and a fresh-looking building poking out of the controlled chaos. And the sign out front invariably says “school” — engineering school, biotechnology school, English-language school, business school, computer school or private elementary school. India is still the only country I know where you can find a billboard advertising “physics degrees.”

All these schools, plus 600 million cellphones, plus 1.2 billion people, half of whom are under 25, are India’s hope — because only by leveraging technology and brains can India deliver a truly better life for its masses. There are a million reasons why it won’t happen, but there is one big reason it might. The predicted really is happening: India’s young techies are moving from running the back rooms of Western companies, who outsourced work here, to inventing the front rooms of Indian companies, which are offering creative, low-cost solutions for India’s problems. The late C.K. Prahalad called it “Gandhian innovation,” and I encountered many examples around New Delhi.

Meet Vijay Pratap Singh Aditya, the C.E.O. of Ekgaon [See http://www.ekgaon.com/]. His focus is Indian farmers, who make up half the population and constitute what he calls “an emerging market within an emerging market.” Ekgaon built a software program that runs on the cheapest cellphones and offers illiterate farmers a voice or text advisory program that tells them when is the best time to plant their crops, how to mix their fertilizers and pesticides, when to dispense them and how much water to add each day. [Read more at http://www.nytimes.com/2011/11/06/opinion/sunday/friedman-indias-innovation-stimulus.html?ref=thomaslfriedman ]

Investing in microfinance

Posted on November 3, 2011 by Bill Harrington

As we have come to learn, microfinance is the provision of small loans to the working or self-employed poor through microfinance institutions (MFIs). Microfinance has spread to involve small savings accounts and other products such as life insurance and even crop insurance. Once the domain of non-profit entities with a social mission, MFIs are now successful businesses with a hybrid social and commercial mission. There are now thousands of MFIs in over 100 countries in the world.

MFIs may have become likely investment targets for impact investors in developing countries for several reasons. First, because microfinance provides basic financial services which are necessary at some level for even poor people to conduct their economic activities, MFIs reach a lot of people and therefore has a lot of social impact. Second, various industry metrics are available about microfinance that are not easily obtained or comparable in other industries such as agriculture or renewable energy. Because of the similarity of microfinance to banking, investors often have some familiarity with those metrics such as return on equity (ROE), return on assets (ROA), portfolio yield, capital adequacy ratios, delinquency and default. That data is collected, standardized and analyzed by the Microfinance Information Exchange, a Washington, DC-non-profit which provides a great service for potential investors as well as policy-makers and researchers. Third, many MFIs, especially those that are deposit-taking, are regulated, even those in remote, under-developed corners of the globe. While the extent and quality of regulation and supervision vary, the existence of regulatory authorities should provide some comfort to investors.

All this investment opportunity in microfinance is not without some caveats. As some MFIs have grown, many have moved away from their original social mission and have become more focused on commercial success and, in some cases, look very much like commercial banks. In other cases, MFIs have struggled to maintain their social mission in tandem with a commercial focus and therefore may not welcome private investors, in spite of a possible need for equity, unless the investors have goals that are compatible with those social objectives. Genuine impact investors may welcome that challenge and opportunity.

High impact companies identified

Posted on October 29, 2011 by Bill Harrington

Kopo Kopo provides back-office services that allow retailers in Kenya to accept payment for purchases by customers using their cellphones. Biosense Technologies is a medical diagnostic company in India that has developed a non-invasive device, currently in clinical trials, that monitors hemoglobin in order to permit rural health workers to detect anemia particularly in pregnant women and children. YoReciclo (website in Spanish) is a recycling organization in Mexico that collects recyclable materials, develops alternative products from them and teaches the benefits of recycling and environmental preservation. Wello is a company in Rajasthan, India, that provides a rolling water carrier to families who do not have running water to reduce the effort and frequency of trips to a well to get potable water. Over one billion people, one in six families on the planet, do not have access to water. Cycle Chalao is implementing a bicycle sharing program in India, a country with a high level of congestion and poor infrastructure in many areas.In addition to sharing an important social mission, each of these impact companies was recognized in a recent article in the New York Times as a participant in a novel business training and accelerator program run by the Unreasonable Institute in Boulder, Colorado.

First impact investment report shows impact in developing countries

Posted on October 18, 2011 by Bill Harrington

Congratulations to the team at the Global Impact Investing Network for the publication of the first major report of performance data on impact investing which is available at Data Driven: A Performance Analysis for the Impact Investing Industry. It’s tempting, of course, to compare profit margins, employment, etc, among sectors such as agriculture, microfinance, health and energy and the report’s authors wisely caution against such comparisons because of limitations in the data. Presumably this report will be followed by others with more data, more participants and more analysis so those investors who may feel data-deprived have something to look forward to. However, even now we can see that money spent in these countries goes far. The median wages (see page 11) in most companies and industries reporting is very low by US standards. Those numbers alone can give an impact investor comfort in knowing that their investment goes further in developing countries and is helping to create jobs and improve incomes in low-income households.

Trade-offs between return, risk and social impact

Posted on September 30, 2011 by Bill Harrington

Conventional investors talk about the trade-off between risk and return. An investment that is riskier than another is expected to provide a higher return. A portfolio combines higher returning investments with others that generate a lower yield according to the ‘risk profile’ of the investor – whether an institution or an individual. For social investors, the profile is more complicated because it has three dimensions: risk, return and social impact. That is further complicated because (a) social impact is difficult to measure, (b) some investors are willing to reduce their required return and/or take more risk if they perceive greater social impact, but others are not and (c) perceptions of the value of social impact vary among social investors, i.e., some value poverty-reduction highly while others value environmental preservation. The variety among social impact investors, as well as the ambiguity, can make the search for investment capital more challenging for a social entrepreneur than for a more conventional entrepreneur.

Welcome!

Posted on September 29, 2011 by admin

Welcome to Money Spent Well. Money Spent Well is a resource for individual investors and social entrepreneurs with the goal of increasing the amount of investment capital that flows into social business ventures that seek to solve some of the developing world’s most pressing problems. While the list is long, we pay special attention to agriculture, renewable energy and water.

We look at the ‘nuts and bolts’ of investing in and building businesses in developing countries. We seek investors with commitment and conscience to work with and invest in entrepreneurs with vision and energy. We expect that the result will be impact investments that provide social benefit and financial return. We welcome your involvement in contributing blog posts and in responding to the posts of others.

Money Spent Well

Where impact investors share best practices and connect with social entrepreneurs who reduce poverty in developing countries

Tag Archives: impact

Hippocampus Learning Centres

Islamic banking and its values

Scaling Up Impact Investing In China

Is there a culture of impact investing and impact-focused companies in China?

How big is the impact investing opportunity in China?

Who are the investors in China right now putting money into companies creating impact?

What needs to take place in China for impact investing to grow?

What is New Ventures planning to do in China to grow the impacts of the environmental companies it works with?

The View from Canada: Impact Investing 2.0 – Your Money, Your Way

Investing in microfinance

First impact investment report shows impact in developing countries

Welcome!