This week’s Acumen Fund Pakistan Quarterly Tea event at the Sheraton Hotel - Karachi opened up with a spectacular light show – or lack thereof. Actually, the power went out in the entire hotel for 15 minutes as the event was to begin. Not so surprising when you consider that Pakistan faces an electricity shortage of 3000 to 4000 megawatts at peak times. But what was surprising and impressive was that everyone in attendance, from Acumen Fund Pakistan partners to advisors to entrepreneurs, all 50 people strong, carried right on with their conversations in the pitch black and did not miss a beat, even with the air conditioning out. Some even used their cell phones as a light source, which showed their resourcefulness and also how common these power outages are becoming in Karachi.
When the power came back on, Brian Trelstad gave an overview of the Acumen model, highlighting the importance of providing ‘patient capital for impatient people’ – those unwilling to sit on the sidelines and watch the problems of poverty. He also spoke specifically about our investment in A to Z Textiles and Water Health International (WHI) – both of which have shown an impressive ability to scale: A to Z is producing millions of bednets a year and has created more than 6,000 jobs; and WHI has 85 water systems serving 250,000 Base of the Pyramid customers, with plans to grow to hundreds of systems serving millions of people in the next 2-3 years.
When it comes to the lessons we are learning, it is within the context of how to best solve the problems of poverty. While increasing aid is important, Acumen Fund is looking at different ways to utilize philanthropic capital. Acumen Fund’s investment philosophy tests market-based mechanisms, and invests in the ingenuity of entrepreneurs and their teams.
After the brief presentation, Brian opened up the floor to questions and for me personally (as well as the Acumen Fund Pakistan team), it was incredibly exciting to see how engaged the audience members were as they asked very specific, focused questions.
Acumen Fund Pakistan Partner Farrokh Captain, Chairman of the Pakistan Human Development Fund, was wondering aloud if microhydro (currently being explored in India) would work in Pakistan and how? He also mused that, in addition to the energy crisis in Pakistan, the main issues remain scarcity of food and rising food prices.
Brian responded that this is indeed a global debate and one which Acumen Fund is wrestling with as well. One innovative approach to address the issue is how Acumen can invest in enterprises to increase yield production or assist entrepreneurs to improve food production techniques. One potential investment Acumen is exploring in Kenya is a company that manufactures a packaged product to counter malnutrition. But Brian also mentioned that one thing is becoming more apparent: there are often non-market factors that also contribute to a crisis situation (i.e. national politics). So we also have to keep in mind the question: what are the broader politics of food?
Other questions from the audience ranged from how Acumen Fund chose to invest and set up offices in Pakistan, India, and Kenya; to how Acumen Fund decides when to do an equity investment versus a debt investment; to the rigors of our market research and our social benchmarks.
At this point, Acumen Fund New York’s Director of Business Development, Sasha Dichter, also waded into the conversation noting that one can also view Acumen Fund as a different way of doing charity. Brian added that the vision for venture philanthropy in the US, dating back to 1999-2000, was a desire to invest in sound business models. So Acumen Fund is always asking the question: how can you generate more social impact per dollar invested?
This is when the true eureka moment of the event occurred. Shahida Saleem, President of d.o.t.z technologies and founder of Sehat First, an Acumen Fund investment in health services to the BoP, commented that one of most pervasive problems faced by the NGO community in Pakistan is that traditional charity can breed dependence. Even with government grants, there is a dependence to fill the gap but this is something a true business cannot rely on forever if it wants to serve the poor faithfully. And then the risk is that an NGO does good work for 4-5 years, and then shuts down. Pakistan has seen this repeatedly, and low-income citizens bear the brunt of this burden. According to Shahida, this is the need that Acumen Fund fulfills – by providing a different kind of capital and focusing on organizational sustainability.
Another audience member piggy-backed off Shahida’s remark saying that its most important when the investor has a stake in the enterprise and the process is organic – that was the main takeaway of the presentation for her.
Finally, Aun Rahman, Pakistan Country Director, wrapped up the event by saying its exciting to see like-minded community members come together to learn more as well as share ideas and connect with one another in this forum. It’s exciting to see our entrepreneurs like Dr. Sono (from MicroDrip) and Shahida Saleem meeting and engaging with our partner community.
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