Patient Capital: A Bridge over Troubled Waters

I recently had the opportunity to participate in the Clean Water Solutions for the Developing World Roundtable held last month at the University of California, Berkeley’s Haas School of Business. Hosted by the Sustainable Products and Solutions Program at Haas’ Center for Responsible Business and the GWC (Global Water Challenge), the two-day event was funded by Dow Chemical Company Foundation as the first of its World Challenges Roundtable series.

The event included over forty representatives present – from NGOS, social enterprises, and corporations, to new technology developers – all working to bring clean water to the more than a billion people who currently lack access. While a large array of models and strategies were addressed, participants were all focused on finding action-oriented approaches to marrying treatment technologies with sustainable business models.

Listening to the presentations and interacting with other participants, I was struck by the real desire many had to partner, to pool their respective strengths to make clean water available on a massive scale and in a sustainable way. But while there was this real interest in building partnerships to bring safe drinking water to those at the base of the pyramid, many agreed that it remains unclear how we can move from effective social and technological innovations operating on a small scale to large-scale commercial endeavors. Many spoke of a gap, or disconnect, between great ideas, and the support they need to scale.

I made the case for Patient Capital, a brand of investment that takes into account the long time horizons and significant non-financial support needed to help innovative businesses scale in difficult markets. Patient Capital can, in many cases, serve as the bridge between the early years of an innovative business model’s ramp up, and later stages when a business is established enough to attract commercial capital or grow through its own revenues. This is an approach with which Acumen Fund has made major strides – not only with water, but also with health, agriculture, and housing. As we find in our work throughout the world, so often the problems associated with bringing water to the poor rest on inadequate or poorly maintained infrastructure, and a generalized lack of accountability that traditional aid in this field fosters. By partnering with local entrepreneurs and businesses, such as WHI who were also represented at the event, we’ve found that Patient Capital works.

As a next step, GWC participants agreed they would find ways to work together more proactively, and we saw several exciting potential partnerships emerge between investors and entrepreneurs. We also agreed to gather again in twelve to eighteen months, to share the lessons that come out of these creative partnerships.