ANDE

TechnoServe VP for Development Simon Winter speaks at ANDE training. (Photo by Brian Murray)

Last week, along with 40-plus other participants, the Acumen Fund summer associates participated in an energetic and informational training session run by the Aspen Network of Development Entrepreneurs (ANDE).  ANDE is a member-driven organization whose goal is to dramatically increase the effectiveness of capital and technical assistance for entrepreneurs in developing countries.  This training was a definitive step towards that goal.

For the second year in a row, ANDE has organized this training along with Acumen Fund, Root Capital, Grassroots Business Fund, Endeavor and many other members of ANDE.  With the exploding interest in supporting Small and Growing Businesses (SGBs) as a means of alleviating poverty, the importance of coordinating and connecting those entering the field has never been more critical.  Not only was the training immensely important to developing relationships across organizations; it also provided a forum to share best practices and to promote innovative thinking.

The two-day seminar was packed with a discussion of different business models, presentations on social metrics and hands-on case studies.  As if any of the graduate-level interns needed more motivation heading into the sector, the opportunity to hear from amazing speakers such as Christine Eibs Singer from E+Co, Brian Midler and Namrita Kapur from Root Capital, Susie Lee from IGNIA, Raj Kundra, Sasha Dichter and Ann MacDougall from Acumen Fund, Simon Winter and Jennifer Golden from TechnoServe, Ben Powell and Ricardo Teran from Agora Partnerships was inspirational.

I was uplifted to meet our peers who are now heading into the field to countries such as Pakistan, Kenya, Rwanda, Ghana, Nicaragua and Guatemala. In particular, I was humbled and inspired by their backgrounds, skill sets and demonstrated passion for the work we will be undertaking.   I hope that this foundation of collaboration is something we all push to continue beyond the training amongst ourselves and by including more people interested in the sector.

My personal highlights were:

• Sasha Dichter’s non-profit Venn Diagram
• Learning more about the Global Impact Investing Network and its mission to educate and drive more investors into the sector
• Quote to inspire by Ben Powell of Agora Partnerships:
  Men wanted for hazardous journey. Small wages. Bitter cold. Long months of complete darkness. Constant danger. Safe return doubtful. Honour and recognition in case of success

  ~ Sir Ernest Shackleton’s trans-Antarctic expedition recruitment advertisement

Although not exactly applicable to those of us heading out into the field (safe return = certain), it is a reminder that we all need support, encouragement and community to help us through the hard times when things don’t seem possible and barriers appear impassable.  I’m confident coming out of this training that this community is stronger than ever and I look forward to contributing.

For those of you who were at the training, please feel free to share your highlights in the comments section!

Last Tuesday morning, I arrived at Heathrow. Straight away, I head to Shell’s offices in Waterloo. Barely missing a beat on the train and tube to Waterloo, I arrive just in time for the global launch of the Aspen Network of Development Entrepreneurs (ANDE). It had been a long journey for me that prior 24 hours (6 trains and 1 airplane in the space of 24 hours…thank god for roller bags). And it has been an even longer journey for ANDE and its founding steering committee over the previous three years.

In the summer of 2005, Henrik Skovby, a founding partner of Dalberg Global Development Advisors, had noticed in a series of lunch meetings with some of our peers in the field that we were all talking about some of the same problems: how do we tap into the capital markets like microfinance has?; how do we prove the case that small and growing businesses can be a major force in fighting poverty?; and how can we work together to build more effective investment teams?

With the blessing of the Aspen Institute’s Peter Reiling, we were able to convene for a summer discussion in 2006 to imagine a movement that would find a way to reach the small farmer, the healthcare entrepreneur, or the community looking to finance and purchase a water filtration plant with the right capital at the right time. Patient capital for people too impatient to wait for the development industry to “solve their problems”.

Competitors showed up at the first two meetings wondering whether there was any real value there, and if so, what are the aims of the movement at this moment? In the crisp mountain air of Aspen, competitors became colleagues, and colleagues became friends.

Willy Foote at Root Capital, Christine Eibs-Singer at E+Co, Simon Winter of Technoserve, and Andrew Stern at Dalberg were the stalwart members of the voluntary executive committee, and we were joined by thought leader Stace Lindsay and Peter at Aspen to help push the boulder up the mountain for three long and sometimes lonely years.

It was thrilling, then, in the over-crowded and over-heated room to see old colleagues and over 100 new faces join together to talk about how we can work together to find ways to help today’s emerging markets entrepreneurs strive to build their businesses more quickly and more ethically, employ more people in high quality jobs, and serve more customers with products that fill urgent needs.

Randall Kempner, the new executive director, guided the day with energy, humility and humor, just the right recipe to fuel the momentum of the movement; ANDE was off to a great start. In a time when the world is questioning the very role that global capitalism should play in development, Tuesday morning’s launch of ANDE was a bright spot that may be viewed in 50 years as a turning point in a new approach to development and to capitalism.

Last Sunday, I had the opportunity to speak on two panels at the 10th Annual Harvard Social Enterprise Conference. The SE Conference is an impressive, energetic gathering, with more than 1,000 attendees packed in on a snowy day in Boston. The backdrop of the financial crisis was everywhere, and you could tell that many students on campus are thinking differently about their careers. At the same time, nearly every panel referred to the opportunity presented by the Obama administration, specifically the potential for the Office of Social Innovation, which from all reports is on the verge of being created.

A keynote by Linda Rottenberg kicked off the day, providing perspective on the arc of the social enterprise sector over the last decade and our opportunities for the years to come. Linda asserted that we spent the first 10 years answering the question, “What IS social enterprise?” and that we’ll spend the next 10 answering, “What have you DONE?” I agree with Linda, though I think that the sector still has a long way to go in terms of clarifying our language and explaining in simple terms what we are and the unique value we bring in combining the best of the private and public sectors as levers for change.

In my morning panel, I had the opportunity to share the stage with Jeff Walker, Ex-Chairman and CEO of CCMP Capital and Chairman of Millennium Promise; Michael Chu, one of the founders of Accion Internacional (an early microfinance pioneer) and Co-Founder and Managing Director of IGNIA Fund; and Peter Kellner, co-founder of Endeavor and Co-Founder and Managing Director of Uhuru Capital Management (launched on Monday), a fund of funds that will give a portion of its management fees to support social enterprises.

The room was packed, with close to 150 people in a classroom that comfortably seats 90. Each panelist gave opening remarks, and we jumped into the discussion. Early in the discussion, Michael Chu made the observation that, across the panel, we represented “a spectrum of theories of change,” each complementary in nature. 

Michael makes a good point, especially given that, from the outside, it may look like we’re all trying to bring capital to bear in a new way to fight poverty and make social change. But the theories of change do differ. 

Millennium Promise uses almost all philanthropic capital to catalyze a set of simultaneous interventions in Millennium Villages, and the results in terms of increased agricultural output, decreased disease burden, and improvements in well-being in these villages is impressive.

Acumen Fund, with our focus in India, Pakistan and East Africa, has set out to provide critical goods and services to the poor, as a way of removing barriers and bringing choice and opportunity. With more than $40 million in approved investments that have touched more than 30 million lives, we have a solid investment track record and have invested in many of the most successful social ventures in the geographies where we operate. We are “impact first” investors, and our main goal is return of our capital, not return on capital.

Endeavor’s principle aim is to foster the growth of “high impact” entrepreneurs in the developing world – to create a vibrant entrepreneurial economy to catalyze change.

And IGNIA, which began making investments in 2008, is leveraging its experience with Compartamos microfinance bank which, in its recent IPO, gave outsized financial returns in addition to its large-scale social impact.  Michael Chu was clear that IGNIA’s goal is to invest in small- and medium-sized enterprises with an explicit goal of “above market” returns.” 

Given the amount of opportunity, the scarcity of capital, how underserved these markets are, and the potential of entrepreneurs to create new business models that integrate the best of the private and public sectors, this is not a question of which is the “right” approach.  Rather, our collective opportunity is to roll up our sleeves, do the work, be rigorous and transparent about what we are seeing and learning, and to be relentless about sharing these lessons learned so that the sector as a whole can better understand where and how we can use the market as a listening device to learn how best to lift millions of people out of poverty.

Fortunately, thanks to the ANDE network, the Rockefeller Foundation’s Global Impact Investing Network, and Acumen Fund’s PULSE platform to collaborate on metrics, the sector as a whole is creating the platforms we need for more collaboration. Stay tuned.

Editor’s note: You can also follow Sasha Dichter on his personal blog at http://sashadichter.wordpress.com

We’ve previously mentioned our Portfolio Database Management System (PDMS), the tool we are developing (with the help of many) to aggregate and evaluate data about social enterprises. Yesterday was a big day for PDMS: the social metrics platform was announced yesterday at the Clinton Global Initiative, and articles about it appeared in both BusinessWeek and The New York Times.

Also announced at the Clinton Global Initiative was the launch of the ANDE network, which Brian blogged about here. The PDMS is currently being tested by a number of beta users, and we anticipate launching officially at the beginning of 2009. We’d love to launch with a name better than the bland PDMS acronym — any suggestions?

Last week, I had the opportunity to sit down with Jordan Kassalow, Graham Macmillan and Miriam Stone – three staff members at VisionSpring – to conduct a long-form interview. Formerly known as Scojo Foundation, VisionSpring is the pioneering base of the pyramid-focused enterprise working to provide access to eyeglasses in low-income communities around the world.

Acumen Fund is an investor in VisionSpring, having made a $500K debt investment back in 2006. We’ve followed their progress for a long time, up to and including their recent name change and announcement of a 5-year fundraising prospectus.

Rob Katz, Acumen Fund: How, when and why did you get involved with VisionSpring?

Jordan Kassalow, Chairman and Co-Founder, VisionSpring: It was very practical. I spotted a market failure in my blindness prevention work (I’m an optometrist and public health expert by trade.) For many years, my specialty was river blindness control, and when I worked in low-income communities, I saw more people coming to clinics because they couldn’t see up close, while there were relatively few who were coming to us for river blindness. I saw this pattern regardless of whether I was working in Africa, Asia or Latin America. When you’re working on blindness, the overall market relative to general eye care is small. The normal need for eyeglasses is strong, but underserved in the developing world. After many months, I finally realized that, if no one else is doing something about it, why can’t I?

Many of us in the base of the pyramid community, myself included, often wonder, is this business really making a social impact? Sure, there are real indicators of success, but what action drove that particular outcome? As I ponder the social impact of business, I’m reminded of an old marketing adage: We know at least 50 percent of our efforts are working “we just don’t know which half. (Hat tip to Brian Trelstad for bringing this up in a meeting.)

In order to build truly inclusive businesses, our sector must start tracking impact over time. This we can probably all agree on. But the challenge is not so much in creating buy-in around the idea of measurement, but in finding a way to integrate an effective and user-friendly system for doing so in an already resource-constrained work environment.

Because of these and other stumbling blocks in creating social metrics, Rob Katz and I were particularly intrigued by the newly released Measuring Impact Framework developed by The World Business Council for Sustainable Development (WBCSD). This framework, which has been in the works for nearly two years, is designed to guide companies from small enterprises to large multinationals through the process of measuring and assessing impact, and making better-informed future decisions within the context of a larger development paradigm.

The WBCSD framework is designed to be applicable across sectors and at varying points throughout a company’s life cycle. The core business activities suggested for analysis — governance & sustainability (including corporate governance and environmental management), assets (infrastructure, products and services), people (jobs, skills and training), and financial flows (procurement and taxes) are flexible, open-ended and non-exclusive.

As someone with a limited background in program and policy evaluation, I can see how this framework could be helpful in conducting an internal impact audit. The WBCSD is effective in outlining and defining the various parts of any good analysis: understanding the relationships between a series of business activities, company resources, direct and indirect outcomes and large-scale impact. Assuming the same individuals conduct the impact analysis over consistent time intervals, organizations can use the Measuring Impact Framework as a tool for identifying goals, achieving internal benchmarks and measuring their own progress over time.

But to gauge an organization’s positive and negative contributions within a broader development context, it will become increasingly important to consider counterfactuals and to establish standard indicators as part of the assessment. By measuring against peer organizations as well as against itself over time an organization can protect itself from its own bias and see itself as part of a greater competitive landscape. Only through this lens will business leaders be able to make integrated and inclusive decisions for change.

It may be a long time before the social business sector (a vague and multi-faceted term in-and-of-itself) can agree on a set of standard metrics; but the work of WBCSD and others such as the Aspen Network for Development Entrepreneurs is encouraging. If nothing else, the Measuring Impact Framework is a tool that businesses can use to improve reporting processes, identify and communicate priorities with stakeholders. Hopefully, it will also serve as a catalyst for shared effort and continued development on sector-wide measurement tools.