energy

The team at Acumen Fund would like to take a moment to congratulate Christine Eibs Singer on her promotion to CEO of E+Co, one of our friends and allies in the social investment space. At the same time, we want to applaud retiring CEO and E+Co founder Phillip LaRocco. They have both shown incredible vision in starting E+Co and proving to the world that small enterprises can deliver innovative solutions to the world’s neediest if they are supported in the right way. They have also been terrific collaborators with us in renewable energy which has been a new focus area for us at Acumen. Congratulations again to the entire E+Co team and especially Phillip and Christine.

Acumen Fund has long admired the TiE - “The Indus Entrepreneurs” network - an impressive and fast-growing community of top Indian entrepreneurs, venture capitalists, lawyers and management professionals. TiE demonstrates the power of community with 53 Chapters in 12 countries, spread across 5 continents.

We are excited to share that D.Light Design, one of Acumen Fund’s portfolio companies, has been nominated as a finalist for TiEcon 2009’s 50 “Hot Emerging Companies” award. From among 1,200 nominees, finalists have undergone a rigorous screening process by TiE’s industry judges. D.Light Design’s mission is to deliver safe and affordable lighting and power solutions to households that lack reliable energy supply. It is exciting to see a social enterprise be considered as a peer among fast-growth commercial companies. This is evidence of the potential to for companies to achieve scale and profitability, while having a material impact on the quality of life of the poor.

The TiE Awards will be decided by collective voices. Voting closes tomorrow on May 7, 2009. We encourage our community to get involved-vote for D.Light Design and other innovative new Indian companies.

The New York Times ran a fascinating article last week about the multifaceted impacts of third world stove soot: “Third World Stove Soot is Target in Climate Fight.” Author Elisabeth Rosenthal deftly explores the intersection of poverty, health consequences and the environment through the lens poor customers’ cooking habits. 

The problem of inefficient, smoky stoves is one Acumen Fund is trying to develop a solution for – but it’s been elusive.  Low-income people cook with wood that, while laborious to find, is still relatively plentiful and free.  (An exception here is Haiti, which has been ravished by deforestation caused by villagers and city-dwellers denuding the countryside in search of wood.) Those interested in a new approach might want to check out MIT MacArthur Fellow Amy Smith, who has been working on the charcoal issue.

Yes, the stoves are a problem – but this is not simply a technological issue. There are lots of stove technologies – rocket stoves, solar cookers and the like – out there that can do the job better and use cleaner fuels, but the capital costs are higher and the distribution models are complex. Incentives from the carbon markets may be part of the solution, but they have not provided enough benefit to drive the adoption of clean cooking products on their own. Even more, getting certified through the Clean Development Mechanism of the Kyoto Protocol is a long and complicated process, a real barrier for start-ups interested in attacking the stove problem.

We are committed to finding a solution here, and welcome any suggestions or thoughts as we move forward.  These stoves, along with the lack of lighting, are really the two biggest energy issues faced by the poor today.

I’m just back from three weeks in India including several days with the D.light team in Noida. It’s so exciting to see the team in action. In a year they’ve built a global organization in India and China and have built real teams around sales, product design, manufacturing, institutional relationships, etc. And I also got to see Acumen Fund fellow Heidi Krauel in full swing in Business Development where she is helping the CEO Sam Goldman think about all the strategic opportunities in front of the company and how to really execute on the right ones.

Really a different approach to creating lighting solutions for the poor and completely based on the premise that if they focus on the preferences of the (poor) consumer with world-class execution that this will quickly scale in a way that hasn’t happened in the past.  And it is great to see support of their approach in the media, like this recent NY Times article.

But what really has us excited is the excitement at the consumer level.  If you have a chance, visit D.light’s website to see hear some of the remarkable stories of their customers and how light has impacted their lives. And also take a look at the letter that D.light just received from a resident in Orissa living in D.light’s first 100% solar village. We’ve got thousands and thousands of villages to go, but a very exciting start.

Yesterday morning, Acumen Fund hosted a monthly breakfast for members of our Partner community featuring Acumen Fund Director of Capital Markets and Energy Portfolio, Raj Kundra. With 30 guests in attendance, this promised to be an engaging discussion.

Brian Trelstad, Acumen Fund Chief Investment Officer, opened up the discussion with reference to Acumen Fund Advisory Council member Peter Goldmark, who observed in 2006 that marginal changes in the climate will affect those on the margins first and most profoundly. Later that yearin no small part due to Peter’s influence - Acumen Fund made a Clinton Global Initiative commitment to launch an energy portfolio, and we began our work in energy 12 months ago.

Raj began the talk with a description of the Acumen Fund model, and how we raise philanthropic capital to invest in breakthrough enterprises that provide critical goods and services to the poor with a focus on health, water, housing, and most recently energy. So while Acumen Fund acts like a venture capital firm, we differentiate ourselves with our focus on large-scale social impact, coupled with economic sustainability, as our primary objectives. We invest in management assistance to support our investees both before and after we make an investment. And we believe in the power of sharing what we are learning, based on the recognition that in a world with trillions of dollars of capital, we will always, by definition, be a relatively small player.

Raj continued with a discussion of the poverty trap that poor people face with respect to energy. As of 2005, poor people spent more than 14% of their incomes on energy, and Raj estimates that these numbers have increased to over 20% with the recent surge in energy prices. In addition, the poor often use fuel sources that are expensive, inefficient, and dangerous (for example, kerosene lamps or burning wood for cooking in open spaces). Finally, with limited access to energy, productivity (whether on the farm or the result of the shortened day for studying or work) is simply lower, all of which contribute to a poverty trap.