Dear Friend of Acumen,

Rebirth. Returning home after 22 years, Basil starts life anew. Click the photo to read more in Jacqueline's Journal.

Spring, the season of change and of rebirth, is the right backdrop for my letter on all that is happening at Acumen. Let me start with the theme of rebirth and the role that patient capital can play. I’ll then touch on the three areas that comprise our mission: investing in companies, leaders and the spread of ideas.

Rebirth: the theme resonates at all levels. I am writing on a flight back to New York from Nairobi, Kenya. While in East Africa, my colleague Amon Anderson and I spent time in Gulu district in northern Uganda, a place ravaged by civil war between the Lord’s Resistance Army (LRA) and the Ugandan government since the 1980s. The LRA would raid villages in the nights, capturing children to be used as soldiers and sex slaves, and at times killing other members of their families. The war decimated trust, destroyed the economy and left more than 1.7 million people in camps for Internally Displaced Persons (IDPs).

During this period, the black soil of Uganda lay fallow for 20 years, enriching itself to deep fertility. Gulu was a place famous not only for cotton production but cotton ginning, the processing of raw cotton into lint that is then turned into thread. The story of cotton in Uganda is another tragedy altogether: in the 1960s, more than 500,000 bales of cotton were produced, but Idi Amin’s reign of terror reduced national production to nearly zero. Cotton production and cotton ginning across the nation has only begun to be revived in the past 15-20 years.

GADC, our first investment in Uganda, is improving livelihoods in a region recovering from decades of strife.

In 2009, the Ugandan government invited Bruce Robertson, a South African entrepreneur (and an Aspen Leadership Initiative Fellow) with 15 years of cotton ginning experience in Uganda, to lease a factory in Gulu that had been idle for decades. His mission was to work with farmers who were coming back from the camps and bring back agriculture as a viable industry while making the Gulu Agricultural Development Company (GADC) a profitable business. Acumen Fund partnered with our peer organization Root Capital for the first time last year to provide working capital loans to GADC, and this year, the company is buying raw cotton from more than 32,000 farmers, providing them with more than $400 per harvest on average.

On my recent visit I spoke to a number of the farmers, including Basil, a tall, thin 59-year old man who fled his home 22 years ago and returned only a year ago. His four brothers who stayed in the village were all killed. When Basil left, he’d been working as a nurse’s aid, was in his mid-thirties and had a wife and young child. During those decades in the camps, he felt “less of a man” for there was little he could do and most of his skills had atrophied. He returned with the same wife, eight additional children, and a new grandchild, but only basic farming skills to provide for them.

By selling cotton to GADC, he feels he has a chance to start life anew, send his children to school and dream of better lives for them. What thrilled me is that this is not the story of one man, but of 32,000 farmers and their 150,000 or so family members. GADC is already running at a profit; Root Capital and Acumen Fund expect to be fully repaid at the end of May and lend anew.

Rebirth. The factory, too, is metaphor. You can still see bullet holes riddled in the backside of the factory walls, near the railway line that hasn’t run for decades. Inside are 14 machines made by Platt Brothers of England in 1963. They stand next to the newer gins, these made by Bajaj in India: they are faster but not necessarily more cost-effective, as the fifty-year old machines were depreciated a long time ago.

I stood looking at the old machines from England and newer ones from India in this revived factory in Uganda and realized the factory was built in the same year that Martin Luther King, Jr. wrote in his “Letter from a Birmingham Jail” that “We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly.” We stand on the shoulders of so many, past and present. How we invest not only our financial capital but our talent, our time, and our willingness to take risk must all be part of the larger way we integrate patient capital into a philosophy of interconnectedness.

In Acumen’s 10th year, we have renewed our own commitment to recognizing it takes more than capital to effect real change, which is why our mission now clearly states our focus on investing in companies, leaders and the spread of ideas as well.

WHI, one of our earliest investments, has taught us many lessons and is poised to expand outside of South Asia.

We invest in Companies. In 2004, Acumen invested in WaterHealth International (WHI), a private company selling affordable, safe drinking water to rural villages in India. Just two weeks ago, we were honored to moderate a panel launching WHI’s new $6 million “Safe Water for Africa” partnership with the IFC, Coca-Cola Foundation and Diageo Foundation at the World Economic Forum regional summit in Cape Town, South Africa.

Three points bear mentioning. First, WHI now sells water to more than a half-million customers in South Asia and is poised for take-off in new geographies.

Second, patient capital has allowed us to experiment and learn where markets work and where they fail. With WHI, we’ve learned that it is possible to establish operationally-profitable, community-based water purification systems. And while these systems can reach thousands of poor communities, we have found the limits of how far “down” these systems can go, particularly with smaller and ultra low-income villages. Today WHI and its partners are experimenting with a model for West Africa to reach these tougher communities in partnership with philanthropy. In this new approach, capital costs are covered through philanthropy and villages only need to cover ongoing operating costs through water sales, thus reducing the cost burden on communities. If this proves viable, we hope to see a private-public model with a much clearer articulation of the “smart subsidy” needed to deliver safe drinking water to millions across the West African region.

Finally, this is a different model for Corporate Social Responsibility: a case of two corporate foundations partnering with a for-profit company and the IFC to experiment with making affordable water available to low-income populations. If it works — and I believe it will — their corporate philanthropy will create a business model for government and the private sector. This is the right role for corporate philanthropy and underscores the critical importance of private innovation and resources in solving major public problems.

Investing in Leaders. We are thrilled to be in the midst of selecting our first class of up to twenty East Africa Fellows in Nairobi this month through a program supported by the Kenya Commercial Bank Foundation and the Edmond de Rothschild Foundations. Altogether, individuals from Kenya, Uganda, Tanzania, Rwanda and South Sudan submitted 538 applications. We plan to launch the program in Nairobi in late July, so stay tuned!

Investing in the Spread of Ideas. There are many ways we think about this. One way to disseminate and gain insights and knowledge is through our eleven chapters. In the past quarter, our team provided leadership training to chapter leaders in Vancouver and New York. We are also looking at building an online learning center to share our Fellows curriculum more broadly. Lastly, this fall the University of Michigan will pilot the first-ever accredited course on Acumen Fund.

None of this would be possible without the real and deep support of our Board, Advisors, Partners and friends around the world and we thank each of you. I could not feel more excited for the future. Every time I visit with the customers of our investee companies, whether in rural villages or urban slums, I feel a sense of profound renewal to our core mission of helping to build a world in which every human being has access to the basic services they need to make their own decisions. The world around us is changing; and while we too often hear only the bad news, there are important buds of hope pushing through if only we would look and listen closely enough.

In peace,

Jacqueline Novogratz