Borgen Magazine – Acumen: Investing in Companies With Social Impact

Original article appeared in Borgen Magazine on December 12th 2020 by Melina Stavropoulos

TACOMA, Washington — While typical venture capital investments emphasize financial returns and reward shareholders, “impact investments” aim to generate a measurable positive impact in the communities it addresses. Rather than just providing humanitarian aid to serve communities in need, impact investing strengthens the individual companies and services in different areas, therefore boosting the local economies and impacting more people. Although the term “impact investing” has just emerged in recent years, the impact investing sector has developed over the last two decades. Today, the Global Impact Investing Network estimates the impact investing market to be $715 million.

Impact Investing at Acumen

Founded in 2001, Acumen’s commitment to impact investing and global change is unparalleled. Acumen differs from other impact investing companies in that it aims to truly understand the complex causes and consequences of poverty before identifying the specific solutions companies provide.

A venture capitalist at Threshold Ventures in Silicon Valley explains that for most venture capital firms, social impact is “usually not a top criterion for whether to invest in a company. It takes focused impact investing vehicles, like Acumen, who prioritize the social mission of their portfolio as a whole, to make sure that opportunities in the poorest areas of the world do not go unnoticed.”

Motivated by the belief that neither humanitarian aid nor reliance on markets alone can adequately address global poverty, Acumen works to change the markets in the countries it serves. By investing in companies that make a social impact, Acumen strengthens companies, communities and economies to create lasting change.

The Workings Behind Acumen

  • Patient Capital: Acumen provides patient capital, an investment made in companies that are still starting out. Therefore, patient capital is a high-risk investment, but focuses on a long-term vision and requires companies to provide proof of the social impact they make. The Threshold Ventures venture capitalist explains that “the main benefit [of patient capital]is that investors and the companies are aligned to pursue the best long-term strategy that will maximize the social impact of the venture while, hopefully, also creating a good financial return for employees and investors alike.”
  • Investing in the Early Stages: By investing in companies when they are just beginning to develop, Acumen validates the companies’ missions and allows them to bring their products and services to the market more efficiently.
  • Expertise and Advice: Acumen provides all of its clients with a network of experts in several fields through their wide range of investing partners. These networks of expertise grow the community of companies focused on effective poverty-reduction.
  • Long-Term Support: Acumen continues to support its companies after investing by assisting in strategic, planning and fundraising efforts to truly maximize the impact of each company.

As a result of its effective investing strategy, Acumen has invested more than $125 million in 126 companies. These companies span across 14 countries and all serve low-income consumers, therefore boosting each country’s economy and improving the lives of those the companies serve.

Acceso Colombia: A Success Story

One of Acumen’s most promising and successful investments is Acceso Colombia, a company that aims to lift small farmers out of poverty by purchasing their products at fair prices and selling them directly to large stores and food retail companies.

Acceso Colombia recognizes that many small farmers, particularly in rural areas that have experienced violence, are estranged from the market and depend on unreliable intermediaries to sell their products. As a result, small farmers and farmers of marginalized groups live in continued poverty and lack economic stability. To empower the farmers it serves, Acceso Colombia assists farmers in every step of the selling process, from managing processing and warehouse stages to planning delivery routes to large retailers. Acceso Colombia therefore creates and ensures a stable market for rural farmers to sell to, providing a lasting impact in rural communities.

Acumen invested in Acceso Colombia in 2019. In partnership with USAID, Acumen used its Investing for Peace Fund to rebuild the economies of Colombia’s post-conflict regions. Acumen’s investment has already allowed Acceso to provide a 50% income increase to its farmers and served 9,000 people including farmers, farmworkers and farmers’ families. When reflecting on the impact Acumen’s investment has had on Acceso Colombia, James Jenkin, the CEO of Acceso states:

“Acceso Colombia greatly values Acumen’s strategic equity investment. This has enabled Acceso Colombia to secure new business, expand into new crops and to improve its operational efficiency, resulting in a more robust platform to support long-term sustainable growth and social impact in Colombia. Acumen’s continued support during COVID-19 demonstrates its commitment to critical local food systems in Colombia and will ensure that Acceso Colombia will come out of the current crisis not only stronger but able to expand its work by partnering with more farmers in post-conflict regions in the future.”

Looking Forward

After just one year of investment, Acceso has experienced tremendous growth and is therefore able to serve more small farmers in need. Acumen’s investment strategy that emphasizes the long-term social outcomes of its companies is clearly evident in Acceso’s success and future goals, especially in the face of the COVID-19 pandemic. With Acumen’s continued support, Acceso can continue to build upon its strong foundation.

Overall, Acumen’s investments and the success of its companies provide hope for the future of investing. The investments venture capital firms make now set the tone for what types of companies future investors will pursue. Acumen is a clear example of the ways that investing in poverty-reduction creates impact all over the world in a variety of sectors. By giving small companies like Acceso a chance through the types of investments it makes, Acumen creates exponential amounts of change that would be impossible through aid or the market alone. Acumen is a reminder that investing in poverty-reduction works—and we should be doing more of it.

Acceso Colombia greatly values Acumen’s strategic equity investment. This has enabled Acceso Colombia to secure new business, expand into new crops and to improve its operational efficiency, resulting in a more robust platform to support long-term sustainable growth and social impact in Colombia.
– James Jenkin, CEO, Acceso