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Acumen Fund

Acumen Fund

Team: Jon Daigle (MBA/MIA '06), Marina Kaneti (MSW '06), Denise Lee (MBA '06), Tricia Morente (MBA/MIA '07)
Areas: Expansion Strategy, Export Market Assessment
Supervisor: Professor Cathy Clark, Social Entrepreneurship course

Acumen Fund is a global non-profit organization focused on creating sustainable change to improve the lives of the poor. By applying a venture capital model, Acumen Fund supports enterprises that increase income, increase assets, and create jobs for the four billion people around the world who earn less than $4 a day. The organization aims to create a blueprint for building financially sustainable and scalable organizations that deliver affordable, critical goods and services that elevate the lives of the poor. Acumen Fund adheres to a disciplined process in selecting and managing its philanthropic investments as well as in measuring the end results. It focuses its portfolio investments in the fields of Health Technology, Housing & Finance, and Water Innovations.

At the time of the project, Acumen Fund's Water Portfolio was in the midst of considering an investment in an Indian nonprofit that works with small-scale farmers, including those in arid regions with scarce water resources. This organization had developed an affordable, micro-drip irrigation technology that made efficient and high-yield irrigation accessible to small-scale farmers by bringing prices down by 60-80%. This nonprofit used an initial grant from Acumen Fund to develop a supply chain and marketing strategy to successfully expand the Indian market for micro-drip technology. Acumen Fund was considering a second stage investment in the form of a loan for a new for-profit entity to be launched for the purpose of scaling up sales and distribution.

Analyzing export markets

As part of Professor Cathy Clark's Social Entrepreneurship course, the Columbia team was tasked with helping Acumen Fund's Water Innovations Portfolio Manager complete the investment memo, which would be presented to Acumen Fund's investment committee. Specifically, the team was asked to explore expansion strategies by assessing four potential export markets: Kenya, Pakistan, Sri Lanka and Tanzania.

The team conducted research and gathered information from key organizations in the four potential export markets. Specifically, the team analyzed opportunities and risks based on a two-pronged analytical approach that focused on country analysis and market analysis.

  Opportunities Risks
Country Analysis

• Favorable trade conditions

• Favorable farm and environmental conditions (similar to home company)

• Risky trade and political conditions

• Farm and environmental conditions not conducive to micro-drip irrigation technology

Market Analysis

• Large Market Size

• High market demand and ability to pay

• Low competition (existing and potential)

• High partnership opportunities

• Small potential market size

• Low market demand and/or low ability to pay (lack of financial intermediaries to provide micro-loans)

• High competition or high government subsidies

• Few opportunities to partner

Developing an attractiveness scorecard

Based on this analytical approach, the team was able to create scorecards that rated the market opportunity for each potential export country. A scale of low to high attractiveness was used for each factor listed above. This analysis was integrated into Acumen Fund's investment memo, for presentation to the investment committee. The team also provided detailed analysis on each potential export market with recommendations on key export opportunities within the broader context of the business model being developed by Acumen Fund together with the Indian nonprofit. "This project enabled me to take key concepts from the course-such as nonprofit scaling through earned income generation and Bottom of the Pyramid theory-and apply it to a real-world setting," said Tricia Morente. "Through this project, I gained insight into the type of analysis necessary to assess expansion strategies and support a rigorous due diligence process."

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