Acumen Fund founder and CEO Jacqueline Novogratz doesn’t use the words from this blog entry’s headline in her recent Bloomberg Businessweek commentary, but she could have:
In 2002, after nearly 10 years of running a nonprofit to help poor farmers in India get the most out of their land, Amitabha Sadangi was frustrated. Government aid to alleviate poverty had largely bypassed individuals earning less than $1 a day. Instead, those funds subsidized large farms and were invested in technology Sadangi says the farmers didn’t want. Rather than battle bureaucracy to redirect the money more appropriately, Sadangi had a novel solution. Convinced the farmers would benefit more as informed buyers than as passive recipients of charity, he adapted a water-saving drip irrigation system to their needs and sold it at an affordable price.
Acumen Fund, the nonprofit venture capital fund I lead, gave Sadangi’s International Development Enterprises India a $100,000 grant to experiment with his product. Then in 2008 we invested $1 million in Global Easy Water Products (GEWP), a for-profit spinoff Sadangi created in western India to further increase the technology’s reach and to sell other products to the poor.
GEWP and its parent nonprofit so far have sold irrigation systems to some 350,000 farmers. That means roughly 2 million people (including the farmers’ families) are now benefiting from higher incomes—for some, $5 to $6 a day instead of $1 to $2. With 101 employees and sales that have tripled since 2008, GEWP is one of Acumen’s most profitable enterprises and has even begun to pay dividends to its shareholders. By all measures, that is the kind of return on investment we need to see in a world with more than 2 billion people living in poverty.
I’m guessing observers such as June Arunga and Dambisa Moyo are unsurprised.
