Jacqueline Novogratz, Founder & CEO, Acumen
Purpose Before Profit
Starting a business is more accessible and affordable than ever, leading many people to walk away from the 9-to-5 norm, and all of its comforts, to go build cool things and work for themselves. In short, entrepreneurship is on trend.
While breaking rules may be the new black, Jacqueline Novogratz is taking it one step further. She wants aspiring entrepreneurs to break even more rules by embracing social entrepreneurship.
That means walking away from the traditional wisdom of what drives a business, and redefining what entrepreneurial success means.
Novogratz is doing so through Acumen, a global, nonprofit venture fund that seeks to change the way the world tackles poverty, by backing entrepreneurial solutions to improve the lives of the poor. Since 2001, Acumen has impacted more than 230 million lives by investing $110 million into 104 companies in 13 countries.
Novogratz has always believed that business could be a tool for good. And while she thinks that success should be primarily be measured in social impact, she’s still equipping entrepreneurs to achieve profitability and financial stability, benefiting both themselves and the world around them.
A New Perspective on Poverty
Novogratz’s investment career began on Wall Street, not exactly known as a haven of altruism, although she worked on international development in Rwanda. She noticed right away that markets too often exploited or excluded the poor in favor of efficiency.
Novogratz also realized that established charities carrying out such work often created dependencies among those in poverty, instead of helping them to flourish on their own. She figured there had to be a better way—a middle path that went beyond donated assistance but would not result in exploitation of communities.
Within Novogratz’s professional community, poverty was typically diagnosed through a strict evaluation of income levels. But as Novogratz worked closely with those in Rwanda, she formed a new opinion on the issue: that poverty should instead be assessed through a lens of human dignity.
That means not only asking whether people have money, but also if they have choice and opportunity. How could one provide all of this to those in need? These were the questions Novogratz sought to answer.
Meanwhile, she was watching the rise of social entrepreneurship, new forms of philanthropy, and incredible technology that was connecting people like never before. Equipped with her unique mindset and these new resources and models, Novogratz set out to change the game.
“Rather than seeing philanthropy and the markets as an end in and of itself, what if we saw them as means? What if we started with a customer who was poor, built solutions from her perspective, and then figured out the kind of capital to invest in them long term?” Novogratz says.
This new perspective was the tool Novogratz needed to disrupt the status quo and build systems that increased incomes and allowed people to have choice and dignity. Her quest led her to form Acumen in 2001.
Investing in Character and Impact—Then Ideas
Rather than simply donating money, Novogratz and her team invest in ways to help those living in poverty. They do this through ideas that create and accelerate solutions to poverty, leaders that possess courage and imagination, and companies that ultimately serve and equip low-income customers.
As a venture fund, Acumen invests in six major industries: agriculture, education, health, energy, housing, and water and sanitation. The right improvements in these industries have the potential to not only alleviate poverty, but also to build long-term solutions that could eradicate it altogether.
“How do we bring people energy that’s clean, affordable, and allows productivity? When we deny people education, we deny them the opportunity and the dignity to solve their problems,” Novogratz says. “How do we build health systems that low-income people can afford?”
Acumen’s team is passionate about investing in social entrepreneurs, but not every project makes the cut. For every 100 companies they review, only one is accepted.
Acumen operates in India, Pakistan, East and West Africa, Latin America, and the United States, so projects are pulled from those geographic areas. With offices in Karachi, Mumbai, Nairobi, Accra, Bogota, London, and San Francisco, Acumen has a worldwide reach. Each office is locally staffed and surrounded by local advisors, allowing Acumen to have a deep connection and impact in each community.
Within those communities, Acumen finds entrepreneurs working in those six main industries. At that point, companies are put through a three-part evaluation process.
“[First], do we believe in the character of this entrepreneur? Do we believe that she not only has vision, but that she can build a team who can make up for her gaps, that she can have the dedication, perseverance, and grit to do what it takes to fight corruption, bureaucracy, complacency, and the status quo? Is this someone we want to work with for 10 years?” Novogratz says.
Second, she and her team evaluate the scalability of each entrepreneur’s idea. Each idea must be able to reach at least a million people. Finally, Acumen looks for a clear path to profitability. “If we can answer those three questions—and we believe in the idea—then we might invest,” Novogratz says.
Every company Acumen invests in must not only be profitable, but also possess an element of social good. These companies must be actively working to solve a problem of poverty. Using one of Acumen’s top companies as an example, Novogratz explains:
“[In 2007], two guys approached us with a solar lantern and a dream to eradicate kerosene, which is the fuel used in hurricane lanterns to bring really bad light in a really polluting way for a really high cost. So, we invested in those guys. …Today, d.light has brought light and electricity to 77 million people at prices they can afford. Through that period, we also learned about the off-grid energy sector and were able to invest in 20 other companies.”
Acumen then took this newfound knowledge of the off-grid sector and built a major for-profit initiative that’s currently helping these companies scale. This initiative is working to demonstrate that African countries can easily transition to full electricity.
d.light’s success is a clear example of how Acumen invests in small-scale social entrepreneurs who are working to eradicate poverty, and investing their returns back into the community at large.
Another example is Ziqitza, India’s first private ambulance company that will serve any resident, regardless of income level. When Acumen starting investing in 2007, Ziqitza had a total of nine ambulances.
Today, the company has about 3,500 ambulances, 8,000 employees, and has transported over 6 million to hospitals across the country. According to Novogratz, Ziqitza is one of the largest ambulance companies in the world, but about 75 percent of the people inside the ambulances are below the poverty line. The company is able to support its community with quality healthcare and employment, while still turning an ample profit.
One more Acumen success story is EthioChicken. One of Novogratz’s favorites, EthioChicken is a chicken company started by two young guys in Ethiopia. They’d been doing it for eight years when Acumen started investing in 2014.
Today, EthioChicken sells 1 million day-old chicks every month to smallholder farms across the country. Ensuring that their chickens are fertile and disease-free, EthioChicken equips these farmers to raise healthy, egg-laying chickens, increasing poultry production in the region.
“Our calculation is that they’re pumping over $200 million a year into poor farmers, most of whom make under $3 a day,” Novogratz says. “That single company is largely attributed for reducing malnutrition rates in Ethiopia.”
One thing that makes Acumen unique is that it’s not out for a quick injection of funds and a speedy return. Over the years, Novogratz has grown very close with the companies and leaders that Acumen supports. “We marry these companies,” Novogratz says, laughing. “One of the things the world doesn’t tell you is how long it takes to build companies that are trying to solve tough problems. Our expectation when we go in is that we’ll be with these companies for 10 years or more.”
Close collaboration over many years allows Novogratz to get to know each company extremely well. According to her, the best of them are good at building trust and helping Acumen understand when things do (and don’t) work out. This is precisely why the fund invests in character first.
Up Close and Personal
Getting up close and personal with these companies requires a lot of work and dedication on Novogratz’s part. “I spend about 70 percent of my time outside of New York,” she says. “The exciting thing is that wherever I am in the world, I have a deep feeling of being home.” This is due in part to the local Acumen teams and their communities.
Novogratz’s favorite days involve site visits, whether meeting with a local farmers collective or a solar distributor. She and the local team spend time understanding each company’s needs and activities, and when she returns, Novogratz is equipped with new narratives about what’s possible.
“[These stories] help us see each other more clearly and look for more inclusive approaches to capitalism,” Novogratz says, “such that we can do a better job at solving our problems.”
That being said, Novogratz thinks we’re both near and far from a world of inclusive capitalism. “We’re closer in terms of the next generation. I think the millennial generation does not see the world as bifurcated as their elders do,” Novogratz says. “My generation too often sees the world as divided between the place where we make our money and the place where we give it away.”
Novogratz believes the millennial generation insists on sustainability, fairness, and transparency, and that these priorities will bring about enormous change. We’re surrounded by a lack of political and business leadership, but she finds hope in the challenge and promise of a more just future.
“Because of this next generation—because of our recognition that the world is becoming less environmentally sustainable, that our inequality is unsustainable—there is a growing population that recognizes that the old way of doing business is no longer an option, that we need new approaches with a seriousness about how we solve problems. I think that this is only going to accelerate,” Novogratz says.
Her passion for these issues is driven internally. “I’m a part of the world, and I feel that it’s a privilege to be living in this moment, where we’ve got everything we need to create a world in which everyone has a chance to solve their own problems,” Novogratz says.
There’s no better way of living than applying yourself and finding purpose in solving those big problems, whether or not they’ll be solved in your lifetime, she says. Instead of looking at bank statements, donation receipts, status, or fame, Novogratz wants to help a generation redefine success by the amount of human energy and flourishing is released into the world.
Pursuing Social Entrepreneurship
Being an entrepreneur is all the rage. But unlike most, who start businesses for profit, fame, and freedom, there’s a new wave of entrepreneurs saying they want to solve problems—and that business is the most effective tool to do so.
“What’s so cool is that [these entrepreneurs] are breaking all the rules,” Novogratz says.
Recently, Acumen invested in entrepreneur Emily Stone, who owns a company called Uncommon Cacao. Uncommon Cacao and similar businesses are ignoring global commodity prices altogether in favor of providing solid prices to farmers and providing transparency in the value chain. In Stone’s niche, 5 million smallholder farmers grow 95 percent of the cocoa that supports a $100 billion business. And when we buy $15 chocolate bars, these farmers may see as little as a dime.
“Through this, I see different kinds of capitalism emerging. These are entrepreneurs that are running for-profit companies and recognize and believe that’s the best way to solve these problems, but they are driven to solve tough problems with profit after purpose,” Novogratz says.
“They’re not starting with profit and trying to do good things, too. That’s the difference.”
To those interested in social entrepreneurship, Novogratz’s advice is simple. Instead of working to define your purpose before getting started, look around at the problems in the world and match those to your own goals. Second, she encourages you to dream big, but start small. Don’t dismiss how long it’ll take to build something impactful and successful. This new approach to capitalism takes time.
Lastly, she says, get really good at listening—to your customers and the environment. Work to build solutions from the perspective of the people you’re serving, not making the mistake of thinking you have all the answers to what others need.
Supporting and scaling these types of companies is tough work. Common challenges include finding the right talent, a lack of marketing and fundraising experience, supply chain development, and overall financing. But Acumen isn’t swayed by these roadblocks, as the long-term impact of these companies is unparalleled, not only for poverty, but also for peace.
“I’m of the mindset that solving our biggest problems requires emphasis on building communities of action, in which we are bound to one another based on shared values, not on race or ethnicity or tribe. We’re seeing that play out in a really exciting way through the work that [Acumen] has done,” Novogratz says.
“It’s reinforced for me, in this moment of history when people feel so divided, what an incredible opportunity we have through building these bonds and friendships by spending time together, solving tough problems. We need to do more of that, as a world.”
- Acumen’s trailblazing vision on global poverty eradication
- Why it’s better to invest in people first, then ideas
- The companies Acumen has invested in and the depth of impact they have made
- Key advice from Novogratz to anyone interested in pursuing social entrepreneurship
Full Transcript of Podcast with Jacqueline Novogratz
Nanthan: Whats up guys? Welcome to another episode of the Foundr podcast. My name is Nathan Chan. I am the CEO of Foundr Magazine, and also the host of the Foundr podcast. I hope you’re all having a great day wherever you are around the world. I’m coming to you live from hometown Melbourne, Australia. I just want to say thank you so much for taking the time to share your earbuds with me. I know your attention is scarce. I just want to say thank you. I really really want to just rock your world with this episode. It is an absolute game-changer. Jacqueline Novogratz is the founder of a company called Acumen. She has created and non-profit venture fund which has actually impacted more than 230 million lives and she has invested over 110 million through her company Acumen Fund in I guess really just social enterprise ventures. Incredible story. What Jacqueline shares with you is really really heartwarming. It makes me really want to see what we can do with Foundr and use our business as a force for good. I know you’re going to get so much gold from this. Jacqueline is really a true testament to the kind of founder that we all really want to aspire to be. You’ll know what I mean when you listen to this interview.
Anyways guys, that’s it for me. I’m not going to rumble too much. But if you are enjoying this episodes please do take the time to leave us a review. Please do make to make sure you subscribe to the podcast as well and share it with your friends. Wherever you are, I know you must have other friends that are founders or entrepreneurs, and if you think this could provide any value to them at all please do share it with them. Alright guys that’s it for me. Now let’s jump to the show.
The first question that I ask everyone that comes on is how did you get your job?
Jacqueline: This job? Or my first job? Or-
Nathan: Yeah the job that you’re doing today I guess. Like how did you find yourself doing the work you’re doing today?
Jacqueline: So I had worked on Wall Street as a young person and saw that markets too often exploited or left the poor out that they created great efficiencies. And I’ve worked in international development specifically in Rwanda, where I had seen the top to aiding charity too often created dependence. Over a 15, 20-year period it also recognized that if we were talking about poverty, we made a mistake by thinking of it in terms of income alone, and needed instead to think about it in terms of human dignity, whether a personal choice or opportunity. And so it was really a question of putting all that together. Seeing the rise of social entrepreneurs, the technology that was connecting us, new philanthropy coming online and I thought “what if we change the game?”. Rather than seeing philanthropy or the markets at them end in and of itself, what if we saw them as means? What if we started with the customer who was poor, built solutions from her perspective and then figure out the kind of capital, invested in them for a long term. What we call patient capital. And maybe, just maybe we could disrupt the status quo and built system that allowed the poor to have that choice and that dignity that I was searching for. So in 2001 I started Acumen.
Nathan: I see. When you talk about – people always talk about – when people look at poverty they look at lack of money, and you’re taking a different approach about lack of opportunity and choice. What kind of work or what kind of opportunities and choice does Acumen give people in poverty?
Jacqueline: Acumen refuses to see the poor as pathetic individuals waiting for a hand for someone to save them, and instead recognising that all of us want access to the freedoms that it takes to live a life of flourishing. We focus on electricity, energy. It’s been 133 years since Thomas Edison invented the lightbulb, but on the continent of Africa, 700 million Africans have no access to electricity. That is unjust. It’s dangerous, it’s ineffective, it’s not good for any of us. And so how do we bring people energy that’s clean, that they can afford, that allows them productivity? Education would be another area where we deny people of education, we deny them of the opportunity or the dignity to solve their problems. Healthcare, you can put yourself into poverty forever. Even if you have a job, and your child gets sick and you don’t have insurance, you will maintain that cycle of poverty. So how do we build health systems that low income people can afford. Agriculture, how do farmers actually get to capture more of the value that they’re creating so that they can see a connection between the effort that they put into their work, and an outcome that they should be able to reasonably expect.
Nathan: I see. When it comes to choosing a project or trying to work out what area or developing country where there is lack of opportunity or choice, how do you decide?
Jacqueline: We only work in India, Pakistan, East and West Africa, Latin America and over the last few years the United States. We’re already geographically determined. We find entrepreneurs that are working in one of these sectors: education, healthcare, energy, or agriculture. We look for three things Nathan. One is, do we believe in the character of this entrepreneur. Do we believe that she not only has vision, but that she can build a team around her who can make up for her own gaps, that she can have the dedication, the perseverance, the grit to do what it takes to fight corruption, bureaucracy, complacency in the status quo. Is this someone we want to work with for ten years. Second, do we believe that the idea that she has can scale to reach at least a million people. And third, do we see a path to profitability. If we can answer those three questions, and we believe in the idea, then we might invest. We look at about a hundred companies for every company in which we make an investment.
Nathan: I see. The idea – like it has to have some element of social good, right? But it can be a full profit?
Jacqueline: They’re all full profits. It’s not just an element of social good, it has to be a company that’s trying to solve a problem of poverty. For instance would be, I already raised this issue of electricity. In 2007 you had about more than a billion of people with no access to electricity. Two guys approached us literally with a solar lantern, and a dream to eradicate kerosene, which is the fuel that people use for those hurricane lanterns, to bring really bad light in really gluting way, at really high cost. So they thought well if I give them a lantern, they’ll throw away their kerosene and all will be good, but life doesn’t work that way. Certainly not when there’s no income, no trust, no infrastructure, but there’s a lot of corruption, and there’s a kerosene mafia that doesn’t want solars to succeed. So we invested in those guys, and continued to invest in them – full profit company – for ten years. But today – or and today, D.Light has brought light and electricity to 77 million people at prices they can afford and value .Through that period, we also learned about the off grid energy sector and we were able to invest in 20 other companies about 20 million dollars, and build an ecosystem, and learned so much that now, we have a full profit initiative where we’re looking to prove to governments in Africa by really scaling these companies that Africa has a chance to leapfrog the bridge just like it leapfrogged landlines with phones, and create a better way. It would have not happened had we not invested the early stage patient capital in those entrepreneurs who dared to make the impossible possible.
Nathan: Yeah, that’s amazing. When it comes to businesses that you guys have funded, or people that you’ve invested in, how many since 2001?
Jacqueline: Since 2001 we’ve invested a little of our hundred million – like a hundred and 110 dollars into about a 104 companies. Our investments have leveraged another half a billion dollars into the company, served about 230 million people. In some cases fully disrupted, created new markets all together. We also have an online course so that we can share lessons learned that has been taken – or set of courses that have been taken by about 350 thousand people. And then in an effort as well to build new entrepreneurs, new problem solvers, we supported about 400 titles around the globe.
Nathan: Yeah wow. I’m curious as well, these companies that you guys invest in, do you take equity? Or how does that side of things work?
Jacqueline: We primarily take – invest equity and buy shares in the companies. In some cases, given the nature of the company and the market, we will take debt.
Nathan: So you take debt as well?
Nathan: Okay. Interesting. What have been your most successful company that you’ve invested in so far?
Jacqueline: Certainly D.Light, with the 77 million people with access to light and electricity. We invested in an ambulance company called Ziqitza when they had only nine ambulances, and today that company has about 35,000 ambulances and 8,000 employees, and has brought over six million people to hospital, which is one of the largest ambulance companies in the world now, but 75% of the people inside the ambulances make under the poverty line. We invested on a chicken company in Ethiopia. I love this company. Started by two young guys, barely out of college, 24 years old. They’ve been doing it for eight years, but today that company sells a million day old chicks, every month, or maybe a million and a half day old chicks every month to agents – 2,000 agents who then turn around and raise the chickens that are baby chicks until they’re egg-laying chickens, and they sell those in batches of three to five to 1.5 million farmers every month. Our calculations is that they are having about over 200 million dollars a year into poor farmers. Most of them make under three dollars a day.
Nathan: Yeah wow, that’s amazing.
Jacqueline: It’s amazing. And I could go on. I love my job.
Nathan: Yeah that’s amazing. I’m curious, out of all of these 300 companies, do you still keep in touch? How do you manage? How do you do all that?
Jacqueline: Well Nathan we marry this companies. I know that many of the followers of Foundr are young entrepreneurs, and I think one of the things the world doesn’t tell you is how long it takes to build companies that are trying to solve tough problems. Our expectation when we go in – which is why we insist on investing in character, is that we will be with this companies for ten years or more. So we get to know them extremely well. And the best of them are good at building trust and helping us understand when things don’t work as well as when things do work.
Nathan: And you keep in touch via Skype mainly or like on visit? Because you guys are based in New York right?
Jacqueline: Well we have offices on the ground in Karachi, Mumbai, London, Nairobi, Accra, Bogota, and San Francisco. Each office is surrounded – it’s all locally based and locally hired individuals. They’re surrounded by advisors in the business community, and so there is a deeply embedded community to support the work we do all around the world. And increasingly, I am of the mindset that solving our biggest problems requires more emphasis on building communities of action, in which we are bound to one another based on shared values, and not by race or ethnicity or tribe. We’re seeing that playout in a really exciting way through the work that this community has done. And it has reinforced for me as well in this moment of history in which people feel so divided. What incredible opportunity we have through building these bonds and friendships, not by simply holding hands and pretending that we like each other, or know each other but by spending time together solving tough problems. Problems that people are working for a long long time. We need to do more of that as a world.
Nathan: What does your day look like? Do you visit these offices? Are you traveling around visiting offices quite often or-
Jacqueline: Yeah I spend about 70% of my time outside of New York. There’s no day – the exciting thing is wherever I am in the world, I have a deep feeling of being home because of our teams on the ground and the communities around those teams. Often I get up very very early, I typically read and do email, go on a run, get to the office, work with team. It’s on the best days that are around site visits even if it takes six hours to go and meet with the farmers, or a distributor of solar, spend time understanding, maybe next morning get back, and then also tell the stories, tell the narratives. What’s possible of and by the floor so that we can see each other more clearly and look for more inclusive approaches to capitalism such that we can do a better job at solving our problems.
Nathan: I’m curious, how far away do you think we are from that?
Jacqueline: Inclusive capitalism, I think we’re both near and far. We’re clloser in terms of the next generation. I think the millennial generation does not see the world as bifurcated, as separated, as their elders do. My generation too often sees the world as divided between a place where we make our money, and a place where we give it away. The millennial generation I believe insists on sustainability, insists on a greater sense of fairness. And the transparency . that technology provides us is enabling us to actually see how much people earn along the supply chain, the conditions of workers, and I believe that will drive an enormous change. We have a lack of leadership around us right now, both politically and too many of our companies. That will be a challenge, but I think that our future and inevitability, a more just one, is what gives me the most hope that because of this next generation, because of our recognition that the world is becoming less environmentally sustainable, that are inequality is unsustainable, that there is a growing population that recognizes that the old way of doing business is no longer an option, that we need new approaches, and those approaches need to bring with them a seriousness about how we solve problems. I think that this is only going to accelerate, and that makes me very optimistic.
Nathan: Why are you so passionate about this problem? You’ve been doing this kind of work for a while. I’m curious what drives you?
Jacqueline: You know, I’m a part of the world and I feel that it’s such a privilege to be living in this moment of history where we’ve everything that we need to create a world in which everyone has more of a chance to solve their own problems with their own lives. Flourish. I think there’s no better way of living than apply in yourself to solving those big problems. Problems that may not be solved in your lifetime but give a sense of purpose and meaning, and do a whole lot of good along the way. I think the older I get as well, the more I want to be part of helping a generation, redefine success, so that we look not at the amount of money we have in the bank, or even how much we give away, nor our status, nor our fame, but in the amount of human energy, human flourishing that we release in the world, and the amount of environmental sustainability that we enable.
Nathan: You make a very interesting point around status, and it’s not about how much money we make or how much is in the bank. And you talk about millennials. One that I find interesting and I guess you know our work at Foundr is kind of contributing to it, but I hope not in a negative light. But one thing I’ve definitely noticed in my generation – in the millennial generation is being an entrepreneur is now the new cool. I think more than ever, people are certainly sold on the lifestyle. They look at the Elon Musks and the Jeff Bezos of the world. Maybe not Elon Musk but it definitely looks like – it’s really cool, it’s definitely highlighted if you’re a very famous founder, you essentially become a celebrity now. I think that definitely attracts some people, and it definitely I think – you know around business, I definitely know that there’s definitely a rising trend of people not wanting to work for somebody else, which is something – it’s only going to grow larger I think. Where I am going with this is do you think that more and more people – what is it about certain people that want to start a social enterprise vs a non-social enterprise? Now these business are all full profit that you backed, but then a lot-
Jacqueline: But they are all social enterprises.
Nathan: They all are?
Jacqueline: Yeah because they’re all trying to solve a problem, even though they’re full profit.
Nathan: Yes.However they’re – maybe the entrepreneur may not be caring about that problem or – like you know what I mean? Like there are a lot of people right now that would be staring business that are purely starting it not to solve the problem, not to provide value, just to make money. I think that’s a growing trend as well.
Jacqueline: That’s right. Because we even have apps that are telling us where the best latte is, or how to create the next thousand dollar juicer. There’s a new generation that is saying “I want to be used to solve this top problem that I see business is the most effective tool to do it”. So they’re becoming entrepreneurs. What is so cool Nathan is that they are breaking all the rules. So we’ve invested in an entrepreneur called Emily Stone who started a company called Uncommon Cacao.She and other entrepreneurs like her in Latin America are ignoring global commodities prices all together when they negotiate with the smallholder farmers who are producing coffee, chocolate. In her case, 5 million smallholder farmers grow all the cocoa -95% of the cocoa that hold up the hundred billion dollar business. So when we buy $12, $15 chocolate bars, the producers might be getting paid for 5 cents of it, 10 cents of it. And so she – these entrepreneurs is saying “we can do better than that”. They are negotiating with the farmers giving them really solid prices, providing them with transparency of the value chain, as are they providing transparency to the customers. Through that, I see different kinds of capitalism emerging. These are entrepreneurs that are running full profit companies, and recognize, and believe that that’s the best way to solve these problems, but they are driven to solve tough problems with profit after purpose. They are not starting with profit and trying to do good things to too. That’s the difference.
Nathan: Yes. So if somebody was listening to this right now, and they wanted to start a business that is purpose before profit, what would you say to them? How would you recommend to get started? This is something we do get request a lot. People would say “we’d love for you to interview more social enterprise founders, people who are doing work for the greater good, not so much for profit”. I’d love to hear your thoughts.
Jacqueline: I would say too many people get hang up on trying to understand what their purpose is, before they do anything. Instead, I would encourage young entrepreneurs to look around at the problems in the world, and then match those problems to some of their own yearning, their own desires. If you look at Dave Ellis, who is the guy who started the chicken farm, EthioChicken. 24 years old in Ethiopia, not really sure what he would do, but he got this opportunity to get the contract for this big government to confirm where there wasn’t a single chicken. Dave himself have never seen a chicken, having grown up in Chicago, but saw a real chance to build a company, contributes to a region, and to think about the millions of farmers now who are improving their incomes, having a new form of business, there are a thousand employees, and that single company is largely attributed for reducing malnutrition rates in Tigray Ethiopia. Overtime, his purpose became him and he became his purpose. But he didn’t start by trying to figure out what his purpose was. I think if he started there, he may not have really done anything. So I would say number one, start with your problems outside of yourself, and then go figure out ways to solve it. Two, dream big. Dave wanted to build the biggest chicken farm in the world. Sam Goldman of D.Light wanted to eradicate kerosene. Huge problems, but start small. Don’t be feeling that you’ve got to take on the world overnight. And then three, get really good at listening. Listening to your customers, listening to the environment, and building solutions from the perspective of the people that you are there to serve, not making the mistake of thinking you have the answers to what other people need.
Nathan: I really like the first one around – or the overarching don’t worry about what you’re going to do, just focus on just doing something and then kind of falling into it. I think so often people want to find the right idea or want it to be perfect, and they worry about failing and all this other things, but sometimes you just gotta jump into it.
Jacqueline: Yes or you meet young people who want to keep all their options open without realizing that you do that long enough, and at the end of the day all you have is a lot of options.
Nathan: I know what you mean there too. Look, we have to work towards wrapping up. A couple of last questions, you said that you basically marry these companies for ten years, and obviously you provide capital, but you provide a tremendous amount of support. When it comes to growing this companies and supporting them, what kind of things are you seeing that are common amongst early stage startups that are purpose before profit, what are the common challenges that you’re seeing that you guys are helping this startups do?
Jacqueline: Great question. I would say number one is particularly in some of the markets we serve is talent. Find the right kind of talent as your growing, particularly since you don’t have a lot of money to pay them, and then continuing to grow that talent. Number two is probably marketing that includes fundraising. This are typically cash start companies that don’t necessarily have a lot of connections, they also often don’t have a lot of experience in marketing to their customers. Number three would be developing supply chains. How are they going to distribute and find those customers particularly as they start to grow. And then four would be – which is connected to the fundraising is overall financing. Because banks often don’t believe in the customers they are serving, and sol finding mechanisms to enable them not only to get equity rounds, but to access debt more effectively would be another big challenge that the newbies have.
Nathan: I see. When it comes to – for the financing cash flow capital, do you guys ever recommend any form of equity crowdfunding or crowdfunding at all?
Jacqueline: Some of our companies crowdfund. There are so many different innovations, and the most creative companies are using a mix. Increasingly we are even seeing companies like Sanergy which is a toilet company. They use Kiva to get micro loans to individual entrepreneurs who buy toilets in the slums. The waste is picked up everyday by employees, and it’s converted into fertilizer and then sold to farmers. It has a public orientation as well as a private sector. It’s a full profit company that has a non-profit company. It therefore is his raising both equity grants and debt, and the entrepreneurs are borrowing micro loans to Kiva. I think increasingly, and it’s one of the great source of excitement for this next generation and the possibilities we have to solve our problems, we’re seeing a whole new array of financial instruments that people can access to build new kinds of companies that I hope will be measured based on the good thet they’re doing for the world.
Nathan: Love it. Well look, we have to work towards wrapping up. Last question Jacqueline before we move on and I let you go, thank you so much for being so generous with your time, where’s the best place people can find out more about yourself and Acumen?
Jacqueline: Thanks for asking that Nathan. We have a website www.acumen.org and I actually have a book called “The Blue Sweater” that’s on Amazon, that tells a lot about the stories, and me as 25 year old trying to build social enterprises and have that led to the creation of Acumen. Lots of stories of failures, and the importance of getting out and trying again. People could follow us on Facebook, or Twitter, or Instagram, and I’m sure other places that my team just doesn’t tell me about it.
Nathan: Awesome. Well look, thank you so much for your time Jacqueline. I really appreciate.
Jacqueline: Well, thank you very much, and I wish you the best of luck.
Key Resources From Our Interview With Jacqueline Novogratz
- Learn more about Acumen
- Follow Jacqueline Novogratz on Twitter
- Connect with Jacqueline Novogratz on Linkedin
- Check out Jacqueline Novogratz’s book The Blue Sweater
- Like Acumen on Facebook
- Follow Acumen on Twitter