Impact investingrequires a 'moral imagination', according to Jacqueline Novogratz.
Jacqueline Novogratz, the CEO of Acumen, a venture capital fund focusing on social impact investing, envisions a more inclusive form of capitalism. In a recent interview, she spoke about the need for a shift in the financial industry, moving beyond short-term profits to make patient, impact-driven investments that address social challenges and poverty.
Acumen, founded in 2001, has invested $301 million in 225 companies through philanthropy and for-profit impact funds. The fund aims to triple its assets under management to $720 million by the end of 2026.
Novogratz believes that if you are focused on reaching low-income people in overlooked markets, there is a trade-off in terms of traditional financial returns. However, she emphasizes the importance of financially self-sustaining models and the use of new market instruments that put a price on externalities.
She cites examples like Beyond Good chocolate, which partners with Whole Foods, as a model for partnerships with corporations that can use their access and true scale to build new markets. Novogratz urges corporate leaders to have a moral imagination and to build systems that include the people who've been overlooked and underestimated.
Impact investing, as practiced by Acumen, relates closely to this inclusive capitalism by channeling capital to enterprises like affordable solar energy providers and disease-resistant poultry breeders, which improve living standards and boost local economies in developing regions. Acumen's portfolio includes companies like D.light and EthioChicken.
Novogratz sees a need for clarity about where the market efficiencies make the most sense, where markets are limited, and where partnerships can solve problems. She believes that a bottom-up movement of people is needed to create new financial models and heroes, particularly in companies like Patagonia, Unilever, IKEA, and visionary entrepreneurs.
The global impact investing market has grown at a 21% compound annual rate since 2019, with more than 3,900 organizations managing $1.6 trillion in assets under management worldwide (Global Impact Investing Network). Acumen has formed partnerships with the World Bank, commercial lenders, and corporate foundations, demonstrating a growing interest in this sector.
Carsten Stendevad has been hired as Acumen's new president and CIO, further strengthening the fund's commitment to this vision. As the world grapples with climate change, inequality, and the needs of low-income populations, Novogratz's vision of a more inclusive form of capitalism grounded in "moral imagination" offers a promising path forward.
[1] Novogratz, J. (2021). Manifesto for a Moral Capitalism. Harvard Business Review. [3] Acumen. (n.d.). About Acumen. Retrieved from https://www.acumen.org/about/
- Jacqueline Novogratz, the CEO of Acumen, envisions a future where technology can be harnessed to enable impact-driven businesses that address social challenges, as they have already invested in several tech-driven companies like D.light.
- In order to triple its assets under management and further propel its vision of a more inclusive capitalism, Acumen, the venture capital fund, is exploring collaboration with tech companies, looking beyond traditional finance and business models.
