Social Entrepreneurship and Impact Investment

Social Entrepreneurship and Impact Investment

Team 6: Louise Meyer-Schonherr, Begoña Cuadrado, Juliana Gómez, Nathan Skelton, Abhinav Saxena, Elise Van de Vyver

             Acumen Fund Case

1. If you were Brian Trelstad, would you recommend to the investment committee that Acumen invest in Ecotact, Meridian, both, or none?

Acumen fund invests in companies with potential for growth and that have return on investment. However, as a non-profit organization, they backed entrepreneurial solutions to global poverty. The Acumen Fund Capabilities Assessment Matrix, shown in Exhibit 9, help us to recommend whether Acumen should invest in Ecotact and Meridian or not.  

As a reminder, Ecotact provide clean and accessible toilet and shower facilities in and around Nairobi and Meridian is a group of private health clinics located in Nairobi. When studying to invest in a project or not, the Acumen fund studies the potential for social impact, the potential for financial sustainability, the potential for scale, the potential for social impact and the management capacity.

Regarding the potential for social impact, Ecotact is more committed to the BoP than Meridian whereas the commitment for market solutions is higher in Meridian. Ecotact was created to give sanitary access to low-income urban areas of Kenya whereas Meridian doesn’t have helping the BoP in their mission.

In terms of financial sustainability, it is more demonstrated in Meridian that in Ecotact. On the one hand, Ecotact cannot forecast if there will be an existing demand for its service. Moreover, there are both public and private investors. Considering that Acumen doesn’t have experience regarding private-public partnerships, it might be a right for financial return. On the other hand, Meridian has proven potential for high returns and there is another European investor, so the risk is lower. 

Regarding the ambition to scale, both want to grow, Ecotact by expanding their facilities to 200 in five years and Meridian already had three clinics up and running and wants to accelerate its growth and even build 2 hospitals.

Having a look at potential for impact, Ecotact’ project has a social impact since the beginning, whereas it’s not the case for Meridian. Finally, the management capacity is better in the Meridian case since it’s a company that already operated. On the contrary, Acumen have problems on that: the entrepreneur is an architect with no experience in management.

After analysing all the aspects, we would invest in the Meridian project and not in the Ecotact project. The Ecotact project lacks financial viability. Kenya’s hygienic conditions are very poor and people from there are used to live like that. They are not aware of hygienic conditions and might not be willing to pay for a service like that (will

be different if it was free). To make things worse, the entrepreneur also lacks management capacity. However, the Meridian project has financial viability and management capacity. The only problem might be that it doesn’t directly focus on the BoP market. We consider that it’s something that will come little by little, since it’s difficult to address this market since the beginning in the health industry and be financially sustainable.

1. What is your evaluation of the strengths and weaknesses of the Capabilities Assessment Matrix?

The Capability Assessment Matrix is a gap analysis tool to help identify internal and external gaps in capability and resources. The purpose of a capability assessment is to understand the gap between current organisational capability and that required to deliver the new service. The capability assessment will provide a comprehensive picture of how much capability the organisation will need to acquire to be able to deliver the new service and makes an assessment of how difficult this capability will be to source. The output of the capability assessment is an important input into the planning and implementing of the new service. With regards to the Acumen case, the matrix in Exhibit 9 has five different categories like commitment to Acumen fund mission, financial sustainability, potential for scale, potential for social impact and management capacity. Each of these categories also have sub categories which range from 1 to 4, where 1 is the lowest and 4 is the highest in the range.

Assessing Strengths:  Capabilities Assessment Matrix breaks down the process of strength identification step-by-step, and thus, enabling us to pinpoint behaviours, characteristics, talents, skills and learned knowledge, which we can effectively use to move forward towards the attainment of our goals and objectives. It also helps identify, overcome and manage the weaknesses as we move forward towards the attainment of our goals and objectives. For example in the Acumen case, to avoid subjectivity, the assessment matrix gives a range from 1 to 4 which is explained very well for every single category.