2. Agriculture is an important source of livelihood
for our target population…
Percentage of population dependent on
agriculture
2010
77%
46%
600 M PEOPLE
44%
in Acumen Fund’s
geographies are
dependent on
agriculture and living
on less than $2/day
India Pakistan East Africa
2
3. …and low productivity means low income
Agricultural Productivity
Value added per worker, USD, 2005-07
27,557
Agricultural productivity in
our geographies is 60x lower
than in high-income nations.
For smallholder
farmers, critical, crop-enhancing
888 inputs are offered at
unaffordable price points and
460
367 farmers lack access to the
324
191 market.
3
4. We have grown our agriculture portfolio
over the last 5 years
Agriculture Portfolio
Other Portfolios
Investments Approved
$ MM
15.6 Agriculture
portfolio
13.3 accounted for
10.9 11.3 nearly 40% of
our work this
7.7 year and is
22% of our
total portfolio
5.1
4
5. We have a mix of debt and equity investments in
agriculture
Agriculture Portfolio - IUM
Total = $14.9 MM, 9 companies
Working Capital Debt
($3.2 MM, 1 company)
Term loans Equity/Quasi equity
($1.9 MM, 3 companies) ($9.8 MM, 8 companies)
* We have invested both debt and equity in 3 companies, therefore total number of companies is less than
5 sum across three capital types
6. …and have invested $14.9M across 9 companies
GEWP, India Micro Drip, Pakistan Jasser Farms, Pakistan
Western Seed, Kenya Juhudi Kilimo, Kenya NRSP, Pakistan
GADC, Uganda GADCO, Ghana Extension services, India
7. Where in the lifecycle are we investing?
4
Scaling
3 Scale to
Preparing increase
2 Prepare customer
Validating business /supplier base
model
1 Create setup, sustainability
Creating initial pilot and
proof of
Develop idea
concept
GEWP
Microdrip
Jassar Farms
Western Seeds
Juhudi Kilimo
NRSP Bank
GADC
Time of Acumen investment
8. There are very few compelling seed stage
investment opportunities
Amount of Investment Requested Innovative agriculture enterprises
typically need $0.5-1 MM to achieve
2009-10
major milestones
Total=62 conversations* • Seasonal nature of agriculture means
that it can take an entire year to
8 change course and learn from
mistakes leading to greater cash burn
13
32 • Barriers to adoption are typically
higher as new products/ technologies
9 may increase risk faced by farmers
<$0.25MM Most of the seed stage funding
$0.25MM- $ 0.5MM requests were for incremental
$0.5MM-$1.0MM growth or to finance specific
> $1.0MM assets (e.g. to build a goat farm)
* During 2009-10, we had a total of 105 conversations in our agriculture portfolio, of which only 62
8 reached a stage where the amount of investment was known
9. Access to working capital finance to manage
peaky nature of business
GEWP Western Seeds
Monthly Sales, 2009 Monthly Sales, 2010
Local banks have been unwilling to Very critical to find working capital
provide peak season working well in advance of the season as
capital debt as the company has there is a 4-month period when the
no hard physical assets (e.g. seeds are grown
plant, property)
2.7x
30.1 x
9
10. Hiring and retaining quality talent while being
based out of smaller towns
Applicable to most
companies in our
Compensation Start-up Risk portfolio
Very relevant for our
Location (e.g. agriculture portfolio
Auranagabad,
Narowal,
Kitale)
10
11. Key Learnings..
• Small holders are scattered and reach is often
expensive.
• Farmer Organization (FOs) can be a cost
effective way of reaching these farmers
however there are other challenges:
– FOs are often geographic focused and might
have multiple intervention initiatives and hence
might lack focus and commitment.
• Adoption of new technologies can take several
rounds of demonstrations and hence larger
cash burns for companies.
12. Key Learnings..
• Challenges to scale:
– Distribution of product inputs can be easier to scale
given established infrastructure of distributors and
retailers.
– Scaling of models where small holders are suppliers to a
processor can be more challenging. Scale can be
achieved through replication.
• Not enough investible opportunities out there:
– There is a ‘Pioneering Gap’. Need more enterprise
funding with much greater risk appetite than investor
capital.
– USD 20 billion in grant funding and soft capital flowed
into the microfinance sector for 2 decades before the
model became financially sustainable and investible.
