ACUMEN LAUNCHES NEW U.S. PORTFOLIO TO TACKLE POVERTY IN AMERICA IN PARTNERSHIP WITH THE ROBERT WOOD JOHNSON FOUNDATION, BARCLAYS AND THE HITACHI FOUNDATION
Acumen, the nonprofit global venture fund, announced today the launch of Acumen America, a portfolio of American social enterprises focused on tackling poverty within the United States. Since its founding in 2001, Acumen has invested $101 million to build nearly 100 innovative enterprises addressing the problems of poverty in Africa, South Asia and Latin America. Now, after 15 years, the organization is bringing its impact investing model to the U.S. to help address the biggest issues facing the nearly 47 million people living in poverty. With the support of Robert Wood Johnson Foundation, Barclays and The Hitachi Foundation, Acumen is building a portfolio of U.S. companies with a focus on health, workforce development and financial inclusion.
America’s poverty problem has barely changed in the last 30 years. Nearly 15 percent of Americans fall below the poverty threshold living on about $24,000 year for a family of four. Income inequality in the U.S. is at a record high, exceeding any other democracy in the developed world today. The U.S. is also one of the least socially mobile countries in the world, making it harder than ever for people born at the bottom to make it to the top.
“America’s social safety net is strained, but both the private and public sectors can play a role in alleviating that strain by providing new ladders out of poverty,” said Catherine Casey, Director of Acumen America. “We believe entrepreneurs, who are important drivers of economic and social progress in the United States, can help strengthen existing systems and build new models that provide more Americans with opportunities to pursue a better life.”
Yet when it comes to financing entrepreneurs and businesses focused on low-income markets, capital—especially early stage risk capital—is scarce. Only six percent of all venture capital in the U.S. is deployed in rounds of one to four million dollars, and 70 percent of all funding is focused on only three states—California, Massachusetts and New York.
Acumen puts mission-aligned entrepreneurs first, providing them with early stage capital, insight into underserved communities, and other support to achieve their vision. The organization has been investing philanthropic dollars, or “patient capital,” in early-stage companies offering life-changing goods and services, from solar lanterns to agricultural inputs to waterless toilets for slums, to low-income customers in Africa, South Asia and Latin America since 2001.
“We’ve learned a great deal since we first started investing 15 years ago and what inspired us to start Acumen then still inspires us today: this is our moment as a world to solve poverty. We believe there is no better time than now to harness the power of American entrepreneurship to build sustainable models that have the potential to move millions of Americans out of poverty,” Acumen’s Founder and CEO Jacqueline Novogratz said. “We’re thrilled to have the Robert Wood Johnson Foundation, Barclays and The Hitachi Foundation as Acumen America’s cornerstone funders. Each of these institutions is, and has been, deeply committed to improving the lives of Americans for decades.”
Market-based solutions that have been successful in tackling problems of poverty in developing markets can inform and be adapted to target domestic poverty in the U.S. With the grant funds provided by Robert Wood Johnson Foundation, Barclays and The Hitachi Foundation, Acumen America will make Seed and Series A investments across three sectors: health, workforce development and financial services.
Health: Most Americans struggle with high costs of health care, limited access and a lack of information. These challenges are critically acute for the poor, and often become drivers of poverty and financial instability. In addition, health is heavily influenced by one’s life circumstances, such as where they live, learn, work and play—these conditions are rarely factored in by traditional medical treatment despite the fact they can directly impact health outcomes and costs. Acumen will invest in ventures that address such social determinants of health, as well as increase patient engagement, improve care coordination, drive access to health care via new models, improve accessibility, and reduce health-related debt burdens. Our first health investment is Healthify, a tech company helping case managers connect patients to critical social services to improve health. Robert Wood Johnson Foundation is the founding funder of Acumen America’s health portfolio.
“We recognize that to build a national culture of health, we must work together with pioneering people and organizations in and outside of health to discover new perspectives, cutting-edge ideas and emerging trends,” said Lori Melichar, Director at the Robert Wood Johnson Foundation, the nation’s largest philanthropy dedicated solely to health. “We see a tremendous opportunity to work with Acumen to bring its deep entrepreneurial and investment expertise in global poverty to bear on fostering innovative solutions to improve the health and access to care of low-income Americans.”
Workforce Development: Roughly 40 percent of employers struggle to find qualified talent for middle-skilled trades and yet, despite the demand, less than 50 percent of qualified candidates find jobs in these fields. Barclays, the transatlantic banking and financial services provider, is the founding funder of Acumen’s workforce development portfolio. Acumen’s first investment is WorkAmerica, a company focused on expanding access to employment in skilled trades for students from community college and technical institutions.
“The ambitions of Acumen America are very aligned with the objectives of Barclays’ citizenship strategy, focused on finding scalable solutions to the challenges of employability for those who most need our support,” said Barbara Byrne, Vice Chairman at Barclays. “In the U.S., there is a significant need for innovation in workforce development. By working with Acumen to invest in companies that provide low-income students and jobseekers with the tools and services they need to build lifelong careers, we hope to be able to make a real difference.”
Financial Inclusion: Roughly 43 percent of Americans struggle to pay their bills, an issue that stems from the fact that they cannot navigate the country’s complex system of financial services or they lack access to responsible solutions. Acumen’s financial inclusion portfolio is currently under development as it looks at companies providing access to capital and financial products to low-income, underbanked and unbanked Americans.
“Acumen has a proven record of impact in developing countries across the world. Our decision to be the first partner to commit funds to Acumen’s U.S. efforts is grounded in a belief that investments in social enterprise businesses can help address critical issues affecting low-wealth communities,” said Barbara Dyer, president and CEO of The Hitachi Foundation. “The Hitachi Foundation’s experience and past support of entrepreneurial solutions are aligned with Acumen America’s efforts to target inequality issues in the health, workforce development and financial inclusion sectors and we are thrilled to be joining forces with them.”