Acumen to fund Indian entrepreneurss

Acumen Fund (AF) of New York is planning to open its bureau either in Hyderabad or Bangalore by January next year so as to step up its funding to Indian entrepreneurs and organisations focused on delivering critical goods and services such as water, healthcare and housing to improve the livelihoods of the poor.

Founded in 2001 by former CSFB Investment Banker and Stanford MBA, Jacqueline Novogratz, with seed capital from the Rockefeller Foundation, Cisco and philanthropists, Acumen Fund (AF) is a global non-profit venture fund serving the four billion people living on less than $4 a day by applying the venture capital model.

Besides India, AF has its operations in Pakistan, East Africa, Egypt, Tanzania and Kenya.

Brian Trelstad, chief financial officer of AF, told  Business Standard here on Wednesday that Acumen had just formalised its plan to set up office in India and would make an application to the Reserve Bank of India in a couple of months in this regard.

The bureau would be set up either in Hyderabad or Bangalore as many of the donors of the fund including venture capitalists and bankers from New York and the Silicon valley have connections with the two cities.

Trelstad was here at the invitation of the Net Impact Club to give a guest lecture at the Indian School Business. He said that the purpose of his visit was also to explore the possibility of AF bureau in India.

According to Trelstad, AF currently has funds to the tune of $30 million and will be investing between $1 million and $3 million a year in Indian enterprises in the near term once its bureau is opened in the country.

"The funding will improve significantly over a period of time," he said.

Stating that AF had so far granted funds up to $800,000 to various projects in India including the telemedicine project being executed by Aravind Eye Hospital in Madurai, he said that the organisation had slowly moved from giving grants to lending to business.

Currently, AF is working on a number of model projects that provide high quality drinking water, low-cost drip irrigation systems, low-cost immunisation and improved access to poor for housing in urban and rural areas.

Trelstad said that as a venture capitalist, AF lending would be based on the business model presented to it. Its interest rates would be low and generally vary from 5 to 7 per cent.

Unlike traditional venture capitalists, AF would not have a control over the project funded by it. Nevertheless, it would provide management support and consultation for the projects.

With regard to investments in equity, he said that AF would not expect any return on the investment made.

"We will be happy if we realised the social impact that has been promised by the entrepreneurs and organisations while presenting the project proposals," he said.