2016 may have been the year of the Fire Monkey in China. But for the Gates Foundation, it was the Year of the Chicken. They had published a blog extolling the virtue of poultry: “just about anyone who’s living in extreme poverty is better off if they have chickens.” The Foundation offered to donate 100,000 chickens to low-income countries (not everyone was receptive). And the Agricultural Development team provided a $7 million grant to a little-known chicken company in Ethiopia.

Grants are the most well-worn tool in the development arsenal, and even grants to for-profit companies are not uncommon. But this one was different.

The Foundation had been investing into R&D on dual-purpose poultry for small-scale farmers. But they had not figured out how to sell these hardy, productive chickens on a massive scale. So when they encountered an effective, growing, for-profit model in EthioChicken, they were intrigued. They first brought the opportunity to their impact investing team, who balked at the precarity of the market, the currency, the product, and the customer.

So the Agricultural Development team came back to EthioChicken and tried to understand how much capital was needed to get the company onto a steady-state. EthioChicken’s founder and co-CEO David Ellis said: “they told us ‘ask for what you need to scale up and we’ll tell you if it’s too much.’” The team asked for $7 million to expand EthioChicken nationally. It was not too much.

EthioChicken secured seven million dollars from the foundation to be themselves, just more so. The funding came with no expectation of repayment, with no ownership stake, but had clear impact targets and results expected by the Foundation. And that grant gave scale to what became the largest backyard poultry company in the world, rebranded as Hatch Africa. Today, Hatch Africa is operating in 6 markets, with 30,000 agents. Their chickens laid over 5 billion eggs in 2025 alone.

Giving it away to make the most of it

I, and most of my colleagues at Acumen, spend a lot of our time thinking about how philanthropy can shift systems to create an explosion of social enterprises and scale the most successful among them. There are some incredible intermediaries (including the one on the masthead) who leverage philanthropy to deliver impact investments to early stage companies.

But what is almost entirely absent is direct philanthropic support to scalable ventures. In 2024, just $1 out of every $19 granted by US foundations went to for-profit companies. Philanthropists and corporate foundations are neglecting the highest-leverage path to change: giving money to for-profit companies who are tackling the problems they want to solve.

We are not impact investors because we took a wrong turn on Sandhill Road on the way to the drum circle. Rather, we do what we do because we believe that a good business - one with healthy unit economics, that creates positive value for people and planet, and has a pathway to scale - is the most capital-efficient way to solve big problems. Philanthropy is the risk-adverse capital that helps those businesses survive the difficult early years.

Imagine that your philanthropic dollars could play the role of Kleiner Perkins back in 1996, getting Amazon the $8 million that it needed to build systems, hire the right people, and fund the steps to scale. That $8 million in equity was the last time (outside its IPO) that Amazon had to sell shares. After it cleared that hump, it became a self-fueling engine that (for better or worse) has taken over the world. But it needed someone to fund the infrastructure of scale - the things and people that could not be afforded by the business as it was, but would easily be paid for by the business that it would be.

This is what Gates Foundation did for Hatch Africa, what they did for Zipline in vaccine delivery. It’s what they and Shell Foundation and Omidyar Network did for energy access companies like M-KOPA and d.light (often providing large grants alongside investment). It’s why the California Wellness Foundation and Annenberg Foundation invested $2.5m of PRIs in Everytable - to help grow a for-profit business that was building wealth in low-income communities.

So…why not just invest in the company?

If you are the type of person who looks at a nascent chicken company in rural Ethiopia and sees investment potential, then you are my kind of people. But if you are daunted by the amount of risk involved, others likely are too. For a company operating in a frontier or broken market, a big philanthropic bet may be the best path.

Using philanthropy to support profitable businesses has always been a hard sell, despite (or perhaps because of) the fact that business is where the philanthropy comes from. And so I do think it’s worth revisiting the relationship between philanthropy and business.

Hans Taparia (full disclosure: Acumen board member) and Bruce Buchanan wrote about “The Impossible Math of Philanthropy” in an NYT op-ed last year that America faces a $1.9 trillion living wage gap, the difference between what employers pay and what it takes to stay alive and thrive in 2025. In response, philanthropists donated just $77 billion in 2023 to the kind of social services that try to fill the gap: food, shelter, medicine. As Hans puts it: “This is what makes charity such a good deal for businesses and their owners: They can earn moral credit for donating a penny to a problem they made a dollar creating.”

The logic of big bets on social enterprises flips the math of philanthropy on its head. What if philanthropy, even just a chunk of it, was given to the sort of venture that earns, and grows, and competes? Companies that were created to solve social issues, but which were also run decently and paid a living wage? What if the most efficient route to impact is the same route that created the philanthropic capital to begin with: business.

Crowding out the market and lining someone else’s pockets

Let’s get to the real objection: why should someone give money away for someone else to make a profit?

To me, the answer to that comes down to additionality. Big direct bets are appropriate if, and only if, (a) that the company is solving a hairy, important problem, and (b) there is a profound market failure which makes traditional finance unavailable or unsuitable.

Those market failures could look like:

• The geography is perceived as too risky

• The product/service is too novel.

• Lack of appropriate intermediaries operating in the market.

• Or, and this is a big one, there’s a compelling reason to believe that scaled impact will only happen if you have mission on the cap table.

I’ve spent the last two years compiling stories of incredible social enterprises. One of the surprising themes is how few of the original founders (including Hatch Africa) gave up control of their ventures. There are certainly examples you can find, but what’s shocking is the growing number of counter-examples, where dilution or acquisition of a company led to a loss of mission: Etsy, Ben & Jerry’s, Everlane, Annie’s, Honest Tea, even WhatsApp. I was at a roundtable recently with the CEO of an impact company, where he shared how many fellow entrepreneurs he had spoken to ‘ended up with full wallets and broken hearts’ after an exit.

It’s no coincidence that the carbon markets have helped create a crop of scaled, purpose-driven companies (BURN, Sistema.bio, ATEC). One reason is because they offer an alternative way to monetize your impact without giving up control of it.

Structuring to scale

Grantmaking to for-profit companies is incredibly, exceedingly rare. Every year, FoundationSource does a great report on giving/investment trends with private foundations. In 2024, the foundations they analyzed gave away $980 million in grants. But for every $100 they gave away, just $5.20 was given to a non-501(c)3 organization (and not even all those are for-profit companies). If you want to add in PRIs, it still doesn’t move the needle much: just 6.4% of all foundation funds went to non-non-profits.

But alternative vehicles for grant-making, and alternative modes of granting, are more widely available today then ever before, and are enabling big bets on social enterprise.*

On the vehicle side, it’s hard to argue with the advice that Pierre Omidyar received, ignored, and then later adopted: “Don’t start a foundation”. Foundations are incredibly limiting vehicles for supporting the full range of impactful organizations. But philanthropists and family offices are increasingly pushing back on the traditional foundation structure. Omidyar Network is the most famous example, using a dual LLC/501(c)3 which allowed them to both invest in social ventures and also make grants. The Chan-Zuckerberg Initiative includes a bog-standard LLC as part of its corporate structure. Both the Emerson Collective and Ballmer Group are LLCs, and have taken creative approaches to funding social enterprises.

On the instrument side, the vehicles are there for foundations to support for-profit companies, as long as they do so under Expenditure Responsibility guidelines (basically, the use of funds must be directly related to the charitable mission) or Program-Related Investments (PRIs).

If you believe strongly in the impact-ownership argument above, then there’s also an opportunity to fund mission-protecting governance in the long-term with vehicles such as Perpetual Purpose Trusts (PPT). Big bets, particularly if structured as investments in a PPT, can cement the long-term mission of the company, beyond even the retirement of its founder.

*Although my father is a lawyer and I did grow up playing hide-and-seek behind filing cabinets, nothing here is legal advice.

Back to the impact

The funding to Ethio was transformative. EthioChicken had $5 million in revenue in 2015, and the Gates Foundation grant enabled investments to more than double that. Co-founder and co-CEO Joe Shields estimated there was just a 10% chance that the company would have reached its current success without the Foundation’s support. His takeaway from the experience:

“Agriculture in Africa needs more investment, whether VC or VC-like or junior debt. Let those investors be the selectors of commercial rationale. But then tied to that can we double-down with grant funding that acts like free equity and drives growth and impact? That’s the type of model, similar to AECF (African Enterprise Challenge Fund) that I’d love to see more of if we really want to bet on the private sector to solve more problems.”

The bet on Hatch paid off. It created a positive next chain of events – allowing them to raise $10 million from Finnfund and other investors. The Gates Foundation later backed Hatch Africa’s expansion to Kenya, Ghana, and the Ivory Coast, this time via a returnable grant.

Big bets do not mean that the company will never go on to raise additional capital, even equity capital. Hatch has raised investment from AgDevCo, AHL, and ARAF, to name a few. But that’s a feature, not a bug: when you add up the retained earnings and invested capital, that initial grant has gotten more than 20x leverage by crowding in private investment. Every additional dollar that goes into that business is another day-old chick that will lay more eggs, create more income for micro-entrepreneurs and feed more people.

One of the lessons from Hatch is that funders should be taking more of these kinds of risks. Take bets on companies that have demonstrated traction. Take bets on companies that are solving for real-world problems, that are ready to execute on capital but are working in broken markets. Not all of those bets will pay off. But for the ones that do, the sustained leverage and scaled impact can be orders of magnitude larger than any other opportunity.

Philanthropy comes from business. To business it can, and should, return.

The world’s largest social enterprise is fighting for control of its future.

Last week the Reserve Bank of India (RBI) issued new guidance on which companies were large enough that they needed to be publicly listed. Tata Sons, the holding company of Tata Group, was on that list (although it is contesting that status). A Tata listing would be a victory for minority shareholders, and perhaps for corporate transparency. But for a 158-year old conglomerate that prides itself on long-termism and philanthropy, a shift to public ownership is viewed as an existential threat. And for those of us who want to see more purpose-built companies, this struggle raises real questions about the blending of private money and public purpose.

Let’s back up. The Tata Group is a conglomerate with holdings in over 100 subsidiary companies. 26 of them are publicly listed, with a market cap over $325 billion. Those subsidiaries include Tata Steel, Air India, and TCS. They own brands like Jaguar and, most important to me, Eight O’Clock Coffee. Ownership stakes in the subsidiaries are held by Tata Sons, the holding company. And Tata Sons is 66% owned by Tata Trusts, the largest foundation in India. They granted out almost $190M last year, funding medical research, hospitals, universities, scholarships, endowments, the whole gamut.

The way the org is structured, profits from the various subsidiaries ($3.7 billion last year!) flow up to the holding company, then are retained or paid out to the Tata Trusts as dividends. The various Tata Trusts then use those dividends to fund various noble things. The Trusts also nominate multiple board directors to Tata Sons, with sufficient votes that those directors dictate the agenda of the board. If that sounds to you like an insular way to run one of the world’s largest companies…well, you’re not the only one.

Two issues are coming up. The more straightforward one is the RBI. Systemically important institutions (defined by asset size) require greater oversight, and boy oh boy does Tata Sons qualify, although they’re trying to get under the threshold. The RBI’s tools for oversight include public listing and related disclosures. Tata Sons became a private company in 2017 (there were lawyers), specifically to control who could buy/sell its shares, and who had a say in major decisions. The chairman of Tata Trusts has written to the RBI, arguing that a public listing would disrupt their ability to allocate patient capital over a decades-long timeframe.

The second, even messier issue is minority ownership. 18% of Tata Sons is owned by another family, the Shapoorji Pallonji group, with historic ties to the Tata family that have frayed spectacularly in recent years. SP’s other holdings are now in decline, and they want to sell their shares in Tata Sons. But they can’t! The private, trust-owned nature of Tata Sons means that the Trusts get right of first refusal on any sale. So an IPO would be a lifeline for SP group, and they, along with some directors within Tata, are pushing hard for it. But others are convinced that quarterly reporting and liquid minority ownership will dilute Tata’s purpose: philanthropy.

Why should you care? Because trust-based ownership is supposed to be the kinder, more sustainable alternative to public shareholder governance. But the Tata case shows that the insularity comes at a cost of accountability.

In theory trust-based ownership allows for longer-term thinking and sustained value creation. Instead of anonymous, rapacious capitalists, you get cooler heads with a longer-term focus. If you’ve ever been to a shareholder meeting, that sounds like a good tradeoff. But trusts are run by people, and people are fallible. The same structure that allows Tata to ignore short-term market sentiments also allows it to ignore shareholders that might have a legitimate point. Within a public company, there are levers to pull when you think a company is being mismanaged. Within a trust-owned company, not so much.

This tension is not unique to Tata. OpenAI was a nonprofit led by an explicitly mission-focused board, but when they tried to fire Sam Altman in order to preserve that mission, the money won. Sam Altman is the CEO today, and those board directors are gone.

Anytime a mission-driven enterprise sells a part of itself to investors who are not similarly mission-driven, the potential for conflict exists. What if you don’t agree with how the company is pursuing its mission? What if they are pouring money into massive, loss-making ventures? Outside of making your case in private and to the press, there’s nothing you can do about it. And maybe that is exactly as it should be.

I hope there are more fights like this. Win or lose they’ll set the precedents, written and unwritten, that determine whether purpose and public capital can actually coexist.

Other things we’re reading

• Staying in India, the India Development Review had a flamethrower of a post on the silence of nonprofits during the recent Cockroach Janta protests. I loved this line: “We are quick to demand that others step up, that others show courage, that others fight entrenched systems that could break them and take their lives. And yet, what are we doing?” The counter argument is that remaining quiet is sometimes necessary for the continued survival of a given org, and there’s an assumption in there that long-term survival of a given nonprofit is worth its silence. But IDR takes issue with that argument, challenging whether the world really needs nonprofits at any cost.

• Pioneer Post has a great article from Impact Investing Ghana and Savannah Advisory about the first close of their new $75m Ci-Gaba Fund, which is an open-ended, local currency vehicle funded by Ghanaian pensions, and underpinned by catalytic capital from Small Foundation and FSD Africa. Their core thesis was that African pensions don’t support impact vehicles because they are not designed for their needs. By taking that as a first design principle, they were able to build something that would attract local capital.

• Lastly, Jasmine Sun has been getting deserved publicity for her recent newsletter on the furious pushback to data center construction in rural America. Some of this is old news made fresh: rural communities bearing the burden of urban infrastructure is a defining tension of modern life. But I think Jasmine gets to the real heart of the issue: this is about AI, and about people feeling an increasing lack of control over the future of their lives, their communities, and their country. It featured this memorable quote from the Democratic Senate candidate Abdul El-Sayed: “It’s the end game of the worst excesses of tech generally: to sell us s*** we don’t need, but that a few very, very powerful people have decided can make money.”

On my mind with Nikhita Nadkarni

This week I am beyond thrilled to have three questions with Nikhita Nadkarni, the Head of Programs and Partnerships at Acumen India, with whom I once had the pleasure of running a focus group in the middle of a Mumbai recycling center.

You have spent the last several years focused on investments in the waste management sector, trying to improve environmental and human outcomes. Has that changed your personal approach to waste and the people who handle it?

The biggest shift for me is that I just don’t think about waste in the same way anymore. I’ve become much more conscious of what I’m buying/consuming and what I’m throwing away. It’s the little things.. I actually find it quite criminal now to buy a PET water bottle or blow up a bunch of balloons for my daughter’s birthday. Even the sheer amount of packaging that comes with an online order makes me think when I really needed all that this. I’ve begun to reduce/eliminate as much of that as I can. At home, I’ve become a bit obsessive about segregation and I find myself wanting to know what actually happens after the waste leaves the house and is it actually disposing of it responsibly? But I think the bigger change has been in how I think about the people who handle our waste. Collectors, sweepers, segregators – I just realise how invisible these workers are and how much we depend on them without really acknowledging them.

As part of that work, you’ve looked at a number of companies who are unlocking value from waste. What are some of the most fun or exciting innovations you have seen?

We’re invested in 3 companies and there’s honestly so much exciting work happening across the ecosystem. A few things that immediately come to mind:

1. Small robots that can sort waste (still in the early pilot stages) but could be a game changer for dignity/efficiency

2. Of course there’s Bintix (waste data to generate consumer insights), Without / Ashaya (using MLP into really cool products such as sunglasses), and Bare Necessities (refillable deodorants)

3. What probably what excites me the most is converting low-quality MLP (think chips/crisps bags) into packaging and construction materials. The economics and price points aren’t quite there yet, but once this can be done at commercial scale/ right cost, I genuinely think it could replace a significant amount of virgin material.

Both at Acumen and in your prior life at Social Alpha, you’ve been focused on solutions for entrepreneurs at the beginning of their journey. Why are you drawn to that kind of work?

Hmmm. I think it comes down to being part of, and hopefully being able to influence, the trajectory of a company when the decisions being made can really shape what it will eventually become. I love the energy at that stage and honestly the satisfaction when something finally works. Get to be part of that messy, formative stage and help/work with a great entrepreneur go from an idea that works to a model that can scale. There’s just something really exciting about being able to make a difference when it can actually change the course of things.

Listening Corner

As someone who always feels there’s a better version of me trapped somewhere inside, held hostage by by self-sabotage and ice cream, I have been loving the title track on The Beths’ 2025 album “Straight Line was a Lie”.

The song is not complicated (unlike its subject). It’s the chorus played twice through, with this line at the core of it:

“I thought I was getting better

but I’m back to where I started

And the straight line was a circle

Yeah, the straight line was a lie”

One aspect that fascinates me (and my fellow fanatic Kevin Njagi, who gave me this idea) is the concept of football as a level playing field on which all countries - rich or poor - can compete. But in practice, countries with less wealth increasingly find themselves playing uphill, competing against better-resourced academies, facilities, rehab, and nutrition.

Acumen’s India team lines up in Goa for a pick-up game with Fellow Founded OSCAR Foundation

And yet, smaller nations do succeed! Look at Morocco: in 2022 they beat Spain, finished 4th, the first Arab and African team to make the semifinals (and just the third team ever not from Europe or Latin America). A country that was once a doormat at international tournaments is now beating major powers with a team of superstars. How did they, and other small countries (Belgium, Cape Verde, Curaçao) build competitive squads?

And (since Acumen won’t let me launch a soccer blog) what has that got to do with impact investing?

Morocco Makes Moves

In 2008 King Mohammed VI of Morocco laid out this strategy to turn Morocco into a global powerhouse. Over the next 10 years, development focused on three pillars:

1. Governance - having a trusted, strategic governing body.

2. Infrastructure - investing in the physical and organizational capacity.

3. Talent - cultivating and attracting top talent.

The federation aggressively recruited from the diaspora: players who were born outside of Morocco but who had family ties. But they also invested in local infrastructure: the federation built thousands of ‘proximity pitches’. They worked with local clubs to build up their academies and talent development. And they also built an uber-prestigious apex development facility, modeled on France’s Clarefontaine academy.

The vision and investment paid off, at literally every level. Morocco didn’t just place 4th in 2022 and make the quarters in 2026. They made the final of the 2025 African championships (things happened). They won the under-20 World Cup in 2025, and made the last 8 of the under-17 World Cup in 2023 and 2025. The women’s team made their World Cup for the first time in 2023, and were runners-up in the African championship in 2022 and 2024. Morocco is now home to FIFA’s Africa headquarters and will be co-hosting the next World Cup in 2030.

Morocco’s Under 20 team lifts the U/20 FIFA World Cup Trophy

The proximity pitch for impact

If we are keeping with the soccer analogy, then traditional finance is France. There are 10,000 local clubs throughout France, feeding into regional clubs, team academies, and national training institutions. Pitches are everywhere, scouts and coaches are everywhere. Each actor knows what to look for and is incentivized to move talent upwards. The French Football Federation has a quarter of a million licensed coaches. If you can kick a ball, they’ll know your name.

Impact, I’d argue, is the United States of soccer. A scrappy underdog in its own mind, but an underperforming player in the global context. A lack of local infrastructure, a patchwork of talent development systems, a politically entangled federation. Growing, but not yet competitive with traditional powers.

If we look at the 3 gaps identified in Morocco, they map fairly cleanly onto the impact investing sector within the US:

• Governance: Despite policy progress in some key countries (Japan, UK), globally there is no credible actor setting the rules of the game and ensuring that incentives channel people and capital towards impact.

• Infrastructure: Communities may have a social lender, but there are few advisors who can teach potential investors about impact investing - just 38% of wealth advisors under $100M feel they understand it. And unlike Europe, in the US there are just a handful of retail-level impact investing products.

• Talent: On the impact investment side, we rely on traditional finance and corporates to supply our investment teams, and do not have a reliable entry path for junior talent. For social enterprises, the problem is somehow worse: 63% of social enterprises say that their inability to attract talent will have a serious impact on their business’ future.

The last problem is the one I want to focus on. Access to talent is a problem that gets worse the more mature you are, not better. Rippleworks found that 25% of early-stage social enterprises have a serious talent issue, but for later-stage firms that figure grows to 45%. Two out of every 5 impact investors say there is inadequate deal-making talent; 3 out of every 5 say the same about IMM folk.

The problem is not demand. Every impact investing role I’ve seen gets a deluge of applications. The impact course at Stanford’s Graduate School of Business is by far the most oversubscribed and applied to course at the school, according to the fund’s CIO.

The problem, for me, comes back to two things: consistent supply and prestige. For first-year MBAs at University of Chicago’s Booth School of Business, 15-20% express an interest in careers in social impact…but just 2% actually go into those careers.

How trad finance recruits: predictable and competitive

In the 1970s just 1 in 20 Harvard graduates went to work in finance or consulting. Today, if we include big tech, it’s half. This is not an accident, it is not a factor of greed, nor is it a lack of moral ambition. To quote Amy Binder, it is an indicator of how firms and universities “organizationally manufacture students’ aspirations for these positions.”

Top consulting, finance, and tech firms have a visible recruiting presence, ‘platinum’ status at job fairs, but also show up in more intimate settings, like at campus professional clubs. Like young Parisian footballers, students can be recruited as early as their second year of university into prestigious firms. In Karen Ho’s book, Liquidated: An Ethnography of Wall Street, a huge percentage of students enter banking and consulting simply because “they were on campus, had a clear schedule, and everyone else was doing it.”

Whatever they’re doing, it’s working: In 2025, 360,000 students applied for a Goldman Sachs internship. Less than 1% got it.

By contrast, the impact space is new, and small.

For small, lean impact investing firms, the payoff of that kind of industrial recruiting just isn’t there. The impact space remains mighty…but tiny. Just 1% of all managed assets are in impact. 1 in every 400 MBAs works in impact.

Look at TPG Impact Platform. Per their website, they manage $32B in assets, making them one of the largest impact asset managers. They employ 80 FTEs, and have invested in 100+ companies. That’s an incredible scale for our space, but it doesn’t come close to the kind of scale that supports the talent-building work that a McKinsey or BCG or Goldman can do. And that is one of the 2-3 largest impact firms in the world.

And so, we rely on the traditional sectors to build our talent pipeline. 80% of impact investors recruit from traditional finance. As Lauren Cochran points out in her blog, most impact firms don’t have time to give basic, time-consuming training around financial analyses: “For every person who doesn’t want to sweat out two years of their life on the 58th floor of [insert wall street bank here], there are two people that already have. Sorry!”

We need more and earlier paths into impact

At a GIIN event last year, everyone was asked to introduce themselves by describing their most memorable job. The dichotomy was stark. Half of the room had been professional financiers, and the other half had made hard pivots out of unrelated industries.

What none of us talked about was our first jobs in social impact, because none of our first jobs were IN social impact. We are newer, and we are smaller, which paradoxically means we skew older. HBR wrote a report on staffing impact investing. 55% of MBAs in impact investing got their MBA after 2010, compared to 41% of traditional finance.

It’s a lot easier to take a job in impact later in your career if you have built up some financial security earlier. It pays less and demands more. It’s harder - it should be. But that means only 6.3% of MBA interns return to impact employers full time (well below 14% from non-impact internships). We don’t have data on why, but I can tell you my guess: those firms are not hiring enough well-paid positions to retain interested talent. MBA students have just made a sizable investment in their careers, and need to get a return on it.

How to Morocco

There are already a number of organizations doing incredible work to bring an impact lens to existing finance and entrepreneurship paths: Case’s i3 program, Turner’s MIINT, ICM Mosaic, Sorenson, and others. Not to mention the plethora of impact-oriented clubs that have popped up in undergraduate schools in the past years: Net Impact has more than 250 chapters today.

How do we make more pathways real? I’m actually asking, I don’t have the answers. But here’s one idea:

Wendy Kopp knows the power of a first job. She built a model - Teach for America - that attracts bright, passionate people. And whatever your thoughts about TFA, it has been successful in attracting those people because it creates prestige through a competitive, predictable process which aggregates impactful career opportunities. There’s an opportunity to get smart undergrads into social enterprises or impact investing firms, to partly fund their salaries, and to use those same impact investing firms as distribution channels to nominate good social enterprises for more graduate placement opportunities. Or maybe even have a rotational program where you get exposed to multiple roles.

Morocco may never win the World Cup (especially not while supplies last). But they are establishing themselves as a force in the global game. And impact investing may never become the premier professional entry point for every graduate - but if we want to become a force, we need a better playbook for investing in our future talent.

Today, we’re excited to invite a special guest: Amar Inamdar, the Managing Director at KawiSafi Ventures. Since 2016, KawiSafi Ventures has backed companies bringing power, mobility, and cleaning cooking to communities the traditional grid was never going to reach. You might’ve seen Amar’s viral Ted Talk on the potential for off-grid solar, or his writing on Forbes, Bloomberg, and FastCompany. Based in Kenya with a PhD from Cambridge and stints at Shell, the World Bank, and the IFC prior to KawiSafi, Amar brings 25 years of expertise building markets and businesses in emerging economies. We’re welcoming his reflections on the question: why doesn’t committed climate capital move?

On Amar’s Mind

As fiscal pressure on aid budgets grows, what actually counts as a return on investing in developing market climate finance? Last month I gave evidence to the UK Parliament's International Development Committee to answer that question from our perspectives at Acumen and KawiSafi Ventures.

My answer started from an observation I don’t hear often in conferences and conversations. I don’t believe the binding constraint is commitment or resources. Trillions of capital at scale have been pledged for the climate transition, but that isn’t translating into deployment, especially into enterprises in hardest-to-reach markets.

It’s not hard to see why. Private capital follows risk-adjusted returns, and the geographies with the most acute need for adaptation don’t offer returns that are compelling enough on paper. Recurring challenges with local capital markets, currencies, and exits stand in the way.

The most common response is still to ask how we can push more developed market money to the emerging world. That’s still a critical dimension, but it’s not the whole story.

Pension and insurance pools across Africa are substantial and growing, yet much of that money is parked in US dollar debt rather than invested in businesses right down the street. They are, of course, following the same risk logic international investors apply in their aim to maximize returns.

Changing that calculation would not only help close the financing gap, but it could build a domestic investor base with a longer-term and deeper stakes in local African markets, independent of decisions made in Washington or London.

Three steps would start to shift this, each aimed at bringing domestic institutional money off the sidelines:

First-loss: We need institutions willing and able to take the first risk. Multilaterals like the Green Climate Fund anchor markets that would not otherwise function, and their willingness to absorb early losses is what would give domestic pensions and insurers the confidence to take a first position.. The cuts to these institutions, which we’re seeing, directly affect hardest-to-reach communities.

Risk sharing: Second, build more instruments that share risk. This month the Green Guarantee Company mobilised $70 million across two African transactions: a $20 million guarantee backing mini-grid development in Nigeria, and d.light’s $50 million green bond, the first to package payments from off-grid solar customers into an investment-grade instrument, listed on the London Stock Exchange. Both demonstrate what’s possible when public credit stands behind private deployment, at a fraction of the deal cost.

These are small numbers against the need, but the trend in leverage is a proof point. Across its full book, GGC turns $100 million of capital into up to $1 billion in guarantees, so every public dollar can back up to ten of private lending. So far that lending has come from international investors, but mechanisms like these are what it will take to reach the domestic capital pools.

Exits: Finally, we need to secure exit paths. Private investors won’t go into investments they can’t leave, even in their own markets. Aggregation structures and special purpose vehicles, which I wrote about recently on NextBillion, are one way to bundle small assets into instruments that institutional investors can hold and eventually trade.

Fortunately, there’s already momentum toward this reality. d.light’s green bond is a first: payments from off-grid solar customers, packaged into an investment-grade instrument and listed on the London Stock Exchange.

I closed my parliamentary evidence with a call for realism, noting how the climate finance debate tends to swing between optimism and fatalism. There’s a third way forward. Capital can be mobilised at the scale we need, but through greater cross-sector collaboration and shared commitment toward de-risking.

Until recently, the climate and development conversation has revolved around developed markets institutions creating a path for developed market money to flow into sub-Saharan Africa. It’s an approach tied to an aid ecosystem which is, for better or worse, gone. It’s time now to focus more on unlocking the capital and potential that exists within even the most vulnerable regions.

Rapid Fire Questions

We couldn’t let Amar go without a few off-the-cuff questions. Here’s a few reflections on his own path, and what he’s celebrating today.

1. You’ve watched Nairobi’s energy landscape change from the inside for almost a decade. Is there a specific moment where you actually saw the shift happen (not just read about it)?

I’ve seen the market ebb and flow - there’s not been linear ‘progress’. I can reflect back on lots of interest from large energy majors before 2020 which melted away during Covid. And carbon pricing having its moment in the sun. But over the last year, our community has been working hard to build the case for securitization instruments - based on the ever increasing data available on receivables performance. So no ‘eureka’ moment, but more of a concerted, collaborative effort over years.

2. You just closed on real capital at a moment when a lot of climate-focused funds are struggling to raise at all. What do you think really got you across the line?

Relationships, perseverance and a wonderful team. Tracking over 450 transactions in our market over 10 years - seeing their successes and failures - helped. And keeping up positive connections with our investor community allowed us to build the support network needed to get us over the line.

3. What’s the one company you find yourself bringing up in conversations; the one you can’t help talking about?

I won’t name just one! We are big fans of our entrepreneurs and the incredible work they do. And each brings incredible innovations, resilience, determination and commitment to serve people in our markets. So I want to celebrate the community for all that they do.

Other Reads We Loved

Meanwhile, on the other side of the globe, two pieces have caught Dan and Kristi’s eye:

1. The future of microfinance in Bangladesh. This piece explores how global research applies to Bangladesh – the country that invented the microfinance model 50 years ago. Nusrat Jahan from BRAC pairs the evidence base with her own interview with the managing director of PKFS (Bangladesh’s apex microfinance body), and the results cut against the usual access-focused narrative: the real story is fit, not access. Entrepreneurial experience (not gender) turns out to be the strongest predictor of impact, and innovation like cash-flow-matched repayment schedules show what “fit” looks like in practice. Digitalization meanwhile remains stuck around 10% of transactions thanks to fee structures that disincentivize MFIs from going digital, all against a banking sector under real strain, while MFI default rates doubled since 2018.

2. Structuring for the Last Mile: Financing the Next Era for African Electrification. A decade in, distributed solar has proven itself in sub-Saharan Africa. Yet the region is still the world’s energy-poverty capital. Why? This new report from GEAPP and Lightrock makes the case that it’s not a tech problem; it’s a plumbing one. Operators, squeezed by sky-high capital costs, keep retreating to richer, denser customers and leaving rural communities behind. The reason is structural; electrifications never got the state-backed financing that roads, ports, and grids take for granted, so operators alone are left holding demand, payment, and currency risk, doubling their cost of capital in the process. The authors propose a fix that isn’t new tech – just old infrastructure finance logic borrowed from elsewhere: pay operators for reliable service instead of hardware installed, hand out exclusive rights to serve defined regions, and split risk deliberately across governments, operators, and financiers. At a country scale, suddenly this type of financing becomes available to last-mile power… and maybe, finally creates affordable electricity.

Listening Corner

And to close us out: here’s a song Amar can’t stop playing on repeat. Despite Buffalo Springfield existing for only two years, they produced some of the most influential lineups in rock history; Stephen Stills and Neil Young eventually split off in their own legendary careers.

Apparently, For What It’s Worth has been assumed to be a Vietnam War protest song, but has actually been inspired by something more local; the 1966 Sunset Strip curfew riots in L.A., where young club-goers clashed with police over new curfew laws targeting late-night venues. Despite that specific origin, the song’s universal lyrics allow it to get adopted as an anthem for basically every kind of social unrest (which is probably why it’s stuck around for almost 60 years).

Welcome to Acumen’s 5-minute corner, “Impact Track”. We’ll be sharing what’s been on our mind in all things impact investing, philanthropy, ag, energy. Get the latest one-hour webinar in five minutes on your subway commute to work, and hear from sharp people doing the work. On today’s platter, we serve you: Climate Irony Week.

Only appropriate that we start with a hot take:

As London Climate Week staggered to the finish line, the heat became so extreme it forced the cancellation of an event about extreme heat, every conversation - both personal and professional - came down to adaptation. In this week’s Stack we highlight a few voices that cut through the haze, then cool you all down with an ice bath of climate finance data.

Dispatches from the London sauna:

• Archit Srivastava from Earthhood pointed out that the heatwave “was more than symbolism, it was an invoice”. We’ve skipped the cleanings and failed to rotate the tires. Now the car is in a ditch on the way to the root canal. Archit does a great job of showing how the failure to act in years past is now creating real economic costs: missed commutes, shorter working hours, cancelled meetings, slower timelines.

• Peter Gross from BFA Global took that same argument and applied it to business. Peter’s point is that we haven’t hammered home the impact climate will have on the bottom line: “climate [adaptation] isn’t going to grow solely via a compliance or public affairs agenda…Investability must be the focus”. In other words: companies that don’t spend on adaptation today will see their profits melting tomorrow.

• Last but not least, INGKA Group’s CSO, Karen Pflug, talks about that cost of inaction: “Delaying the transition does not avoid costs. It locks in exposure to shocks and instability” It’s not just spotted owls and glaciers: 4 out of 5 CEOs surveyed believe that clean electrification reduces business volatility.

Now put all of that in the context of CPI’s latest Landscape of Climate Finance, which shows that climate finance growth has more or less stopped. It was booming in 2021 (30%), slowed to 6% in 2024, and is projected at just 2% for 2025. The world is rapidly getting hotter, but climate finance is cooling off.

In particular, adaptation finance - which funds the tech that will keep people cool and fed during a hot and stormy future - has flatlined. Just $64 billion went into adaptation finance in 2024, only 3% of overall climate finance*. Peter Gross talked about this bizarre duality last week, where everyone offstage was talking about AC (adaptation in its most acute form), but almost no one on it:

“AC is never going to be the complete solution…But, given the demand and the technological progress, why aren’t we building hundreds of startups – manufacturing, financing, distribution – to bring low-cost, clean AC to the mass market in the Global South, saving billions of hours of labor productivity, and hundreds of thousands of lives?”

But there’s three ways climate finance is shifting:

1. It’s more domestic. The top theme: countries are increasingly financing their own transitions. Domestic private actors (households, corporations, financial institutions) now account for 60% of global mitigation finance. Households globally spent $330 billion on things like EVs and energy-efficient appliances. It’s a hopeful sign that investment is becoming more embedded in everyday economic activity as a necessity, and isn’t waiting for governments or international development finance.

2. It’s increasingly commercial: Private finance now represents 62% of climate finance; up from 48% a few years ago (‘19-’20). Commercial debt, equity investment, and household consumption have all grown at a 17-20% CAGR over the last 5 years. Notably lagging? Private adaptation finance, which reached just $3.8 billion in 2024, down more than half from 2023.*

3. The center of gravity is slowly (but unevenly) shifting towards emerging markets. While advanced economies and China are still responsible for 80% of climate flows, the fastest growth is happening across emerging markets. South-South lending has more than doubled since 2021. But the Least Developed Countries saw climate finance fall by 21% in 2024, with adaptation finance hit particularly hard. These countries remain vulnerable to a shrinking pool of international public finance.

One takeaway from all of this – adaptation has become impossible to ignore, wherever you are in the world. Now it needs a scalable model to fund it to keep up. Until then, we expect sweatier summers.

*CPI does make clear that tracking private adaptation flows is quite difficult, as they could theoretically include thousands of small adaptive actions everyday. There is likely underestimation, but no one involved thinks we’ve raised enough capital.

Even More Reads we Loved

1. When “sustainable” quietly means “without the farmer”: Dave Boselie has a chilling piece on how smallholder commodities (like coffee and cocoa) are increasingly being made without farmers at all. He uses synthetic vanilla as an example, which is >99% of the vanilla market today and trades at a tenth of the cost of the natural product. There are some pros and cons to phasing out tree-grown crops (an increase in poverty vs. cleaner corporate procurement). But what Dave highlights so well is both the high likelihood of unintended consequences of that shift, and the co-opted language used to sell it (beware marketing that reframes supply chain security as environmental conservation).

2. Understanding Africa’s Broken Climate Finance System: How the Missing Layers in the Capital Stack are Holding the Market Back. Gagandeep Bakshi and Santosh Singh examine the symptoms of Africa’s broken climate finance system as natural symptoms of the same failure: a broken capital stack. The well-discussed symptoms – the Series A cliff, geographic concentration, foreign dependence, currency mismatch – all signal that capital isn’t moving the way it should. Instead, they visualize the four “links” along a chain that capital should move along:

   1. Layer 1: Grants and concessional capital

   2. Layer 2: Catalytic or first loss capital that makes a deal investable

   3. Layer 3: Commercial equity and debt at scale

   4. Layer 4: Local institutional money, liquidity and less risk investments

Layers 2 and 3 (the infamous missing middle) are noted as absent. While blended finance should ease the links, it hasn’t really, because it’s substituted private capital.

On my mind with Lindsay Camacho

We’re excited to introduce the brilliant Lindsay Camacho. Lindsay is the Associate Director of Institutional Partnerships at Acumen, meaning she leads key accounts with foundations, corporates, governments, and bilateral partners. She’s also played a key role in building Acumen’s gender lens investing practice. Lindsay’s the type of person you’d rely on to deliver the best wedding toast while also smoothly negotiating a high stakes deal.

Take a look at some of her fresh thoughts from London Climate Action Week.

1. You’ve lived in both the US and the UK; two places that experience heat very differently. After living through last week’s heatwave in London during LCAW, what are your thoughts on how people adapt to extreme heat?

I’ve lived in the UK for nine years, and this has been the hottest summer I can remember. Last week was 35°C (95°F), and humidity levels were high. Because the UK is so far north, while summer days are hot we generally still experience cool nights. Last week, the temperature wasn’t dropping below ~20°C at night. The combination of all of these factors meant that people couldn’t cool down their bodies, nor their homes. We don’t have a culture or infrastructure of AC here, the way other parts of the world do, which meant that most people literally had no respite from the heat for days.

Then you start to see things breaking down. Most of London’s Tube system broke down last week, the national train service experienced cancellations and delays, and riding on buses was like sitting through a hot blow dryer! A lot of people (including a close colleague) had to take off work for childcare purposes, because schools closed due to extreme heat and potential fire hazards (server rooms were overheating!).

In the UK, our lifestyles and economy are built on infrastructure designed for non extremes. But then suddenly, you can’t work because you can’t get to your place of work, or you have to take care of your children due to emergency school closures. You try to go to the grocery store and things are sold out, or freezers aren’t working. So it quickly becomes a scary situation.

I hope this summer’s heat waves (there’s another coming next week - the third of the summer!) encourage our government to make urgent policy changes and improvements to our infrastructure. But we all know policy takes time to implement, and in the meantime the UK populace will have to learn how to adapt. Maybe we’ll have to adjust the times people go to school or work. In any case, the experience certainly infused a lot more urgency in the backdrop of conversations last week.

2. Looking back on London Climate Action Week, was there a conversation or event that stuck with you most?

One event I attended was on the role of philanthropy in climate finance, and had significant representation from locally-led organizations – meaning women, youth, grassroots, and indigenous-led groups leading climate work in communities directly impacted by climate change.

The conversation was about how climate finance is getting trapped at the macro level within large multidevelopment banks and institutions. Communities on the frontlines who understand the solutions and are implementing them, with much success, are severely underfunded; the money is not flowing down to them. What I found interesting was that (a) 80% of climate philanthropy is coming from the US but (b) 50% of that funding is staying in the US. Yet we all know the Global South is where most of this funding is needed.

Another key point was that philanthropy can both provide global, long-term support for public and national agendas, and partner with locally led innovators, in ways that other types of money cannot. Philanthropy can also provide credibility for local innovators and be an ally to them, as it can serve as a bridge to facilitating conversations with larger public and private organizations.

3. You’ve been at Acumen for more than a decade. How has the conversation on adaptation changed from 10 years ago?

The potential and risks for AI to address the information asymmetry issue that communities in the Global South have faced for so long. Acumen is seeing interesting models within our network using AI do exactly that. Two examples:

1. Crop2Cash - There are simply not enough agronomists to support smallholder farmers in Nigeria, and Acumen West Africa Fellow Michael Ogundare reached half a million smallholder farmers through an AI-powered chatbot, specifically designed to address this asymmetry issue. Through Crop2Cash, farmers can call a toll-free number in local languages to get advice on planting and pricing.

2. River Poultry Farms – A similar problem; getting veterinarians to last mile communities in rural Uganda is challenging. Acumen East Africa Fellow Richard Obuku founded River Poultry Farms which allows poultry farmers to use AI-tools to quickly diagnose their sick chickens, rather than waiting for a vet to reach them.

There’s lots of challenges here as well: adaptation from communities who aren’t digitally literate, inclusion of local languages in these models, data ownership and privacy. At the end of the day, we’ve seen many of our entrepreneurs in these markets import knowledge and talent from the U.S., China, and Europe, where the talent is currently sitting. Acumen is looking at ways we can facilitate partnerships with corporations that have access to this talent and technology, to ensure local entrepreneurs and their communities aren’t left behind.

Listening Corner

Dan’s hottest song of the summer is none other than Loving Spoonful’s, Summer in the City. Adapted from a song written by John Sebastian’s teenage brother, the hit was completed across just two sessions – lamenting the heat of summer days in New York City. My personal favorite discovery of its production: the team placed a mic in a garbage can, and struck it with a drumstick to make that crashing sound.

We too, are embracing the mindset that ‘despite the heat it’ll be alright’.

Lovin’ Spoonful - Summer In The City (1966)

Debt financing is sprinting past equity in African venture finance. From Q1 2025 to Q1 2026 debt grew sixfold, while equity funding slowed by 27%. Partech’s Africa Tech VC Report tells a similar story; nearly half of all capital raised by African tech startups was debt (a 63% increase from the prior year).

The trend extends beyond venture capital. Tameo’s latest Private Asset Impact Fund (PAIF) report found that private debt funds are getting larger even as the number of funds have slightly declined. In other words, larger pools of capital appear to be flowing through slightly smaller numbers of established debt vehicles. Meanwhile, GOGLA’s latest report found that debt financing for off-grid solar companies increased by 178% to nearly $150 million, with local banks playing a growing role.

Now the immediate question is whether this development is a positive one.

On one hand, it reflects a maturing market. More businesses are reaching a stage where they can access another type of financing beyond equity. Companies with predictable revenue streams and stronger operating histories can raise growth capital without diluting founders and early investors. In that sense, debt is becoming a part of Africa’s financial infrastructure.

But on the flip side, this shift reflects a more cautious outlook. As Janet Harrison wrote in a recent article, “This is the uncomfortable part of the new model: it rewards discipline, but it can also make experimentation harder.” Investors are becoming more selective about where to deploy capital; seeking predictability over pure potential. No one is betting on the future.

The Big Deal’s Database has been writing about this for months now.

“If this trend continues, Africa might still be producing big rounds in 2026, while silently starving the pipeline that produces the next generation of breakout companies…” writes Max Cuvellier Giacomelli.

Which brings up our next point: this debt boom remains highly concentrated.

Despite the debt boom, the number of ventures it’s reached is still small; only 53 startups announced debt last year, compared to 363 announcing equity. Partech finds that VC debt continues to flow to a few sectors (fintech, energy, mobility), half of that debt is concentrated in three markets (Kenya, Egypt, Nigeria). And most funding has flowed to Series A and B companies – businesses that have already demonstrated traction and scale.

So the question remains – if debt is growing because investors have become better at financing proven companies, who is funding the companies that haven’t proven themselves yet? Economies aren’t just built on scaling today’s winners; they also depend on finding tomorrow’s. As investors seek predictability in a time of radical uncertainty, the real challenge won’t be about mobilizing more capital, but ensuring that enough of it can take risk. We’ll explore that in future posts.

On Bowofade’s mind:

Meet Bowofade, our West Africa Portfolio Associate Director. With nearly a decade of experience spanning tax, strategy, corporate finance, and venture investing, Bo has done a little bit of everything; from leading technology and industrial investments across Africa, the U.S., and Mexico to helping incubate the next generation of African startups. Before joining us, he managed a portfolio of 60+ companies at Platform Capital, worked on acquisitions and divestments at ARM, and began his career at Deloitte. When he’s not evaluating businesses or building investment theses, you’ll likely find him on a golf course or curating the perfect Nigerian music playlist (peep his favorite below)!

1. Where do you see the biggest disconnect between perceived risk and actual risk when companies seek debt financing?

The biggest disconnect is that lenders often treat the absence of formal collateral, long operating history, or perfect financial reporting as the same thing as business risk. Those things matter, of course, but they are often proxies and sometimes lazy proxies for the real questions: does this business have reliable demand, disciplined cash conversion, operational control, and the ability to absorb shocks?

In many of our markets, a company can have strong customer demand, real productive assets, deep farmer or agent networks, and a clear route to cash generation, but still look “risky” on paper because it does not fit a conventional banking template. On the other hand, a business with cleaner documentation or more traditional collateral may still be carrying much deeper risks around working capital stress, FX exposure, governance weakness, or customer concentration.

So I think the perceived risk is often “this company is informal or early-stage.” The actual risk is usually more specific: timing mismatch, currency mismatch, tenor mismatch, weak controls, or a financing structure that does not match the company’s operating cycle. A lot of debt risk is created not because the company is fundamentally unfinanceable, but because the capital is too rigid, too expensive, too short-dated, or denominated in the wrong currency. Or maybe it’s just that the company does not cosmetically look like what underwriters are used to. Capital is not scarce; it is truly scared and scared money don’t make no money!

2. If you could redesign the financing ecosystem for companies in your portfolio, what type of capital is most missing today?

The biggest gap is not just “more capital.” More capital is needed for sure but we need even more better-fitting capital.

For the kinds of companies we work with, especially in agriculture, productive use of energy, and other deeply inclusive models, the missing capital is flexible, patient working capital and growth capital that understands seasonality, inventory cycles, receivables, FX exposure, and the messy realities of serving low-income customers or smallholder farmers.

Many of these companies are not pure venture-backable businesses, but they are also not bankable in the traditional sense. They sit in the middle: revenue-generating, impact-heavy, operationally complex, and often solving problems that markets and governments have historically underinvested in. What they need is capital that can sit between equity and senior debt but is customised for purpose: revenue-based finance, subordinated debt which could have returnable grants and impact-linked instruments wraps, seasonal facilities, local currency facilities, guarantees to galvanise access, and working capital lines that grow with performance.

The ecosystem also needs more capital that is willing to finance the “boring but critical” parts of scale that is often not covered by investment journalism that both domestic and offshore capital providers rely on. Key pieces like inventory, receivables, processing capacity, agent networks, and route-to-market infrastructure. These are not always glamorous uses of funds, but they are often the difference between a promising business and a durable one.

3. What’s been your favorite diligence trip?

My favorite trip was to Sommalife, an agribusiness in Ghana. On paper, we read about the shea value chain, women-led aggregation, conservation, and traceability. But in the field, those things stopped being abstract.

We spent a few days with women smallholder farmers and shea pickers in communities like Dormawa and Kunfusi, to understand what Sommalife meant in the rhythm of their daily lives. They showed us around a community nursery, which could house 40,000 shea and cashew seedlings at one time! We were also taken through an end-to-end demonstration of the shea butter-making process — from sorting, drying and grinding, to roasting, kneading and boiling. You could see the amount of labour, knowledge and local processing that sits behind a product that eventually travels far beyond those communities.

So we got to see the full arc of the business: seedlings in rural Ghana, women-owned nurseries, informed but skilled processing, to global buyers. It was incredible to see how Sommalife had transformed conservation. In each community, the nursery isn’t some distant ESG project managed from a head office. It’s owned and maintained by the women in that community.

One conversation stayed with me the most. A farmer said, “Even when larger and more liquid buyers come into communities, I value working with Sommalife… because Sommalife was the only company that showed real concern for replenishing our wealth, not just buying from it.” It’s not enough to teach a child how to fish, you have to make sure there’ll be fish in the river tomorrow.

That sealed the deal better than any slide could.

Sommalife built a more durable economic future around a product the world consumes but rarely traces back to its source.

Listening Corner

Lately, Bowofade’s been jamming to BNXN and Sarz’s “Back Outside”. You’ve likely heard Sarz’s influence in your lifetime – he helped co-produce Drake’s One Dance, has been sampled by Beyonce and is at the origin of Skepta’s hit “Energy (Stay Far Away)”. Take a listen! And stay subscribed for more beats…

BNXN, Sarz - Back Outside (Official Video)

Solar is booming in Africa. Global Solar Council’s (GSC) latest report found that Africa recorded its fastest year of solar growth ever in 2025 (54% increase in installations). Most striking is where that growth is happening: more solar was imported in 2025 (18.2 GW) than is projected to be installed on a utility-scale level for the next two years (14.3 GW). Meaning, a good portion of this boom is happening through distributed systems: rooftops, telecom towers, businesses, and mini-grids.

In other words, customers are taking power into their own hands (literally). African households are buying solar. Businesses are self-generating electricity because grid reliability is too weak and diesel back-up is too expensive. Telecom towers are hybridizing because they can’t afford the downtime. People can’t afford to wait any longer for a reliable main grid, especially when there’s viable and increasingly affordable alternatives.

That’s exciting. But it also creates an uncomfortable tension: those most capable of paying for reliable electricity are the ones most capable of leaving weak grids behind.

Which brings us to the infamous utility death spiral.

Utilities only work if their best-paying customers stay connected: the factories, malls, firms, and wealthier households that effectively subsidize the broader grid. But they’re the same customers that can afford to leave and install their own rooftop solar or hybrid systems.

The result - Utilities lose their strongest revenue base while still carrying the same infrastructure costs. Tariffs rise for everyone left behind. Reliability worsens. And the poorest suffer – either through worsening service or higher tariffs – or have to rely on illegal connections to survive.

So as these distributed systems scale, the question becomes: how do you help people escape energy poverty without unintentionally weakening the shared infrastructure economies depend on?

Because there’s a big difference between electricity that charges your phone and the electricity that powers businesses. The first improves quality of life. The second powers economies.

Todd Moss explores this tension in his post, “Africa needs big solar farms, not just solar islands.” The good news is, distributed solar often complements weak grids rather than fully replacing them in some areas (or replaces diesel). The concern is when fragmented systems are less efficient than interconnected ones in the long run. A functioning grid balancing demand across many users can probably integrate renewables cheaper than isolated households trying to rely on their own solar and battery systems, requiring less duplicated infrastructure and variable renewable supply.

That doesn’t diminish the urgent need to scale decentralized energy; it’s thriving where the traditional grid has struggled most. PAYGo systems now help millions of rural households access solar home systems at a level of affordability that would’ve been unimaginable ten years ago. Organizations like the Rural Electrification of Africa Lab (REAL) are designing new approaches to electrify the hardest-to-reach communities, building basically distributed utilities specifically designed to reach them. Hardest to Reach (H2R) unlocks distributed solutions aiming to reach 50 million first-time energy users where traditional capital has failed to reach.

As a recent GOGLA article put it, “The question, then, is not which priority comes first, but how to optimize different delivery models, technologies, markets and financing structures at the same time.”

Which is why, hopefully, Africa may be one of the first regions to figure out how both can coexist.

The future will likely look hybrid: utilities focusing on industrial growth, transmission, and large-scale reliability, while distributed systems handle resilience, rural access, and last-mile electrification. The real challenge is making sure these systems reinforce one another rather than fragment apart, because electrifying last-mile households is no longer the impossible part it once was. It’s building an electricity system where distributed energy strengthens the broader economy instead of quietly hollowing out shared infrastructure.

Other Reads

Liquidity Is the Missing Elixir in Impact Investing. Harvey Koh (Dalberg/Transform Finance) and Ben Smith (Paul Ramsay Foundation) recently penned an article on impact investing’s biggest and least discussed barrier to growth: illiquidity. They note that truly catalytic investments are often inherently illiquid because they fund markets and sectors conventional capital avoids, which helps explain why impact portfolios skew heavily toward private markets. But this creates a major challenge for institutional investors like pension funds and foundations that still need cash flow, benchmarks, and exit pathways. So they point to emerging solutions: impact secondary funds, continuation vehicles, listed impact structures, and liquidity guarantee facilities. Overall, they argue that the future growth of impact investing may depend less on proving returns vs. impact tradeoffs and more on building functioning liquidity infrastructure around the sector.

Widening the Lens: Mapping the Evolving Landscape of Financial Inclusion Funders. CGAP’s report studied 2,000 new capital providers in financial inclusion. 90% were private actors (VCs, commercial banks, asset managers) without explicit impact mandates. Interestingly, they found that over half of funders were headquartered in emerging markets. This signifies an exciting shift of localization; but potentially higher risk of fragmentation. It highlights how “legacy’ funders can best influence the newbies: (1) encourage newcomers to share their data (2) smart subsidies and impact-linked incentives in high-impact areas where commercial margins are small or risks are too elevated for these commercial investors.

Listening Corner

I’ve never really ventured into psychedelic rock, but I’ve recently discovered a Korean singer, Kim Jung-mi, popular in the 70s. Kim was a protege of the “Godfather of Korean rock” (Shin Joong-hyun), and released her landmark album called Now. But in 1975, President Park Chung-hee declared rock music as “depraved” and began purging foreign music (including any protest songs, like Bob Dylan) and any local psychedelic rock. So her albums were pulled from the shelves and promptly destroyed.

While that prohibitive era around music is long gone, any physical copies of her albums are gone – as is she. She’s rumored to have left Korea and started a new identity abroad. Luckily, her music’s been revived and available online (and re-popularized by a tear-jerker K-drama, When Life Gives You Tangerines). It’s an interesting listen!

Here’s a cookie if you’ve made it this far 🍪 If this resonated at all, I’d greatly appreciate a like and subscribe!

In Ezra Klein and Derek Thompson’s book ‘Abundance’, they lay out the delicious but frustrating ‘everything bagel’ problem confounding American liberals’ attempts to build nice things. The bagel in question is not one you’ll find at a New York deli, but the torus that threatens all of existence in the movie ‘Everything, Everywhere, All at Once’.

Klein and Thompson’s point is right there in that title: trying to right every structural wrong within discrete projects has created a system in which public projects arrive decades late and over-budget.

The example they use is California’s High Speed Rail. Approved by voters in 2008, the system was meant to connect SF and LA by 2020. Almost two decades later, no one has ridden this train. The project timeline has doubled, the budget has tripled, and all we can expect by 2033 is 171 miles of rail - about a fifth of the way from the Golden Gate to Venice Beach.

How did this happen? Klein and Thompson showed how project managers tried to:

• Prevent any environmental degradation through an extra-inclusive review and comment process

• Address worker pay through the exclusive use of union labor

• Make the project locally inclusive by adhering to the zoning and permitting laws of every township and municipality that the train passes through, without eminent domain

Planners were trying to do more than connect a region; they were trying to change everything about the way that big things get built. But nothing moved.

Impact investing has an everything bagel problem

Impact investing contains a similar tension. Impact funders want to grow good companies solving important problems. Unfortunately, the world is full of important problems. So the apex funders (DFIs, corporate foundations) operate across multiple countries and sectors, and work through dozens (if not hundreds) of intermediaries. They are investing in cocoa in Ghana, plastic waste in India, entrepreneurship in Bolivia, and so on. Each of those problems has its own context and risks, and collectively those dwarf the expertise and judgement of any one institution - better to use intermediaries, with their localized knowledge.

But now what is happening on the ground is out of your control, and likely beyond your understanding. And yet the risks still come back to the funder. If, for example, a carbon project developer is found to be making untraced cash payments to local power brokers, there could be huge reputational damage to the institution and you, the human who made a decision to fund this mistake.

The easiest way to solve this principal-agent problem is to combat macro exposures with micro compliance. Larger and larger teams - legal, ESG, risk, compliance - start requesting more and more paper: gender action plans, environmental and social management systems, child labor policies, forced labor exclusions, end-of-life management plans. Everything, everywhere, all at once.

And again, each of these goals are not just good - they are vital! But when we layer those expectations - and lest we forget, the reporting obligations that come with them - onto an early-stage company or the funds that invest in them, we make it impossible to run or invest in a real-life business.

When Ideal Economies Meet Real Businesses

The former CEO of an off-grid solar company told me in an interview about how his company had, simultaneously, received pressure from its investors to:

• Verify that their supply chain had no forced labor in it;

• Come up with end-of-life solutions for batteries in a region where not a single recycling facility existed;

• Reach poorer households; and

• Become reliably profitable

For example, the company was asked to plan and budget for end-of-life battery recycling in a way that American firms, with a vastly more developed infrastructure, still are not today.

More generally, he was frustrated with the idea that his relatively tiny company should be expected to address giant political and economic issues beyond his control. In his view, by starting a business in one of the toughest markets on earth he was already tackling one massive problem: energy poverty. The rest was beyond his control. One thing he said stuck with me: “the ideal of being part of those solutions was conflicting with any part of being a real business.”

Why Social Enterprises Are Not Development Projects

That conflict, between an ideal economy and a real one, is a tension that will never - probably should never - leave impact investing. Mission-driven companies are for-profit businesses AND social experiments. They are explicitly promising to achieve social goals as well as financial gain, and that brings them under the umbrella of international development. Most of their funding (especially in early years) comes from government agencies or philanthropy, both of which have established structures for measuring and monitoring the impact of development projects.

But social enterprises are NOT development projects; they are for-profit companies selling products or services at a profitable price to a willing buyer. And so those measurement structures fit uneasily on companies that need to operate in difficult markets, manage FX and political risk, keep their costs manageable, cultivate talent, and above all: focus.

The Hidden Tax of Impact Capital

The other piece of administrative creep is the unkillable growth in diligence, in fund-level restrictions and compliance. A side letter from a public or quasi-public LP used to be a dozen pages long; now anything under a hundred is a relief. Tripping even minor wires - a social enterprise failing to implement an Environmental & Social Action Plan, e.g. - carries the threat of funding pauses or clawbacks.

Collectively, this amounts to a tax on socially-minded companies and funds. My colleague Julia Mensink highlighted a case of a social entrepreneur who explicitly preferred to raise capital from commercial investors, because they did not want to handle the extra hassle and cost of impact investors. I see their point: those obligations eat directly into your margins, literally raising the cost of the impactful product you’re trying to produce. And that tax is regressive. A full-time impact reporting team might be manageable for a $100M business, but small companies face an impossible reporting burden, at a time when they should be tightly managing their cash.

Impactful companies operate in risky environments filled with uncertainty. Requiring those firms to be compliant with a long and growing list of requirements may feel like the risks have been reduced, and probably some have. But 50 years of institutional sociology have shown us that these types of requirements more often create an industry of compliance, without changing the realities of the business.

Revenue Is the First Impact Metric

I’ll say here two things that I have only ever said over drinks:

First, the greatest evidence of impact is when a person in poverty is willing to pay for a product/service. That transaction tells us that the solution has actual value for the people we purport to serve. And assuming the unit economics are sound, it has a pathway to scale: profit.

Consider a company like Ampersand, that sells electric motorcycles to taxi drivers in brutally competitive markets. Those drivers are sophisticated economic actors. If thousands of them are willing to take the risk of parting with their hard-earned cash, that is powerful evidence. Ex ante, it is the strongest signal we have that the company is solving a meaningful problem in a way that customers value.

We still need to understand how a product or service is contributing to solutions (for Ampersand, that’s e-bikes saving emissions and money). But once we’re convinced and the investment is closed, the indicators we as impact investors care most about are:

• Revenue growth: the solution is reaching more people

• Repeat customers: it is delivering value over time

• Free cash flow: there is a pathway to scale.

I’m not saying revenue always equals impact. Credit, third-party payors, subsidies - these can warp that revenue-impact link, and require more diligence. Businesses can change their product mix and their target customer. But we over-index for that risk. I co-wrote a report on Acumen’s failed investments - a tiny fraction of investments succeeded financially but not impactfully.

What is much more common is that we expect a for-profit business to serve everyone, and it turns out they can only serve the customers who can afford a solution. That’s not a moral failing, it’s financial gravity. Expecting otherwise is how we end up treating companies like projects.

What Impact LPs and GPs Should—and Shouldn’t—Expect

The second: our role as impact investors is to help a social enterprise do what it already does, just do more of it. Absent illegal or immoral practices (i.e. it’s not okay to pay bribes just because you run a good school), we should give entrepreneurs a break on all the things they need to solve and track. We should expect them to address the risks that are material to their business model, to be transparent and act in good faith. And then we should expect them to become the largest, most sustainable, version of themselves.

Growing revenue by serving low-income households is difficult and valuable, even if it is not transforming labor markets or shifting cultural norms. We cannot expect farmers to sit on boards, or for companies to become policy laboratories. Our baseline expectations need to shift from expecting (for example) a mini-grid operator to solve for power and jobs, or power and migration, or power and child labor. If we fund them to solve for power, and we’re VERY lucky and work VERY hard, power is what we’ll get.

I agree with Maoz Brown: impact investing should be hard. But it should be hard because finding deals that make the world a better place and are legitimately additive is hard. We should not make life harder for visionary entrepreneurs, we should make it easier. That’s how we get more of them.

Right-Sizing Expectations

Now let’s get practical. First, let’s right-size expectations:

• If you’re making less than $1M in revenues operating in an emerging market, then LP and GP focus ought to be on building your capacity, not making you compliant.

• If you’re between $1M and $10M, you should have systems in place to mitigate the second and third-order issues created by your model.

• Bigger than that, you should be fully compliant (and also maybe talking with other large social enterprises about how to streamline and standardize reporting).

FMO has been a great example of this in our portfolio: in earlier-stage agri-businesses, they have adjusted their risk management to a capacity-building approach. Acumen flags the areas of weakness in a potential investee, but barring severe red flags, these are marked as conditions to be addressed subsequent to our investment. For smaller companies, this is a great way to approach legitimate social and environmental risks.

Second, let’s add value to the business, instead of detracting it. The CEO I mentioned above was deeply proud of the work his company had done on gender. It was something they felt strongly about, that was clearly linked to their mission, and that had positive ROI. Investors provided valuable TA to enable that work.

Impact investing at its best

Back to the bagel. Klein and Thompson argue that what we need is less ‘legitimacy of process’, which inherently favors inaction over action. Instead, we need to “fall back in love with outcomes”. Take the high-speed rail example. Over the same period that California built 171 miles of rail (2008-2024), China built 24,000 miles; enough to ride around the world.

The comparison with China is both uncomfortable and revealing. The legitimacy of the Chinese government is not derived from stakeholder inclusion, but from an inexorable focus on delivering better outcomes for most people. The New York Times had an article last year on a village underneath the highest-voltage power line in the world. People talked about sparks shooting off of umbrellas and shocks when they held metal fishing rods, but few “dare object”. Yet that same line is powering a green revolution by connecting vast solar arrays in the northwest with huge EV factories in the southeast.

Marc Dunkelman, author of the book ‘Why Nothing Works’, said recently that “[liberals] have a fantasy, and we’ve had it now for several decades, that if you get everybody in the room early enough in a planning process, you can create a product or an outcome that has no trade-offs.” We may not love a decision that leads to a pond having a warning label about electrified fish. That trade-off is real. But these are the kind of difficult decisions that, made over and over, reduced China’s poverty rate from 58% in 1999 to 0% today. That kind of success breeds legitimacy: 6 out of 7 Chinese respondents in the Edelman Trust Barometer say they have confidence in their government to do the right thing, the 2nd highest in the world.

Impact investors are obsessed with how we can grow our tent. The answer is not through omni-compliance or a fantasy of zero tradeoffs. The answer is through ambition, achievement, and outcomes. Social entrepreneurs want their companies to be great. Good investors help them to focus on the problem they’re trying to solve. Ultimately we will all be judged, not by the risks we mitigated, but by what our capital delivered for the people we purport to serve.

We talk about climate adaptation the way we talk about eating vegetables.

Everyone agrees it’s necessary. No one is quite sure how to make it appealing.

To date, the case for adaptation has been framed around avoiding losses and minimizing damages. It’s always serious and important, but also fundamentally unexciting – not a hunger-inducing pitch for private capital. Today, private investors account for 8% of adaptation finance, and even a smaller share in developing markets.

And yet, almost every company is actively adapting to survive in a hotter, more volatile climate. Nearly 90% of companies are taking hazard-specific steps to protect their operations (MSCI). Adaptation tech activity is increasing (JP Morgan). And energy transition investment has reached an all time high (Bloomberg).

So the risk management case is clear, and is being acted on already. That’s not adaptation’s messaging issue.

The more overlooked half of the story is adaptation as an enticing growth opportunity.

MSCI Institute’s latest report – The Hidden Adaptation Economy: A New View of Corporate Resilience and Opportunity found that companies aren’t just protecting their assets and supply chains - they’re building and selling tools that help others do the same. The market is more established than we realized; nearly half (47%) of large and mid-cap companies in the MSCI ACWI index are getting paid from resilience-enabling products and services – like insurance products or precision irrigation systems. As Jay Koh, Founder and Chair of the Global Adaptation & Resilience Investment Working Group writes in the report foreword,

“Adaptation and resilience investments are not confined to a handful of specialist firms. They are hiding in plain sight.”

In other words, adaptation is a key ingredient across the economy, often without being labeled, measured, or sold as such.

So why does it still feel like such a hard sell?

Part of the reason it’s underappreciated is structural. Unlike mitigation, adaptation rarely presents itself with a clean, standalone revenue line. You can measure the carbon avoided and assign it a price; adaptation is messier. The benefits that are shared, localized, or realized over time – and avoided financial losses don’t show up neatly on an income statement. That’s meant there’s a stubborn gap between what adaptation needs and what private capital can finance.

It’s why adaptation has been seen as the government/philanthropy’s thing – seawalls, early defense systems – the boiled broccoli of adaptation. Again, necessary – but it’s not what gets investors excited.

“Adaptation assets are challenging because the revenue line is not apparent (unlike mitigation). Largely because they are shared services, shared infrastructure, so paid for by funding structures by taxes, grants and the likes,” says Andrew Johnstone, CEO of Climate Fund Managers in a recent webinar.

What is appetizing: when resilience is baked into products and services people already want.

Take agriculture. Tech like solar-powered irrigation from companies like SunCulture are often framed as climate resilience tools. They are. But for farmers, the immediate value is something more tangible: yields increase by 5 times, water usage drops significantly, and input costs fall by 30-50% compared to diesel alternatives. Resilience is not the product – it’s a natural byproduct of an item that’s already commercially compelling. For investors, the appeal is simple: predictable farmer incomes drive consistent repayments, making these systems feel less like risky ag bets and more like distributed infrastructure with recurring revenue. And if shocks happen, farmers are better able to recover due to their increased incomes (Acumen).

Of course, not all adaptation can (or should) be driven by private investment alone. But even here, the pie is shared more than it first appears. In a 2°C world, McKinsey estimates over half of the $1.2 trillion adaptation costs will go into protecting against heat. 50% of that spend will come from private actions by households and firms (think cooling and asset protection). Then 30% will be public goods like early warning systems, and 20% will be things in between – public or concessional capital to absorb risk and crowd in private investors

Which brings us back to vegetables.

The challenge was never convincing people of their benefits. It was making them desirable enough to become a choice.

Adaptation is at a similar inflection point. The narrative is shifting from an obligation to an opportunity – to something that can generate real, tangible value. In the hands of the right chef, it turns out that vegetables are pretty damn delicious.

We invite you to share your favorite adaptation deals… and/or veggie recipes in the comments below.

On Sarah Bieber’s mind: Beyond “capital I” infrastructure

Meet Sarah Bieber, the Head of Climate Strategy at Acumen. She’s spent the last 15 years working in energy and climate (7 in off-grid energy at USAID). At Acumen she’s helped mobilize over $200M of capital towards energy solutions in Africa. Plus, she has the unique superpower of being able to talk to rooms full of high ranking government officials and multi-millionaires, while also unpacking complex issues in a way her two kids can understand.

So two questions for Sarah Bieber:

What does it actually take for humanity to live and adapt on a hotter planet?

We keep talking about resilience like its roads and seawalls – and yes, we need those – but why aren’t we investing in what households themselves would buy?”

Air conditioning is still a luxury in most of the world, but heat is already slowing productivity, disrupting supply chains, and limiting how many hours people can work – particularly for low-income laborers and informal workers. That’s an enormous market. So where’s the innovation?

Affordability will need to be a huge piece of it. As people make spending decisions, they weigh cost-effectiveness, feasibility, etc. Until there is an affordable AC that runs on solar, it might be that passive cooling and fans are the more cost-effective, physically feasible option for now. That said, if we can put a rocket on the moon, why can’t we build an affordable AC that runs on solar?

We need better sloganizing. Something that hits people in their everyday lives – what would my mom care about? Not ‘20 years from now,’ but right now: can I work, can I keep my home cool, can I feed and protect my family?

Billions of people are already living this reality. They’re not beneficiaries or problems to be solved – they’re customers.

Where should we be looking for climate solutions?

Well, will climate risk just be another ‘perceived risk’ that keeps investors away from investing in emerging markets? I would say only at those investors’ own peril.

There are huge market signals of demand in these regions which have billions of customers that are highly exposed to climate stress and shocks, so if traditional investors don’t see opportunity there, they have a blind spot – particularly when there are catalytic capital providers, DFIs and guarantors out there de-risking a lot of these projects and companies.

The climate solutions that will have a competitive edge in these markets are not going to be coming from Silicon Valley but rather from Karachi or Mumbai or Nairobi or Lagos or Bogota. Because that is where the demand is, and where the exposure to climate stress is a part of everyday lives – in a way that more privileged parts of the world just don’t experience in the same way.

Other Reads

A new framework for stress-testing investment portfolios against nature-related shocks. Earth Capital Nexus (LSE) and Norges Bank Investment Management created a framework to evaluate the financial impact of nature-related shocks on companies. One unsurprising finding: nature risk isn’t confined to high exposure sectors, but is felt throughout entire supply chains (including tech and energy systems). And nature risk can vary as much within a country as between countries.

Bending the Climate Change Curve by Blending Finance: What Is The Real Potential Value Added of Guarantees? This paper from two authors at the Finance for Development Lab set out to discover when (not if!) guarantees add value. They found that guarantees are often overestimated in theory and underperforming in practice; and progress will come through incrementally improving pipelines, FX solutions, prudential treatment, and market infrastructure – not a single breakthrough reform. In particular:

1. They’re MOST effective when they lower the cost of capital for viable mitigation projects, help standardize/aggregate/scale portfolios, overcome investor segmentation and misperceptions, and build pipelines through MDBs, DFIs, and national institutions.

2. They’re LEAST effective when there’s no revenue streams, weak institutions, or poor project prep.

Listening Corner

Speaking of blends, I’ve been listening to Claude Bolling’s cello & jazz piano trio album (featuring the great – Yo-Yo Ma) on repeat while parsing through reports for this post. It’s a beautiful blend of classical music and jazz – the drums tapping in midway just adds a little layer of unpredictability to make it alive.

Suite for Cello & Jazz Piano Trio: II. Concertante

My recent thought: the fear that ‘classical music is dying’ is a bit overstated. There’s so many different ways it’s evolving to new audiences. What would the show Bridgerton be without its classical-pop renditions to beckon the youthful watchers to a timeless era? Or the number of rappers with grandiose orchestra openings that feel anything but old? The composition might look radically different than it did half a century ago (nor be counted as “pure” classical music), but the instruments are still doing the work.

I wonder if we ought to look at adaptation and resilience in that same way. We tend to look for them in their “purest” forms and conclude they’re hard to finance, scale, etc. But like classical music, they’re not a disappearing art – they’re slowly woven into everything else.

Stay tuned for more recommended tunes!

Meet Amina, a 31-year-old farmer managing four acres of leased land in Western Niger state, Nigeria (Amina is a fictitious character that represents the impact results and voices from real smallholder farmers in Nigeria, as reported in the 60 Decibels Resilience Deep Dive Impact study). Amina and her neighbors can clearly recount the devastating floods that ruined their crops and livelihoods last year, sending Amina and her community into a state of desperation. Amina recalls, “[When] flooding occurs in my farm, I don’t know what to do. I will just leave it.“ The hardship meant cutting down on essentials, such as three meals a day for her and her family and education for her eldest child for the remainder of the school term.

Niger State is known to be one of the most vulnerable regions to climate change in the world, having seen increasing variability of rainfall with extreme flooding followed by periods of drought, resulting in near-impossible conditions to cultivate rainfed crops with traditional methods. However, thanks to Cropsafe, Amina now has access to critical inputs, climate-smart farming training, and water pumps to prevent her fields from being destroyed by flooding. Today, Amina has bounced back and feels more prepared than ever to withstand future climate shocks. “I’ve learned to use organic fertilizers to allow my soils to better withstand flooding,” she says, “and I’ve applied chemicals ahead of time to protect my crops from pests.”

Challenging and erratic conditions similar to what Amina experienced are no longer confined to hypothetical climate models. They are part of the day-to-day experience for millions of people and disproportionately impact smallholder farmers like Amina who live below the poverty line. It is estimated that at the current rate, climate change could push over 100 million people below the poverty line by 2030. The impact we’re seeing with companies like Cropsafe proves that we can unlock the necessary resources to create an ecosystem that will enable farmers to adapt and build their resilience. To address the size of the challenge, we need direct, patient, and intentional investment with robust measurement methods in place to understand the most effective business models for building smallholder farmer resilience. This insight will enable us to magnify the impact of every dollar invested.

Defining Climate Resilience

Climate resilience is defined as farmers’ ability to adapt, absorb shocks, and access critical services. For over 20 years, Acumen has invested in more than 50 agribusinesses that are building farmers’ resilience by:

• Improving farmers’ ability to use adaptive climate-smart agricultural practices;

• Improving access to key enablers, such as market access and credit, and;

• Supporting the farmers to build up sufficient savings to bounce back from any climate event.

For example, KaFresh provides farmers with an organic coating to spray on their produce to improve its shelf-life 10 times, significantly reducing post-harvest losses and increasing the incomes of the smallholder farmers. Oorja provides solar irrigation as a service, significantly increasing farmer yields and incomes. This is absolutely key as these farmers operate in drought-prone areas with unstable energy supply. Our investments contribute towards a diverse market of innovative products and services that will enable farmers to build resilience and thrive despite the impacts of climate change.

While our companies continue to iterate their business models, we help them learn about the unique climate change risks farmers face on the ground by bringing the farmer’s voice into the pre-investment and post-investment process. We’ve developed a dedicated resilience tool to assess and track farmer profiles across the three pillars of resilience: their ability to adapt, absorb shocks, and access to critical services.

To build resilience, there is no silver bullet, but rather a menu of services

We first piloted the resilience tool on Cropsafe, one of Acumen’s recent investments under Trellis, a philanthropically backed venture investing initiative. Cropsafe is a farmer allied intermediary business model that aggregates agricultural produce, provides access to value-adding drying services, and provides market access to over 3,000 smallholder farmers. Beyond their core offering, Cropsafe is a one-stop shop for many farmers with relevant information, technologies, and training, specifically training to build farmer capacity in climate-smart agricultural practices. For example, the company offers training on no-till, which requires farmers to avoid turning (or disturbing) the soil to maintain moisture and soil structure, a core practice in regenerative agriculture.

Through Trellis, Acumen will better understand how resilient farmers are by assessing how many adaptation practices they are actively using, how many enablers they have access to, and whether they have easy access to emergency funds in the face of a climate shock. The tool further helps Acumen better understand how Cropsafe contributed towards the farmer’s resilience, and finally how we can build the resilience of smallholder farmers year-over-year, generation over generation by identifying areas of improvement. The table below provides the indicators assessed across the pillars of resilience.

Impact Measurement for impact validation, leading to Impact Management

Assessing Cropsafe’s smallholder farmers across these three core pillars gave us insight into their resilience and how Cropsafe has contributed to it. Farmers acknowledged the positive impact of the company on their livelihoods, and Cropsafe scored well beyond industry standards.

1. Adaptation Practices: Cropsafe trains farmers in climate-smart agricultural practices. On average, farmers apply 3.9 out of 7 recommended adaptive practices. This adaptability has led to 87% of farmers reporting increased production and 94% reporting higher earnings. 81% of the farmers reported their improved usage of adaptation practices because of Cropsafe.

2. Access to Enablers: Cropsafe ensures farmers can access critical resources such as quality seeds, fertilizers, and finance. Furthermore, 118 out of 202 farmers with reliable water sources were supported by Cropsafe to introduce irrigation into their farming practices. Garba, a farmer near Kano, emphasizes, “Irrigation is to farming what money is to banking. It determines the success of the season.” On average, farmers access 4.5 out of 7 enablers, boosting their resilience and productivity, and 80% of farmers indicated that their increased preparedness for climate shocks is a result of Cropsafe.
   

3. Absorption of Shocks: Resilience is also about absorbing shocks, not solely adaptation. Cropsafe supports farmers in building financial reserves that are key in bouncing back after a shock. 93% of farmers indicate that Cropsafe has improved their ability to access the means necessary to recover from unforeseen events, ensuring their livelihoods remain intact.

Digging even deeper into the results, Osagie Azeta, the founder of Cropsafe, shared that what sets Cropsafe apart is twofold: 1) Cropsafe, through their drying services, is able to pay smallholder farmers highly competitive prices three months earlier than other buyers who do not offer drying services, and; 2) Cropsafe is dedicated to long-term impact by providing training, inputs and pro-bono services in return for farmer produce at a future date. 99% of respondents reported an increase in their quality of life, and the company achieved an impressive Net Promoter Score of 90 out of 100, validating Cropsafe’s impact aspirations and demonstrating that farmers value the services. But the real impact of the study was the action it allowed Osagie to take:

1. Identify which agricultural practices Cropsafe needs to introduce into their offering, or double down on, and;

2. Recognize that Cropsafe’s extension services and agent network should leverage individuals from the communities that they’re serving. Doing so enables Cropsafe to build trust and establish their commitment to the community for the long run.

Building a resilient future is possible if we have the courage and patience

Cropsafe exemplifies the transformative power of building resilience. For Acumen, investing in businesses like Cropsafe is not a risky investment; rather, it’s risky not to invest. By investing Patient Capital into early-stage companies, we enable the time necessary to build adaptive, accessible, and absorptive practices, and we ensure that smallholder farmers not only survive but thrive in the face of climate change. As Osagie said, “There is no way to do this work without the support of Patient Capital.”

But companies and their solutions need more than just Patient Capital. They need more of the right type of capital and partnerships. The Global Resilience Partnership (GRP) together with 80+ partners collectively advance resilience through identifying and scaling on-the-ground innovation, generating and sharing knowledge, and shaping policy. Jesper Hörnberg, CEO of GRP, articulates the need for blended finance to lower the cost of capital, the very type of finance that enables Cropsafe to have the resources and time to build resilience. Jesper notes, “Blended finance can catalyze and unlock new funding flows, which can promote stability and enable resilience.”

GRP’s work with organizations, including UNDP, the Global Environmental Facility, the Near East Foundation, and Mountain Harvest who provides small-scale farmers in Uganda and Sudan with access to more fairly priced capital. GRP also works with the Shockwave Foundation and the Munich Re Foundation to support organizations and companies in East Africa with mentoring and capital through the Resilient Agriculture Innovations for Nature (RAIN) Challenge. Be it in Uganda, Sudan, or Western Nigeria it is clear that building resilience is possible with the right capital and right partnerships.

Acumen’s investment into Cropsafe’s journey shows that with patient capital and intentional support, a significant impact can be achieved despite operating in challenging environments. From this impact study, it is also clear that we can gather resilience data on smallholder farmers, deepen our analysis, and continue collaborating with partners to scale these impactful solutions. And finally, it is possible to achieve this impact while keeping the farmer at the core. The millions of farmers just like Amina deserve access to companies like Cropsafe, they deserve to be able to become more resilient, and they deserve to live dignified lives.

A couple more liters per day from the family cow; less income forked over for diesel to run the generator; a bit higher price for cocoa than the year before. The climb out of poverty is made up of incremental gains, a small but growing cushion for the inevitable setbacks, and no little amount of luck.

At Acumen, through investment initiatives like PEII+ and Trellis, we invest in companies that tackle problems of poverty. Although we have heard customers tell us for years that they saw improvements in their income, we had scant evidence for what that journey out of poverty looked like for an individual customer over time. This gap was especially evident with Productive Use of Energy (PUE) companies offering solar-powered appliances and services, as well as agribusinesses serving smallholder farmers. We wanted to put a number on customer income improvements, so we undertook a study to test new tools for measuring economic impacts over time. The results are in, and the evidence shows that social enterprises are, in fact, increasing the profitability of the farmers and micro-entrepreneurs they serve.

The research

We partnered with 60 Decibels to survey customers of three of our portfolio companies operating in the energy and agriculture sectors:

• Promethean: Through cold chain solutions and direct market access to farmers in India, Promethean expects to command higher prices for higher-quality milk, then use those premiums to pay farmers more than competing offtakers.

• Koolboks: Based in Nigeria, the company sells solar-powered refrigerators and freezers to shops and traders, ranging from a small, family-owned business to a large restaurant where a freezer is a fraction of the business operations.

• Lizard Earth: Lizard Earth works with cocoa smallholder farmers in Sierra Leone, providing them with training and market access, to improve the quality and price of the cocoa sold.

We worked with 60 Decibels to create a new method for measuring income changes over time. First, we conducted a baseline survey with recently onboarded customers who could recall their revenues and expenses prior to engaging with Promethean, Koolboks, or Lizard Earth. Second, we conducted an endline survey six months later to see how those revenues, costs, and profit had changed. Lastly, we complemented that data with monthly diaries and longer interviews to get a more holistic view of respondents’ financial health.

Drivers of income

Through those studies, we were able to identify and quantify the drivers of income, or the levers that enable companies to impact customer earnings. Rather than focus on total household income (which can come from multiple sources and is affected heavily by external forces), we looked closely at where companies can directly impact their customers’ earnings.

Our companies usually try to improve revenues and/or decrease costs for micro, small, and medium enterprises (MSMEs). An MSME can range from a cocoa smallholder farmer, to a small, family-owned business, to a large restaurant that uses a solar-powered freezer.

Since this covers all my household expenses, I have no problems. Payments are received on time, and I have household milk available, so I don’t have to buy it.

Dairy famer, Promethean

Promethean

Take, for example, Promethean. As you can see in the diagram below, the company connects dairy smallholder farmers to buyers, with prices determined by the quality and quantity of the milk. It also provides last-mile refrigeration to reduce spoilage. Farmers are expected to spend more on feed and cows, but to benefit through increases in the size and yield of their herds. By focusing on drivers of income, companies like Promethean can actually identify the levers they can control, measure their impact, and take appropriate action.

The survey results of Promethean’s customers closely matched its theory. Farmers sold 27% more liters per cow and 42% more liters overall. This increase came from three factors: better feed (which causes cows to produce more milk), less spoilage due to Promethean’s milk chillers, and larger herds because of access to credit. Costs for the median farmer almost doubled because farmers were investing more in feed and agrovet services. But those costs were small in comparison to the absolute revenue increases, which meant profits increased 61% at the median.

Koolboks

By using Koolboks’ solar-powered freezers, MSMEs can reduce their cost of utilities, increase their revenues by staying open for longer periods of time (even during power outages), and reduce losses due to food spoilage.

When customers were asked how much they spent on “power” and “related costs such as fuel and generator,” the study found that the company was successful in eliminating the need for diesel generators for refrigeration purposes. Median power costs fell 100%, with average costs down 40% (note that most customers purchased their Koolboks freezers in cash, but those who purchased on credit may or may not have included their loan payments here). Paying utilities was the largest expense for 34% of respondents at baseline; at endline this fell to 11%. While significant inflation made it difficult for households to see increased profits, the company succeeded in what it set out to do: drive down power costs for MSMEs.

Despite the present economy meltdown, my income keeps increasing due to the increase in my sales everyday.

Frozen goods seller, Koolboks

Lizard Earth

Through Lizard Earth’s training and assured market access, cocoa farmers expect to see improvements in volume and quality in the short-term, as well as an increase in the price for their product.

The survey results showed that the median price received per bag of cacao beans was 88% higher at the endline, although this was at least partially due to the global cocoa price hike during this period. The price and earnings received by farmers who were making the least amount of revenue at the baseline were even more pronounced. Those farmers increased their profits by 192% on average. This was a factor of both increased productivity (up 16%) and increased price (up 110%), while farmers who were already earning more revenue at the baseline reported less improvements in cocoa yield and quality. This data suggests that impact is closely related to the starting point of the respondents, and people living on less experience the greatest impact.

The changes I am seeing in my plantation are slow for now, but I believe it is a process; it will get better someday.

Cocoa farmer, Lizard Earth

Takeaways

There are three main lessons we take away from this research, with lots more in the report.

1. Measure what companies can control.

While we saw positive results on the drivers of income that companies sought to shift, overall household incomes for the median household fell for two out of three companies (Koolboks by 41%, Promethean by 28%). When people talk about poverty, household income understandably comes to mind. But total household income is rarely attributable to a single product or service. According to one study, the average household in Kenya had 10 sources of income.

Household income is also affected by macroeconomic forces like inflation or world market prices. Over the course of our study with Koolboks, a Nigerian-based company, the country’s economy experienced one of its worst periods, with inflation surging to 34% in June. While neither our companies nor their customers are immune to larger market forces, we undertook a study to look at what our companies could control. For example, we learned that Net Promoter Score (NPS) and challenge rates —metrics that companies can control — can be proxies for income increases, which investors can use to understand the impact of the company on its customers.

2. Productive use of energy (PUE) companies and innovative agribusinesses are building economic resilience despite macroeconomic factors.

Across all three companies, income from the relevant MSME increased as a portion of household income. While these interventions did not provide a silver bullet in turbulent times, they did provide stable sources of income. When economies grow, companies’ interventions may help customers grow even more. And when economies struggle, company interventions very likely help customers build resilience; without these interventions, customers could have fallen even deeper into poverty.

3. Impact changes over time. Our tools should acknowledge that.

The preparation and implementation of these studies took 18 months, but if we want to understand the long-term impacts of social enterprises, it will take a lot more time and data. Longitudinal data like this helps both companies and investors understand the customer journey and identify what can be improved. Companies need time to iterate and refine their product or service, Patient Capital to invest in their operations, and data to make better decisions.

The only way we can know if we are getting closer to solving problems of poverty is by measuring our progress and the impact of our companies. We are committed to doing that in a way which reflects the lived experience of customers and is useful for companies. We hope you will join us in this work.

Each year over 10 million young people enter sub-Saharan Africa’s workforce, yet only about three million formal jobs are created. This leaves most youth to build their livelihoods in the informal economy. While this is usually cast as an unfortunate inevitability, many youth view it as a definitive choice. They, especially young women, are drawn to the autonomy, flexibility, and daily income that informal work provides. And while there are real challenges that come with the informal economy, young workers would like to see it supported and scaled rather than replaced or eliminated.

As part of the research process leading up to Acumen’s new report with BFA Global, Dignified Futures: Youth Aspirations and the Search for Decent Work in Nigeria, we conducted 90 in-depth interviews and focus group discussions with men and women ranging in age from 18 to 30 across Nigeria. Their message was clear: Although they need decent work opportunities to break out of poverty, they are not waiting. They are working, building, and striving to make a living, shaping economies that don’t always work for them.

“A lot of us have degrees, but it’s hard to find jobs in our field, so we drive to earn money in the meantime,” said a female driver in Lagos.

“I worked for a hailed mobility company for a year and two months,” said a male driver in Enugu. “I’ve been on my own for three years and eight months now. I enjoy the flexibility of this job.”

“I feel good and quite comfortable,” said an informal retail employee in Enugu. “Although I am aspiring to expand, for now, I am not dissatisfied. My goal is to import high-quality clothes and goods from places like Turkey, and cater to a more specific clientele.”

We spoke with workers in transportation, healthcare, creative, retail and trade, and agriculture. Across all five sectors, we found that they managed portfolios of work like gigs, small-scale trading, and community services that contribute to their income and their drive for purpose and stability. This layering of livelihoods is the reality for 93% of Nigerian workers.

“Many of these guys have side businesses,” a transportation employer in Lagos told us. “They’re doing gig work to make money to invest in their actual life’s purpose…a farm, shop, or salon that they really want to do.”

In addition to the Dignified Futures report, Acumen and BFA hosted a webinar in April about unlocking decent work for youths in Africa. All the experts on the panel emphasized that, rather than forcing all youth into formal jobs, we must recognize that formal and informal work will co-exist for decades to come and thus must design interventions that make informal work more viable, secure, and dignified.

“Where we are now as a continent and as a country is that the informal sector will still be the largest employer of labour for decades,” said Sanmi Lajuwomi, founder and CEO of Winock Solar.

“There will always be formal and informal work,” echoed Molade Adeniyi, CEO of Teach for Nigeria. “Let’s appreciate that and reshape our thinking.”

The Lack of Security in Informal Jobs

While informal work offers flexibility and income, it often lacks critical elements of security, such as income stability, social protection, and benefits, which are equally important. Without buffers against life’s shocks, many youth and especially young women remain one crisis away from sliding deeper into poverty.

One woman who works as an informal healthcare employee in Kano shared her reality with us in the Dignified Futures report:

“I often go two to three months without payment. When I do receive allowances, they are very low. My motivation for continuing the work is primarily to help society, no longer for financial gain.”

Importantly, the burden of informality is not gender-neutral. Many systems sideline young women who carry the weight of unpaid care work, cultural expectations, and workplace exclusion.

However, innovators are showing that security can be designed into informal work. For instance, the start-up Awabah in Lagos, with a mission to bring financial security to the informal economy, offers micro-pensions and insurance to independent workers and small entrepreneurs, providing long-term financial safety nets that are tailored to the risks and realities of their livelihoods.

Likewise, Turaco, a micro-insurance company, provides affordable health and life cover to low-income earners and informal workers. By embedding insurance into digital platforms and employer benefits, it protects users from common shocks like illness or income loss, helping them stay resilient while they work.

These companies are demonstrating that security is not only about formal contracts, but can be embedded in platforms, market linkages, and support systems within the informal economy itself, through technology, partnerships, and policy.

“The face of the informal sector is feminine and (that) is deliberate,” said impact expert Femi Balogun at the webinar. “The systems within which we’re working have continued to marginalize women.”

“Safety nets can be designed within informal work,” said Sanmi Lajuwomi, CEO of Winock Solar. “We don’t need to wait for the government. In our own spaces, what are we doing?”

“Intervention should not just be about how we get young people to survive, but how we get them to thrive,” added Femi Balogun.

Using Productivity to Scale Decent Work

Beyond security, productivity is the missing ingredient to scaling decent work. While many youths are working hard, they are often trapped in working poverty, unable to afford a living wage or build the lives they want. They need support to transition from survival-level work to sustainable businesses. That means unlocking ladders out of poverty. Some companies are lighting the way, particularly in embedded finance, e-commerce, and mobility.

Consider Moniepoint, which is helping small informal retailers access working capital, expand inventory, and grow daily earnings, using transactions to build credit history where there used to be none. Or Pricepally, which connects small-scale food traders directly to steady markets, boosting their incomes through larger, more stable sales channels.

Companies like these are critical because they increase the productivity of informal businesses and independent workers through logistics, access to capital, and market linkages. This enables them to stabilize, expand, and create and improve decent work opportunities that not only facilitate prosperity but also meet youth aspirations, incentivizing their longevity in work long enough to build the resilience they need to break out of poverty.

Building Ecosystems to Support Decent Work

Productivity can lift informal livelihoods from survival to stability, providing ladders out of poverty. Security provides the nets that catch them when shocks occur. Both are necessary for decent work to thrive.

At Acumen, we have concrete insights into what young people want from work. We know they are actively shaping their work paths, and we are seeing models that make informal work more viable and decent. What we need next is a shift to building ecosystems that support decent work at scale, integrating ladders and nets.

This blog, like the report and the webinar before it, asks that we design interventions for decent work for youths not from assumptions, but from youth voices, with the tools for productivity and safety. It is an invitation for us to collectively build an ecosystem that enables decent work to thrive for young people and women across Africa.

“What young people want isn’t a job; it’s work that works,” said journalist Salimah Ebrahim at the webinar.

Ladders help youth rise. Nets keep them safe. We need both.

This greenhouse, purchased for only $667 from Acumen investee Kheyti, revolutionized the economics of Krishna’s farm. He added an entire new growing season, doubled his income, and repaid his greenhouse in 18 months. But there’s a catch: That greenhouse cost $1,200 to make. So who footed the $533 difference?

Enter venture philanthropy, which directly subsidized the cost and de-risked thousands of early adopters like Krishna.

Today, Kheyti has brought the production and product costs down to make their operations financially sustainable. This was a necessity; philanthropy alone cannot subsidize the cost of greenhouses indefinitely. But Kheyti could not have gotten to this stage without that initial subsidy.

The changing face of subsidies

Subsidies have always fueled transformative industries, from automobiles to aviation to the Green Revolution and the Digital Age. The corporate giants of today, firms like Google, Tesla, TSMC, and Huawei, owe their very existence to government grants and procurement contracts. Subsidies now underpin huge swaths of the global economy, both for good ($168 billion in renewable subsidies) and for ill ($7.1 trillion in fossil fuel subsidies).

The use of public money to support private business always creates political tension. From energy to agriculture to healthcare, governments are grappling with the costs — both political and fiscal — of propping up entire industries. In the U.S., disputes over healthcare subsidies lay at the heart of the recent government shutdown. In Europe, subsidy wars are reshaping trade alliances and testing budgets.

In emerging markets, subsidies face a different challenge: Most governments simply lack the fiscal capacity to subsidize innovation at scale. And yet, in these very contexts, subsidies have proven catalytic and unleashed markets for clean cookstoves, mobile payments, and off-grid solar — industries that now reach millions. Unlike wealthier economies where governments foot the bill, these subsidies often come from philanthropists, impact investors, iNGOs, and foundations.

At Acumen, we believe in this broader, more dynamic definition of subsidy. It’s not just government aid but any capital that absorbs risk and helps entrepreneurs build markets, ideally for social good. When done right, it can accelerate innovation, fix broken markets, and pull tomorrow’s solutions forward. Impact investors and those who share our mission have a critical role to play in making that happen.

Designing smarter subsidies

Years of operating on the leading edge of venture philanthropy has honed our perspective on subsidies. We view them as neither inherently good nor bad; they’re as effective as their design and the market allows.

At their best, subsidies can de-risk innovation, fund early R&D, and bring proven products within reach. At their worst, they can distort markets, muddy price signals, and misallocate resources without delivering meaningful change. For example in India, 70% of groundwater wells are in critical condition today because decades of subsidized electricity for farmers encouraged the over-pumping of groundwater.

Paradoxically, subsidies can actually discourage innovation by shielding organizations from the market discipline of developing scalable, self-sustaining business models that will stand on their own when public support moves away. But the answer is not to abandon subsidies or tip-toe around them. The answer is to recognize their value, their risks, and their finiteness.

For companies leveraging subsidies to deliver critical services, we have seen the following factors be essential to success:

• Address a clear market failure: Solving, not distorting. Subsidies must be grounded in need, in the case of clear market failures, and drive meaningful, additional progress against those failures. In cookstoves, for example, the positive externalities of reducing deforestation were not priced in — a market failure that carbon credits addressed.

• Send the right price signals. In the balance between affordability and sustainability, establishing the right pricing points is key.

• Have a sustainable source of revenue with a long-term plan. Poorly designed subsidies often lack an exit plan, and blanket price reductions are costly. Kheyti was eventually able to scale into a price point that the market could bear.

• Target well. The best subsidies continuously refine targeting, leveraging data, digital tools, and behavioral insights to maximize impact and minimize inefficiencies.

Case study: SunCulture and the art of stacking creative capital

Let’s look at these keys to success in practice with one of our investees, SunCulture.

SunCulture operates in Kenya and Uganda. In Kenya, where 98% of agriculture depends on rainfall, only 16% of land receives enough rain due to climate change. Smallholder farmers thus have to contend with lower crop yields, productivity, and income. The irrigation systems that do exist in the market today run on diesel, which is prohibitively expensive for poor farmers and pollutes local ecosystems.

SunCulture’s pumps are solar-powered. Once they’re installed and paid for, farmers can avoid the ongoing financial burden of diesel and vastly improve efficiency, reliability, and yields. But the upfront cost of a solar water pump ($500 to $1000) is often more than a smallholder farmer can afford. To bridge this gap, SunCulture combined carbon credits, results-based finance (RBF), and used their Pay-as-you-Grow platform to offer farmers a consistent, subsidized price.

Taking our keys to success one by one we see:

• Clear market failure: Yes, the negative externalities of diesel and positive externalities of solar were not reflected in the respective cost of pumps or fuel.

• Send the right price signals: Definitely. SunCulture is not giving away pumps or selling at a fraction of the price. They reduce the cost by ~30%, which still requires significant commitment from farmers.

• Sustainable in the long-term: To be seen, but if SunCulture can scale to hundreds of thousands of units, it will be able to reach these same customers with little or no subsidy – and can continue to increase pricing for its carbon credits.

• Targeted: Difficult to narrowly target in markets without robust social registries and identification (such as Rwanda’s Imibereho), so many subsidy programs operate based on technology (i.e. subsidizing all solar water pumps).

In Togo, SunCulture partnered with Bboxx-EDF, Shell Foundation, and the government, which covered half the deposit of solar water pumps. This drove rapid uptake across their markets. Already, 93% of SunCulture farmers report increased production and 87% increased income, showing the potential to scale across Kenya and beyond.

SunCulture’s long-term strategy is to slowly phase out the subsidy from results-based finance and solely rely on carbon credits. This doesn’t just make products cheaper. It builds a financial ecosystem where subsidies serve as a bridge to better livelihoods.

The way forward

Markets are failing people in poverty. While the risks of distorting those markets are real, the unequal impacts of climate change demand urgency and risk-taking. Rather than abandoning these mechanisms, funders, governments, and iNGOs should strengthen existing tools and finance what works. More specifically:

We need smarter subsidies with better safeguards and strategic partnerships. This requires stronger data, rapid feedback loops, and regulations that understand and protect lower-income households. In many emerging markets, public capacity is thin, which is where the private sector must step in.

There will always be a role for governments. We need subsidies across all stages of a company’s lifecycle. Just as early-stage Silicon Valley innovation was funded through DARPA and defense contracts, we need R&D funding for cleantech solutions to reach proof of concept. To scale, companies need support to find the right price point, establish value, and expand access, as challenge funds like the Energy Catalyst Challenge Fund have done.

Most of all, we need a mindset shift to make more long-term investments that take the risk. Markets like solar irrigation will take decades and billions of dollars to reach maturity. But market distortion can’t only be valid when done in the name of profit. Uber subsidized rides for years. We must extend the same grace to private companies that are delivering public benefits.

Many of the businesses that Acumen invests in, especially in sectors like energy, borrow capital from the U.S. or Europe but sell their products or services to local customers. This creates a structural imbalance: their revenues are mostly denominated in shillings or naira or kwacha, but their funding is overwhelmingly in dollars. When local currencies depreciate (which they do, often), revenues are suddenly less valuable. The implications are severe: companies are unable to order enough inventory, repay their debt, or attract additional capital. In acute cases, they may be forced to lay off employees. In short, foreign exchange (FX) swings are an ever-present threat to many companies’ survival in Africa.

Over the last two years, we have seen multiple successful companies brought to their knees by abrupt drops in the value of the shilling, the naira, and other currencies. Hedging that risk brings predictability but at a prohibitive, unaffordable expense. In this article, we want to make the case for urgently re-exploring solutions to FX risk and offer a place for interested readers (investors, companies, funders) to share their thoughts and ideas.

Why Local Currency Debt Is Out of Reach

In 1999, Barry Eichengreen and Ricardo Hausmann identified a condition they termed the “original sin” in financial markets: any situation in which a country is unable to borrow long-term in its domestic currency. They wrote 25 years ago that in the presence of this mismatch, “financial fragility is unavoidable.” They were writing about sovereign debt. But that same original sin – earning in shillings, borrowing in dollars – persists today for African enterprises, and it is the quicksand underneath the impact they have created.

Acumen invests in low-to-middle-income countries, where local currency debt is incredibly scarce. The chart above shows local debt as a percentage of GDP, and the bars are the median market in each of these regions. In sub-Saharan Africa, domestic credit penetration is low. Tanzania, the median market, has only 15.2% penetration. Kenya stands at 32%, while Nigeria is at 14%, and Ghana is even lower at just 12%.

Banks in those markets are well-run, quite profitable, and do not lend to small and growing companies, at least not without 100% or more collateral. Catalyzing more local lending is crucial, but it’s not the subject of this article. Suffice to say, companies in our portfolio cannot borrow in their local markets and are forced to look elsewhere.

International lenders exist, and some of the companies we invest in are eventually able to borrow from them. But much of that debt is denominated in so-called “hard” currencies – Tameo’s most recent report showed that 65% of impact debt in 2022 was in dollars or euros. One way or another, that creates a mismatch.

What does currency mismatch mean for companies?

From January 2023 to January 2024, the Nigerian naira lost more than half of its buying power. The Kenyan shilling lost 22%, and since the new year has appreciated 18%. The swings can be wild, and the dips are severe. Sadly this has been the reality in most of Africa, and throughout the world. Research from TCX shows that in any given year, one in eight low-income countries will see their currency depreciate 20% or more. One in 20 will see a 50% depreciation.

When a currency depreciates significantly, the operational excellence and positive impact of the companies we invest in do not diminish. Their products, talent, and market knowledge do not deteriorate (in fact the opposite). In 2022, the Sierra Leonean leone depreciated 60%, and the Ghanaian cedi lost 50% of its value. For companies operating there, revenues were suddenly worth one-quarter to one-half less to their hard currency lenders, unless they or their investors hedged their loans. And even if they did, short-term currency movements can make a well-leveraged company look exceedingly over-indebted in the short term, which in turn makes raising more capital difficult.

This puts entrepreneurs in a slowly-tightening vice. They can play roulette, and hope that this is not the year their number comes up (this strategy is not uncommon; one-third of impact debt flows were unhedged in 2022, per Tameo). Or they can pay to hedge their borrowing, adding hundreds of basis points (or thousands, in smaller markets) to their already sky-high cost of capital. Instead of making it easier to start a business in the poorest countries on Earth, companies are saddled with an extra tax.

What makes a company viable?

There is a view that hedging costs are merely a manifestation of the overall risk in emerging markets. If the prevailing cost of funds is 16%-20% (based on Aswath Damodaran’s data for the Weighted Average Cost of Capital (WACC) in emerging markets), but you need to add 8% in hedging costs to make revenues predictable, then you need a business model that works with a cost of capital of 24%-28%.

Unfortunately, there are far fewer business models that work at 26% compared to 7% (the WACC in America). And not so long ago, there were plenty of VC-backed startups that couldn’t make money even when rates were at or near zero.

The unfortunate truth is that the high cost of capital that companies face does not just reflect risk, it creates it. Our portfolio companies run out of inventory frequently, because they lack access to working capital, or are holding excess reserves to cover sudden swings in the value of operating currencies.

If we want to reduce the risk of investing in Africa over the long term, the only way to do that is by facing it today. In markets where users have less to spend, where infrastructure and talent issues abound, doubling the cost of capital is an unreasonable burden for companies. But it’s one that could be lessened.

Our purpose in writing this is to reinvigorate the discussion about more effective approaches to FX risk management, at both a micro and macro level. We’ll be clear right at the start of that discussion: we don’t have the answer. But let’s start with first principles: what should effective financing options for SMEs in emerging markets look like? In our view, they should be:

• Affordable. Debt financing ought to enable growth and profitability, not detract from either.

• Local. Local-currency financing resolves the mismatch between the revenue currency and debt currency. It is strongly preferred, and scarcely available.

• If not local, then equitable. If lending in hard currency, then the cost of hedging macro risks, such as FX movements, ought to be shared between borrower and lender.

• Wholesale. Certain firms, once they’ve become large enough and have low enough funding costs, have no trouble finding local currency funding. We need better solutions for all firms.

• Sustainable. Lenders need to make money as well, and so need to price in their own cost of funds and expected credit losses. Concessional and blended capital may be crucial to fulfilling these goals.

Mitigating FX risk in an affordable way is essential to achieving these outcomes. A number of solutions have been proposed, but not yet implemented. TCX (itself an institution launched to make funding more available for emerging market firms) proposed several initiatives in a recent white paper. Those included a vastly scaled hedging facility, a trust fund for currency risk guarantees, and a reduced dependence on hard cash collateral. An older (but sadly still relevant) OECD paper from 2017 called for more credit enhancement facilities, as well as more DFI-led lending operations that shared currency risk with borrowers.

Some innovative approaches have been tried and succeeded over the years.

• In 2005, Grameen Foundation partnered with a number of donors to create the Growth Guarantees program, which leveraged private contributions to deliver $32 million in guarantees from Citibank to local banks, which in turn unlocked $145 million in local currency financing from 19 MFIs in 12 countries.

• The Africa Local Currency Bond Fund was created in 2012 to help African companies issue local-currency bonds. By 2021 it had invested $229 million in bond issuances of 47 companies.

• And from our own portfolio, in 2020 d.light and African Frontier Capital structured an innovative off-balance sheet financing vehicle to provide d.light with local currency financing. The facility eventually purchased the shilling equivalent of $110 million in receivables, underwritten by the U.S. Development Finance Corporation and Norfund. It was fully repaid in 2024.

The common thread with these approaches is that they are mostly available for more well established companies. Younger, smaller companies remain price takers, with prohibitively high costs of capital. We believe that for companies of a certain smaller size, particularly those creating important social outcomes, first, hedging costs should be shared pari passu between impact investors and investees; second, we need a broader suite of suitable hedging products such as deliverable hedges to address convertibility risk in many of these markets; and third, Development banks ought to explore more structural solutions to reduce the cost of hedging.

This year brought sweeping changes to the global aid system and left a growing gap in development funding that philanthropy alone can’t fill. Yet, when used strategically as catalytic philanthropy — to take risks, test new ideas, and attract follow-on investment — philanthropy can unlock a more sustainable path forward.

“Catalytic philanthropy doesn’t just fund projects; it opens markets, builds confidence, and draws in the private investment needed to achieve impact at scale.”

Stacey Faella, Woodcock Foundation

While many professionals in the international development and investment communities have elevated the topic of catalytic philanthropy, the approach remains niche, and both international giving and innovation-focused giving are still a small fraction of overall global philanthropy. Given the urgency of this moment, Acumen and the Woodcock Foundation, a major advocate for catalytic philanthropy, teamed up to connect with people in our community to discuss the topic, share insights, and explore ways to accelerate the use of this powerful tool.

Philanthropists, entrepreneurs, and investors convened for dinner roundtables on catalytic philanthropy in Los Angeles, La Jolla, and San Francisco. Over a shared meal, guests exchanged perspectives on how philanthropy can serve as a catalyst for unlocking new forms of capital to address global challenges during a time of declining aid. Here are some major themes that surfaced.

Philanthropy as leverage

Catalytic philanthropy makes deals possible and draws in other investors by playing a critical role in absorbing early-stage risk, signaling viability, and attracting private investment to underserved markets. The risk tolerant nature of philanthropic capital can be used to prove and test models, which then provide commercial investors with the confidence to scale them. Acumen has seen this play out time and again with its investees and partners, who are able to scale solutions over time when the right kind of capital comes in early.

But one theme that emerged during our dinner series was that this approach does not always feel accessible to donors. Many people in a position to donate are unaware of more catalytic options and approaches. Foundations with endowments are a natural starting point. Because they have grant capital and investment capital to deploy across a range of asset classes with differing impact and return expectations, they are particularly well suited to utilize philanthropic capital creatively to mobilize additional assets and enable communities to share in wealth creation.

The Woodcock Foundation, for instance, commits 100% of its endowment to mission-aligned investments and targets catalytic investments for 5% of its portfolio, which it can use to support early-stage, proof-of-concept, high-risk ideas before they’re ready for commercial investment. Woodcock’s catalytic portfolio includes one of Acumen’s earliest investment vehicles and the more recent ALEG II fund, which invest in social enterprises and entrepreneurs in underserved markets.

Nonetheless, donors either don’t know that approaches like the ones that Woodcock uses are an option or feel actively discouraged from using grants to support for-profit or commercial endeavors. Increasingly wealth advisors are incentivized to discourage risky or non-traditional investments that could be extremely effective in unlocking capital or scaling an innovative business model with significant social impact.

Reframing roles and language

Our discussion revealed the need to reframe the role of philanthropy and perhaps even the language of philanthropy itself. Some of the participants in our conversations felt there was a stigma around the language of philanthropy, viewing the concept as inaccessible and expressing discomfort in identifying with it. There was shared concern over how tax incentives, jargon, and institutional gatekeeping (by advisors, firms, and even the language itself) form barriers to creating impact. The wealth management industry’s profit-maximizing norms and the perception of impact as concessionary were seen as obstacles, as was the lack of confidence and knowledge among wealth holders to challenge these norms. Many saw redefining the purpose of capital — from preservation and profit toward purpose and shared prosperity — as essential to cultural and systemic change.

Thus, we want to emphasize that this moment is not just about insiders and experts: We’re seeing the impact that individuals and families can have on unlocking catalytic capital firsthand. We heard a range of inspiring stories from guests: entrepreneurs who prioritized philanthropic giving even when they had student loans to pay; first-generation funders who were eager to ensure their contributions would achieve maximum impact, even when it meant shifting norms within their own families; and wealth advisors and philanthropy professionals looking for ways to empower their clients with new tools.

“Giving back has always been a priority for our family, even when we didn’t have much to give. Now we want to find ways to give back that align with our values and our own experiences as entrepreneurs and investors.”

Roundtable dinner participant

Sharing insights and redefining success

We were incredibly fortunate to have a diverse group of leaders at our dinner tables, spanning entrepreneurs, investors, and funders alike. However, those at the table noted that spaces for talking openly about lessons learned, areas of uncertainty, and failures were often hard to find. Guests expressed a strong desire to exchange insights and lessons, not just transactional opportunities, and recognized that knowledge-sharing fosters collaboration and accelerates systemic change. There is growing interest in collective action across diverse stakeholders and a desire to find communities that are more comfortable with risk and innovation.

Moving forward: Hope and generosity shine through

This has been a year of upheaval, setbacks, and threats to communities and institutions that value collective well-being. Nonetheless, we were overwhelmed with an enduring spirit of generosity and a continued love of giving at all of our discussions. Catalytic philanthropy is not simply about direct impact. It is about leverage and ultimately unlocking new market-based solutions by taking early risks, validating models, and strengthening ecosystems. It provides the bridge from declining aid to sustainable development, aligning investors, entrepreneurs, and governments on a new path forward to create lasting, systemic change.

Acumen has invested in Energy Assured Nigeria, a last-mile provider of mobile solar irrigation pumps for rice farmers in Northern Nigeria. The investment deepens Acumen’s commitment to powering livelihoods with clean energy, helping smallholder farmers and microentrepreneurs in India and Africa become more efficient, profitable, and climate resilient.

Smallholder rice farmers in Northern Nigeria rely heavily on diesel pumps that come with high fuel costs, operational volatility, and exposure to both market and climate shocks. With the vast majority of Nigeria’s arable farmland lacking irrigation, yields remain low and incomes fragile. Energy Assured addresses these constraints by providing trolley-mounted solar water pumps that are mobile and affordable, stabilizing access to water and unlocking additional cropping cycles that strengthen long-term resilience.

The company’s core innovation is its cluster irrigation-as-a-service model, in which groups of five to 11 farmers pay a flat monthly cluster fee of $56 for shared access to a solar pump for the season. This brings the effective cost for an individual farmer down to as little as $9 per month — a dramatic reduction in the upfront affordability barrier that has long prevented widespread adoption of solar irrigation. Farmers can also pay by selling produce to linked buyers, such as local mills or aggregators, to reduce inflation exposure and credit risk.

Together, these features represent a first-of-its-kind model in the region. Early outcomes highlight its potential: 95% of customers accessed solar irrigation for the first time through Energy Assured, 100% of income-generating users reported higher earnings, and 86% saw a significant improvement in quality of life. The company has impacted more than 20,000 smallholder farmers and avoided over 45,000 tonnes of CO2 emissions.

“At Energy Assured, our work is grounded in the belief that clean energy should protect both people and the planet. With Acumen’s support, we can show that clean energy is not only affordable, it is essential for building a resilient, food-secure, and sustainable future.”

Ibrahim Aboki, Energy Assured Founder and CEO

Energy Assured is part of Acumen’s $25-million Pioneer Energy Investment Initiative (PEII+), which has invested in everything from portable solar dehydrators for fruits and vegetables to solar-powered cold chain solutions for dairy and perishables. Energy Assured’s preferred-equity investment will be disbursed in two tranches and will help the company procure more inventory and expand operations from its existing customer base in Bauchi and Adamawa to Taraba, Jigawa, and Gombe.

“The potential impacts from solar irrigation are clear,” said Bowofade Elegbede, Acumen’s associate director for portfolio, West Africa. “With most arable land in Nigeria still rain-fed, agricultural productivity remains low and farmers remain vulnerable to climate shocks. Energy Assured’s cluster rental model offers a compelling solution to making this important technology accessible and affordable for the farmers who need it most.”

Looking ahead, Energy Assured is focused on achieving greater impact at scale. The company plans to build two new fabrication centers that strengthen local manufacturing capacity and drive more widespread adoption of climate-resilient irrigation in a region that urgently needs it. With PEII+ as both an anchor investor and strategic partner, Energy Assured is positioned to demonstrate how productive use of energy can unlock meaningful economic opportunity at the last mile, setting a blueprint for climate-smart agriculture across Africa.

Today’s cocoa supply chain is not sustainable. Cocoa smallholder farmers only receive around eight percent of the value of an average chocolate bar, but they take the majority of the risk. When cocoa farmers are unable to adapt their farms and financially absorb a climate shock, their cocoa crops fail, and they lose a key source of income. And when their crops fail, those shocks are felt throughout the rest of the value chain. We’ve seen this through a chronically undersupplied industry, threats to biodiversity, and volatile market prices translating into higher prices for cocoa traders and consumers.

To chart a more sustainable path forward, CAF – Development Bank of Latin America and the Caribbean and Acumen, convened cocoa sector leaders for a two-part exchange in Colombia. The week began with a field visit to Asoseynekun, an Indigenous producer organization in Pueblo Bello that grows and sells cacao to responsible buyers like Acumen investee Cacao Hunters. Through horizontal knowledge exchange, participants shared their respective experiences and actively compared production methods, post-harvest practices, and organizational models.

Discussions then moved to Bogotá, where entrepreneurs, investors, corporations, and sector organizations gathered for a closed-door convening to align on shared challenges and co-create pathways toward a more resilient cocoa supply chain. Participants included social enterprises from across Latin America and West Africa, alongside representatives from international nonprofits like Solidaridad and multinational corporations like Mars.

There is no single blueprint or three-step plan for sustainability. Each participant brought their own unique perspective and priorities: living income, productivity, price stability, biodiversity. But they all agreed that a decent, stable livelihood for cocoa farmers was a critical component of achieving a more sustainable cocoa supply chain and that shared roadmaps were needed to help align the industry. Here’s a look at the major themes that emerged and the roadmaps that participants designed.

Shared goals and structural barriers

We kicked off the main discussion by asking participants to envision what they wanted the cocoa sector to achieve by 2040. We then dove deeper into what it would take for the sector to accomplish these outcomes. By asking participants what they considered to be the biggest challenges and barriers in the industry, and then pushing them to design a roadmap towards a more sustainable sector, we surfaced key conflicts, identified outcomes we could agree on, and recognized where more dialogue was needed.

Four themes emerged:

1. Prioritizing productivity or sustainability? There is a wide variety of intersecting and sometimes contradictory problems to solve. For example, some participants noted that farmers are encouraged and incentivized to improve the productivity of their cocoa farms. However, this may at times be at odds with sustainability. If cocoa farms are designed to produce as much as possible, this might come at the risk of deforested land or failing to plant other crops.

2. Cocoa is a business of working capital. In order for enterprises to be able to absorb shocks and swings in the global cocoa market, and to ensure that farmers get a fair and stable price, they need affordable and sufficient working capital. However, social enterprises struggle to access affordable working capital given that many lenders view the sector and farmers as “too risky.”

3. Traditional business and finance will not work. The loss of funding sources like USAID has meant that cocoa producers and social enterprises can’t rely on traditional financing mechanisms.

4. Sustainable solutions will take a village. Private sector initiatives need public sector support and alignment. Even within the private sector, social enterprises can share innovative approaches with corporations, and social enterprises must be in constant dialogue with farmers to ensure they are meeting their needs.

A roadmap for a more resilient, sustainable supply chain

Leveraging these insights, challenges, and opportunities from the discussions, participants moved towards co-creating roadmaps toward stronger cocoa value chains. Participants were divided into three small groups to ideate around action plans and strategies. Groups laid out the following three outcomes with their respective proposed approaches:

Outcome 1: Ensuring that at least 10,000 producers in 3-4 cocoa-producing countries can improve their productivity at a correct, fair, and remunerative price.

Approach 1: While cocoa producers struggle to access capital and investment, interventions through social enterprises can help them learn adaptive practices that can improve the productivity of their farms. In turn, those social enterprises will need technical assistance and short-term working capital in order to deliver training and reliable market access to farmers. This could look like partnering with current working capital providers and understanding what they need to make loans more affordable and accessible, or creating a new facility to help enterprises weather the shocks and volatility of the sector.

Outcome 2: “Premiumization” of chocolate and educated consumers willing to pay premium prices.

Approach 2: Increasing consumer willingness to pay for traceable, high-quality, and deforestation-free chocolate could drive “premiumization,” channeling more income to farmers. Consumer education could take place through mass marketing campaigns or partnerships with corporations.

Outcome 3: Making cocoa production attractive and profitable in the long-term for the next generation.

Approach 3: Participants recognized that they wanted to see a future for cocoa, not only in 15 years, but in 30 years and onwards. To achieve that, actors across the industry need to lay the groundwork now for future generations. In order to do this, participants proposed an educational program that could offer “learning tracks” to youth in agriculture, where they could learn about improving productivity, value-add processing, farm diversification, technology, and farm financial management. Through a program focused on professionalizing the industry and educating younger generations, youth could see a future for themselves in cocoa.

Prioritizing impact across the value chain

As a development bank, CAF will continue to promote multi-actor dialogue, help catalyze capital and partnerships, and support knowledge exchange to advance more resilient and inclusive value chains for the benefit of its 24 Latin American and Caribbean member countries. Acumen will continue to support and invest in innovative social enterprises, offering Patient Capital, insights, and networks that enable market-based solutions to scale

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