Acumen Fund Design Lessons from Exited Investments

March 30, 2007

dkyle@acumenfund.org David Kyle: 1-646-747-3980

Objectives • • • Bring the team up to speed on exited investments Discuss the key lessons that have informed our investment process moving forward Brainstorm on how to share these lessons broadly and honestly, while maintaining confidentiality

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Acumen Fund’s exited investments to date • • • • • • •
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Project Impact: Affordable hearing aids Satelife: PDAs for disease management SSI: Immunosensors for low-cost disease testing Aravind Eye Hospital: Telemedicine for eye disease A to Z: Anti-malaria bed net production Mytry: Low-cost de-fluoridation filters Heritage: Peri-urban water distribution & finance

Project Impact: Affordable hearing aids
Grant 2001
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$400,000 India

Goal: Design, manufacture and distribute highquality, low-cost hearing aid in India Problem: 3% of required number of hearing aids in developing countries actually reach those in need, due to low margins for manufacturers Produced a device costing < $50 Distributed more than 10,000 hearing aids

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Project Impact – Lessons Learned • • • • • •

Importance of viable business model Understand customer preferences Test willingness to pay Need for strong sales team Challenges in distribution through governments and institutions in public health Grant-making often does not lead towards revenue-generation and scale

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SatelLife: PDAs for disease management
Grant 2001

$324,000 Global

Goal: Increase information available to healthcare workers in rural Africa through hand-held computers (PDAs) platform Problem: poor communications infrastructure leaves health professionals in rural areas without access to critical up-to-date information on diseases and treatments Pilot collection and analysis of data was successful -- 75% cost reduction in data collection Challenges with content and accessibility of information provided to health professionals

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SatelLife – Lessons Learned • • • • • Local context and resources matters Non-profit framework Need for solid business plan and clear longterm goals Role of institutions in public health Informed our approach towards investing in Voxiva, private healthcare informatics company

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SSI: Immunosensors for low-cost disease testing
Grant 2002

$430,000 Global

Goal: Portable, low-cost and easy-to-use device for dengue fever detection and potentially other infectious diseases (i.e., HIV/AIDS) Problem: 1/3rd the cost of current tests and in places where detection is almost non-existent SSI made technical progress, but have been unable to produce a portable diagnostic device ready for field testing. Innovative intellectual property agreement

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SSI Immunosensors – Lessons Learned • • • • • •

Early stage technologies International vs country-specific investment Focus of promoters Grant-making Investment management Intellectual property model for universities

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Aravind Eye Hospital: Telemedicine for eye disease
Grant 2002
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$208,205 India

Goal: Implementation of telemedicine to expand eyecare treatment and healthcare training Problem: 85% of the world’s blind (45m people) suffer from preventable blindness, but the poor can rarely afford the necessary eye surgeries. Aravind Eye Hospitals perform over 200,000 surgeries a year and see over 1.3 million outpatients. Effective cross-subsidy: 70% of patients are treated for free. Telemedicine platform successfully developed and utilized.

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Aravind – Lessons Learned

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Recognizing transformative social entrepreneurs Cross-subsidy and pricing for the BOP Valuing our technical assistance Grant funding vs commercial model

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A to Z: Anti-malaria bed net production
Loan 2002

$325,000 Tanzania

Goal: Technology transfer, production and distribution of long-lasting insecticide-treated bed nets (LLITNs) for malaria protection Problem:
– Of the 300m episodes of malaria that cause over 1m fatalities annually, 90% are in Africa – Bed nets are a cost-efficient solution, but prevailing short-term insecticide-treated nets are ineffective

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Strong public-private partnership
– A to Z, Sumitomo, ExxonMobil, WHO, UNICEF

Rapid expansion in production, now ramping up production to 7m nets/year

A to Z – Lessons Learned • • • • • • Effective customer-centric product design Managing partnerships Entrepreneurs who scale Investee relationship Role of institutions in public health Experimentation with private sector channels
– In 2005, Acumen Fund made a second investments of $400,000 to launch private sector LLITN distribution channels. In addition, a grant of $275,000 was provided for the provision of $3 net subsidies for low-income households

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Mytry: Low-cost de-fluoridation filters
Loan 2004

$185,000 India

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Goal: expansion of manufacturing and distribution of the household fluoride filters through dealer network Problem: Excess fluoride in groundwater appears in 17 states in India (66 million people at risk) Launch of a for-profit company for manufacturing and distribution Well-vetted and appropriate product design Logistics required us to convert to a grant; did not disburse final tranche

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Mytry – Lessons Learned • • • • •

Financial vehicle Product financing Need for effective marketing strategy Risk of sales to government Investee relationship -- transparency and communication

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Heritage: Peri-urban water distribution & finance
Loan 2004

$300,000 India

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Goal: Provide credit for community water infrastructure in 20 urban and peri-urban slums; demonstrate viability of community managed water supply and application of credit for water. Problem: irregular and intermittent water supply, heavy time and resource commitment from women and children Quantifying the opportunity costs of “free” but intermittent water supply Heritage ultimately did not access Acumen Fund’s investment due to technical and logistical challenges

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Heritage – Lessons Learned • • • • •

Financial structuring challenges Challenges of multiple priorities Focus on water storage – “Ripple Effect” Innovator vs Entrepreneur Key risks to look for in Water Portfolio pipeline

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Issues for Discussion

• Cross-cutting issues from these 7 investments • Ongoing relationship with exited investments • Communicating exits and sharing lessons publicly

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