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Acumen Fund March 30, 2007

Design Lessons from


Exited Investments

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

• 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
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Project Impact: Affordable hearing aids

Grant $400,000
2001 India

• Goal: Design, manufacture and distribute high-


quality, 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 $324,000
2001 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 long-
term 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 $430,000
2002 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 $208,205
2002 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
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utilized.
Aravind – Lessons Learned

• 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 $325,000
2002 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
• Strong public-private partnership
– A to Z, Sumitomo, ExxonMobil, WHO, UNICEF

• Rapid expansion in production, now ramping up


12 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 $185,000
2004 India

• 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 $300,000
2004 India
• 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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