Agriculture is an important source of livelihood for our target population…Percentage of population dependent on agriculture2010
India Pakistan East Africa
44% 46%
77%
600 M PEOPLEin Acumen Fund’s geographies are dependent on agriculture and living on less than $2/day
2
…and low productivity means low income
Agricultural Productivity
Value added per worker, USD, 2005-07
Agricultural productivity in our geographies is 60x lower than in high-income nations.For smallholder farmers, critical, crop-enhancing inputs are offered at unaffordable price points and farmers lack access to the market.
460
888
367 324191
27,557
High-
inco
me
natio
ns
3
We have grown our agriculture portfolio over the last 5 years
4
Agriculture Portfolio
Other Portfolios
Investments Approved$ MM
Agriculture portfolio accounted for nearly 40% of our work this year and is 22% of our total portfolio
7.7
10.9
11.3
5.1
13.3
15.6
We have a mix of debt and equity investments in agriculture
5
Agriculture Portfolio - IUM
Equity/Quasi equity($9.8 MM, 8 companies)
Working Capital Debt($3.2 MM, 1 company)
Term loans($1.9 MM, 3 companies)
Total = $14.9 MM, 9 companies
* We have invested both debt and equity in 3 companies, therefore total number of companies is less than sum across three capital types
…and have invested $14.9M across 9 companies
GEWP, India Micro Drip, Pakistan Jasser Farms, Pakistan
NRSP, PakistanJuhudi Kilimo, KenyaWestern Seed, Kenya
Extension services, IndiaGADCO, GhanaGADC, Uganda
Where in the lifecycle are we investing?
GEWP
Microdrip
Jassar Farms
Scale to increase customer /supplier
base
Creating
Validating
Preparing
Scaling
Develop idea
Create setup,
initial pilot and proof of
concept
Prepare business
model sustainabilit
y11
22
33
44
Western Seeds
Juhudi Kilimo
NRSP Bank
GADC
Time of Acumen investment
There are very few compelling seed stage investment opportunities
8
13
9
32
<$0.25MM$0.25MM- $ 0.5MM$0.5MM-$1.0MM> $1.0MM
8
Amount of Investment Requested2009-10
Total=62 conversations*
* During 2009-10, we had a total of 105 conversations in our agriculture portfolio, of which only 62 reached a stage where the amount of investment was known
Innovative agriculture enterprises typically need $0.5-1 MM to achieve major milestones
• Seasonal nature of agriculture means that it can take an entire year to change course and learn from mistakes leading to greater cash burn
• Barriers to adoption are typically higher as new products/ technologies may increase risk faced by farmersMost of the seed stage funding
requests were for incremental growth or to finance specific assets (e.g. to build a goat farm)
Local banks have been unwilling to provide peak season working capital debt as the company has no hard physical assets (e.g. plant, property)
Access to working capital finance to manage peaky nature of business
9
2.7x 30.1
x
GEWPMonthly Sales, 2009
Western Seeds Monthly Sales, 2010
Very critical to find working capital well in advance of the season as there is a 4-month period when the seeds are grown
Hiring and retaining quality talent while being based out of smaller towns
10
Compensation
Start-up Risk
Location (e.g.
Auranagabad, Narowal,
Kitale)
Applicable to most companies in our portfolio
Very relevant for our agriculture portfolio
Key Learnings..
• Small holders are scattered and reach is often expensive.
• Farmer Organization (FOs) can be a cost effective way of reaching these farmers however there are other challenges:– FOs are often geographic focused and might
have multiple intervention initiatives and hence might lack focus and commitment.
• Adoption of new technologies can take several rounds of demonstrations and hence larger cash burns for companies.
Key Learnings..
• Challenges to scale:– Distribution of product inputs can be easier to
scale given established infrastructure of distributors and retailers.
– Scaling of models where small holders are suppliers to a processor can be more challenging. Scale can be achieved through replication.
• Not enough investible opportunities out there:– There is a ‘Pioneering Gap’. Need more enterprise
funding with much greater risk appetite than investor capital.
– USD 20 billion in grant funding and soft capital flowed into the microfinance sector for 2 decades before the model became financially sustainable and investible.
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