New York-based nonprofit venture Acumen closed up on about $70 million funds to back companies delivering affordable and renewable energy to mostly poor consumers in East Africa. Founded by Jacqueline Novogratz the fund seeks to provide cheap power and competitive return.
KawiSafi Ventures a subsidiary of Acumen seeks to bring clean energy to 10 million people with investments in fast-growing companies. Early investors in the fund include TED curator Chris Anderson, the Skoll Foundation, venture capitalist Steve Jurvetson and the Green Climate Fund.
According to Bloomberg, impact investing has been accelerating, fueled by the interests of millennials and the threat of climate change. In the U.S., assets dedicated to the social good reached $12 trillion at the start of 2018, up 38 percent from 2016, according to a report from the Forum for Sustainable and Responsible Investment.
In Africa, millions of people don’t have electricity and typically resort to dirty sources of power. The Acumen fund will supply early-growth capital to help companies gain scale and reach more consumers with energy from solar panels. Some of the outfits had earlier backing from Acumen’s “patient” capital, which sets long time-horizons for investment returns.
Speaking in an interview Novogratz said, “We began to see the potential for off-grid solar as a major thrust for Africa to solve its electricity challenge.
“That’s where we got the insight that based on 10 years of energy investing experience and using patient capital, now we could help really grow those companies.”
Kawisafi started raising funds in 2016. The venture invests $750,000 to $10 million in the energy companies and has so far approved five investments, one of which is d.light, which manufactures and distributes solar products. The fund, which expects to exit all of its investments in 12 years, is seeking returns in the low-teens.
“What’s important to us is to show that it’s absolutely possible within more mature sectors like off-grid energy to build a vehicle that brings financial returns and social impact,” Novogratz said.
