Investors should foster greater 'ethical creativity' according to Jacqueline Novogratz
Jacqueline Novogratz, CEO of Acumen, a venture capital fund focusing on social impact investing, envisions a form of capitalism that is more inclusive. She believes in emphasizing "moral imagination"—the ability of investors and business leaders to look beyond short-term financial gains and consider the long-term social impact of their investments.
Founded in 2001, Acumen has invested $301 million in 225 companies through philanthropy and for-profit impact funds. Novogratz's vision is to create transformative, sustainable change by making smaller, risk-tolerant investments in underserved markets or businesses that provide critical products and services to low-income populations, even if they do not deliver immediate quarterly earnings.
Acumen's portfolio includes companies like D.light, which provides affordable solar energy systems that have reached over 190 million people across Africa and Asia. Another investment, EthioChicken, sells disease-resistant chickens to farmers in Ethiopia, producing five times as many eggs as local breeds. Beyond Good chocolate, which Acumen has invested in, makes beautiful chocolate out of Madagascar and Uganda, and its connection with Whole Foods has been game-changing for the company and the farmers.
Novogratz believes that partnering with governments or using new market instruments that put a price on externalities is necessary when working with poor people to achieve scale and use the market. She urges business leaders to invest for impact beyond the next quarter's earnings, stating that "crazy-small" investments can have a transformative effect.
Carsten Stendevad, former co-chief investment officer for Sustainable Investing at Bridgewater Associates, has been hired as Acumen's new president and CIO. With this addition, Acumen aims to triple its assets under management to $720 million by the end of 2026.
Novogratz believes that a groundswell of people are looking for new financial models and new heroes, and she sees this as a bottom-up movement towards creating solutions for the next place. She states that we don't want to have the conversation about trade-offs when it comes to solving our biggest problems of poverty.
Last year, more than 3,900 organizations managed $1.6 trillion in impact investing assets under management worldwide, representing a 21% compound annual growth in the total market since 2019, according to the Global Impact Investing Network. Impact investing is growing as ESG funds have fallen out of favor with the White House and its supporters.
Novogratz states that if we're going to build systems that include the people who've been overlooked and underestimated, we can't be so distant from them. She thinks that we need to start looking for new role models that are helping us create and build the solutions that get us to the next place.
Investing in businesses that prioritize social impact, like D.light and Beyond Good chocolate, aligns with Acumen's mission, founded by Jacqueline Novogratz in 2001. Novogratz, as CEO and a proponent of moral imagination, envisions a future where business leaders and investors consider long-term social impact alongside financial gains, aiming to triple Acumen's assets under management to $720 million by 2026.
