For 25 years, GCFF member Acumen has invested in businesses serving low-income communities, helping advance the idea that financial returns and meaningful impact are not inherently at odds. As impact investing enters the mainstream, Acumen founder and CEO Jacqueline Novogratz argues that the sector faces a different challenge: turning investor interest into capital that is prepared to take the risks required to scale businesses and markets in the Global South.

In a recent episode of Devex’s Theory of Change podcast, Novogratz argued that the challenge is not simply a lack of capital, but that much of the available capital as “too expensive” and “too risk averse.” While development finance institutions, philanthropies, and asset managers increasingly seek both investable opportunities and impact, Novogratz asserts that too little patient capital is available to help promising enterprises—particularly early-stage and growing SMEs—become viable investments.

Through its investment model and recent work in climate-resilient agriculture, Acumen demonstrates how to support enterprises that require different types of capital as they move from an initial idea to commercial scale.

TAKING THE RISKS REQUIRED TO BUILD BUSINESSES

Acumen defines patient capital as investment willing to accept longer timelines and greater uncertainty while impact-oriented enterprises test and strengthen their business models. Through Acumen Ventures, the organization uses philanthropic capital to take risks that conventional investors may be unwilling to assume during the earliest stages of enterprise development.

This support is particularly important for businesses operating in underserved markets, where companies may need to develop not only a product but also the surrounding supply chains, distribution systems, customer-financing mechanisms, and market infrastructure. Many SMEs delivering solutions in sectors such as sustainable agriculture, renewable energy, and waste management face these same requirements as they work to establish commercially viable models.

Acumen’s approach reflects its view that investable opportunities do not always emerge fully formed. Early patient capital can help entrepreneurs test demand, refine operations, and demonstrate whether a business model can produce both impact and financial returns. That process prepares enterprises to absorb larger and more commercially oriented investments later on.

MATCHING CAPITAL TO EACH STAGE OF GROWTH

Acumen uses the term capital continuum to describe the sequence of financing an enterprise may need as it progresses from testing an idea to expanding a proven model. Different stages require different instruments, investment sizes, and levels of risk tolerance—and therefore often different funders.

Acumen’s analysis of local cocoa processing in West Africa illustrates how these financing needs change as an agribusiness develops. An early-stage cocoa company may require grants for technical assistance and patient equity to acquire equipment, recruit employees, and demonstrate that local processing can be commercially viable. As the company grows, it may need larger equity investments to expand its facilities and affordable working capital to purchase crops, pay farmers promptly, fulfill orders, and manage seasonal cash flows.

The availability of capital does not mean that its terms fit those needs. Acumen reports that working-capital interest rates in Nigeria can reach 30%, making it difficult for early-stage companies to process cocoa locally even when doing so could retain more value within producing countries. Larger processors may face rates of 15–17% while requiring substantial financing to bridge the period between paying farmers and receiving payment from buyers.

Through these examples, Acumen argues that the financing gap is not solely about the total amount of capital available. The type, price, timing, and scale of financing must also correspond with the needs of the enterprise. For smaller and growing businesses, poorly matched capital may constrain an otherwise viable model or prevent it from reaching the scale required by larger investors.

No single investor is likely to provide every form of support across this continuum. Acumen therefore emphasizes stronger handoffs among philanthropic funders, impact investors, development finance institutions, and commercial investors. Early funders can support experimentation and help reduce risk, while later-stage investors can provide the larger pools of capital required for growth.

THE CAPITAL CONTINUUM IN PRACTICE

Acumen’s recent progress in climate-resilient agriculture shows how it is applying its capital continuum approach. In July, the Acumen Resilient Agriculture Fund (ARAF) announced US$90 million in committed capital to continue investing in growing food and agribusinesses that help African smallholder farmers adapt to climate change.

ARAF’s existing investments have reached more than three million smallholder farmers through 12 portfolio companies, with over 80% of those farmers reporting increases in income and yields. The new capital will expand the fund’s reach beyond East and West Africa into North Africa, with the goal of directly benefiting at least four million additional farmers.

The capital was committed by institutions including the Green Climate Fund, FMO, Proparco, Swedfund, BIO, and FASA. Acumen presents their participation as evidence that climate resilience can attract larger-scale investment when funders combine capital and structure it around the needs of agribusinesses and farmers.

ARAF represents the later-stage end of Acumen’s agricultural investment platform. Its early-stage Trellis initiative provides initial institutional investment to agribusinesses developing models that improve market access and climate resilience for smallholder farmers. ARAF can then provide larger investments to growing businesses prepared to expand those models.

By operating across these stages, Acumen seeks to create a more continuous path from experimentation to scale. Its model recognizes that patient capital cannot meet every financing need, but argues that it can help build the companies and markets in which larger investors are eventually able to participate.

For CEO Novogratz, the mainstreaming of impact investing is therefore not the end of the sector’s development. Acumen’s perspective is that its next phase will depend on whether investors move beyond expressing interest in impact and provide enterprises with capital that has the risk tolerance, flexibility, and patience required to achieve it. For SMEs delivering climate solutions, this kind of capital can be particularly important in building the operations and market infrastructure needed to progress from early promise to commercial scale.