April 12, 2012

Acumen Fund’s Agriculture Portfolio

PARTNERSHIP FOR SCALING

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.

Thank you