I’ve been in Nairobi for almost three months now and life seems to have taken to me think­ing in frag­ments and bul­let points. My mind had been flooded with learn­ings, lessons, busi­ness plans, frag­ments of news, dis­cus­sions of devel­op­ment, con­flict, life of expats, impact assess­ments and where to make invest­ments count. It’s hard to seg­ment out the which bul­let points are worth shar­ing but to give some con­text on the dom­i­nant thoughts float­ing around, here’s a blog post that was pub­lished a while back on the Acu­men Fund blog on Oct 22nd. A lit­tle dated, but still rel­e­vant questions.

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Orig­i­nally pub­lished on Oct 22, 2012 on the Acu­men Fund blog. Repub­lished with permission. 

In the world of impact invest­ing, there is next to no time to rest. There is a sense of urgency to explore the bound­aries of this sec­tor and uncover the dynam­ics of suc­cess of a poten­tial invest­ment. In the best cases, you get an invest­ment approved and every­thing goes as planned accord­ing to your ini­tial memo. In the worst cases, you get stuck in the trenches, pre– and post-investment, fight­ing to make each dol­lar count.

In this con­tin­u­ous process of explor­ing bound­aries, here’s a cou­ple of lessons I’ve learned and ques­tions that I’m con­stantly ask­ing myself, which per­haps, you might be too.

Human­iz­ing Mar­ket Creation

As I dive in deeper into the health­care and nutri­tion sec­tor in East Africa, I was reminded by a col­league of a great video by Seth Godin at last year’s Investor Gathering.


Seth Godin dis­cussing mar­ket cre­ation at the 2011 Investor Gathering

The dri­ving ques­tions at hand: how do we human­ize mar­ket cre­ation? How do we teach peo­ple to use prod­ucts they have never used before? How do we con­vey the value of our ser­vices and prod­ucts of our port­fo­lio companies?

This is when we aim to have two-way stories—to become part of the fab­ric of the com­mu­nity and co-create along­side the investor com­pany. Mar­ket cre­ation is more than just get­ting con­sumers to use our ser­vices and prod­ucts. Good mar­ket cre­ation is about teach­ing and fun­da­men­tally chang­ing con­sumers’ behaviors.

The Unre­li­able Narrator

I’ve become increas­ingly dis­trust­ful of my inter­nal nar­ra­tor lately. I’m slowly dis­cov­er­ing that impact invest­ment eval­u­a­tion is skewed heav­ily towards my inher­ited prej­u­dices of tra­di­tional invest­ments, at the expense of tak­ing into account the social impact. When I stop to con­tem­plate my actions, I find myself won­der­ing whether I am really lis­ten­ing and being objec­tive, or just nar­rat­ing back to myself what I think I heard.

It’s hard some­times to fully com­pre­hend the impact of what we eval­u­ate, espe­cially if you have not expe­ri­enced what it is like on the ground. This dis­trust means that when we are surg­ing for­ward in a sec­tor that is fraught with uncer­tainty and trade-offs, we need to be mind­ful of the con­text of the investment.

An Ode to Value

As an impact investor, our role is so much more than just being a trans­ac­tor of debt or equity to poten­tial investees. We have an oppor­tu­nity to become an ecosys­tem builder, and to lead the charge to solve mar­ket inef­fi­cien­cies. My daily chal­lenges are thus: are we cre­at­ing value pre and post our invest­ments and where do we draw the line of sup­port? How do we value a busi­ness that has neg­a­tive cash flows? How do we encour­age orga­ni­za­tions to move away from grant reliance? How far do we lean into risk for the sake of value?