I was reading online about this new book, The Blue Sweater, by Jacqueline Novogratz.  The concept intrigued me so I delved a little deeper into Mrs. Novogratz and began discovering wonderful things such as that she is the head of the Acumen Fund, a “social venture capital” fund that seeks to place “patient capital” into startups that offer a social benefit in an area of high need, like food and water for the poor.  The term “patient capital” was a new one for me, but on the Acumen web site it is defined as follows: (1) Long time horizons for the investment; (2) Risk-tolerance; (3) A goal of maximizing social, rather than financial, returns; (4) Providing management support to help new business models thrive; (5) The flexibility to seek partnerships with governments and corporations through subsidy and co-investment when doing so may be beneficial to low-income customers. Points (1), (2) and (4) really are no different than your run-of-the-mill “vulture” capital fund.  However, point (3) is really and radically different.  So different in fact that it inspired me to write.  “A goal of maximizing SOCIAL, rather than financial, returns.”  As Lily might say, “imaginase!”  In a world where the myopic pursuit of financial returns has reaped much social destruction, it is refreshing to see the whole idea turned on its head.  Adam Smith must be turning over in his grave to hear such idealistic and economically illogical views.  But Mrs. Novogratz is no stranger to hard-core capitalism, being a Stanford MBA and having cut her financial teeth as an international banker for Chase Manhattan bank. I have not had the pleasure yet of reading The Blue Sweater, but apparently the story is that she was doing volunteer work in Africa when she encountered someone wearing a “blue sweater” that she had donated many years prior.  The whole event made her think about how interconnected we all are and inspired her to use her financial “acumen” to make a difference, rather than just a profit, hence the ACUMEN fund.  My hats off to Mrs. Novogratz for pioneering a revolutionary concept that is long overdue as well as much needed.

Tags: Jacqueline Novogratz, Patient Capital, Social Venture Capital, The Acumen Fund, The Blue Sweater

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