Acumen Fund CIO Describes Firm's Approach to Social Investing

The work Brian Trelstad does would be familiar to most chief investment officers. As the CIO of the Acumen Fund, Trelstad manages and measures the performance of the fund's $75 million portfolio. And he provides one of the public faces of Acumen Fund, educating the public about its activities. "In many ways we take a classic venture capital approach," he told a Yale SOM audience on January 25. "We're looking to satisfy our financial returns, but also to optimize social impacts."

It's that second part that separates what Trelstad does from many other investors. As a guest of Net Impact and the Social Impact Lab, he explained how the Acumen Fund is different not just from a traditional venture capital firm, but also most organizations looking to alleviate poverty. Acumen Fund, which was founded in 2001, seeks a new approach to fighting poverty by investing in social entrepreneurs who are building companies aimed at improving the lives of some of the world's most vulnerable people.

Trelstad, who joined the firm in 2004 after four years at McKinsey, sketched out the criteria that Acumen Fund uses in deciding which enterprises to support. First, the firm needs to believe in the entrepreneur and his or her vision. Not only must the social impact be real, but investing money in the enterprise must be the best way to help alleviate the particular social problem. There must be a real financial return, large enough not just to pay back Acumen's investment, but also sufficient to attract private capital. And there must be a potential for demonstration. "We're looking for breakthrough insights to get behind," he said. "We want it to be something that garners a lot of attention and creates real excitement."

For the first decade of its existence, Acumen Fund worked in South Asia and in East Africa, focusing on enterprises dedicated to housing, health, energy, agriculture, and water. Recently, the firm has been looking to expand its coverage, including a move into West Africa and into education. Trelstad is also now spending some time researching opportunities in the domestic market.