Funding Proposal Fp005 Acumen Kenya and Rwanda

FP005: KawiSafi Ventures Fund
Kenya and Rwanda | Acumen Fund, Inc. | Decision B.11/11
October 26, 2015

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I. Brief Programme information
1.1 Programme Executive Summary

Acumen is raising a new impact fund, KawiSafi Ventures Fund (the “Fund”), that will seek to catalyze a
thriving off-grid solar ecosystem in East Africa, demonstrating that nations can leapfrog fossil-fuel grids to
clean energy. The fund will be comprised of portfolio companies in the clean energy sector in East Africa that
provide overlapping impact with primarily the climate change mitigation objectives of the GCF, but also will
have overlapping impact with the adaptation goals of the GCF. The Fund will initially focus on Rwanda and
Kenya, but may also expand to other East African countries such as Uganda throughout the life of the Fund.
We are requesting $20M of equity capital from GCF that will be invested in the Fund and $5M of grant capital
to be used for specific technical assistance purposes subject to an upgrade of Acumen’s accreditation status to
allow it to receive grant capital from GCF detailed in the sections below. Acumen will seek to upgrade
Acumen’s accreditation status.
Acumen is targeting a $100M total size for the Fund and expect that GCF’s anchoring investment will help
to catalyze the remaining investment capital into the Fund. Acumen will invest at least $5M and up to $7M
into the Fund and Acumen has also secured several verbal commitments from a group of individual investors
for the Fund. Acumen is targeting a first close of $40M by the end of the year, providing a strong foundation to
raise the remaining balance of the Fund in a second close.
This Fund would be one of the first, if not the first, of its kind in the sense that it is a climate change
focused fund that is targeting an ecosystem approach to investing in small-medium enterprises (“SMEs”) that
serve bottom-of-the-pyramid (“BoP”) customers. The Fund will seek to bring off-grid solar power and clean
energy products and services to a target of 15 million people in East Africa and will attempt to demonstrate a
blueprint to a clean-energy future that can be followed by other nations. The Fund expects that its investment
capital will be leveraged roughly 6:1 as the companies it will invest in will require additional investment
capital from co-investors and will also receive targeted technical assistance funding for specific business and
impact related purposes. Within the impact investing industry, it is the industry standard to account for lives
impacted based on the total lives reached by the company, not just lives that are attributed to the portion of
capital and single investor invested. More detail on the calculation and rationale for lives impacted is included
in sections below.
The Fund will seek to invest approximately $80M (after accounting for fees and expenses) in 10 – 15
companies. 60-70% of investments will be in businesses that have proven solutions to bring energy access to
the masses such as solar lanterns, solar home systems and solar mini-grids, while 30-40% will be invested to
build-out parts of the eco-system, which are weak or missing. Examples of investments in the latter category
include consumer financing vehicles, mobile payment and remote monitoring / meter technologies, and
working capital facilities.
The Fund is unique in that social impact is built into the operations and incentive structure of the Fund.
The Fund Manager will only achieve a share of the Fund’s profits if both a financial hurdle rate and Impact
target have been achieved. The financial Hurdle Rate for the Fund is a 6% IRR and Impact Target is15 million
lives impacted. The Fund Manager will receive 20% of the Fund’s profits only if it achieves the financial
Hurdle Rate and the Impact Target. If the Fund achieves the financial hurdle rate but only a portion of the
Impact Target, the 20% share in profits will be adjusted downward in proportion to the percentage of the
Impact Target achieved.
The Fund will track multiple social impact metrics of the portfolio companies and report those to the GCF
and the Fund’s Investors. Acumen will report on the number of lives impacted, number of
individuals/households with improved energy products, poverty levels of the households that have been
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reached, gender impact of its investments, and number of tons of CO2 reduced. The Fund may also report on
other metrics as it sees fit.
II. Financing / Cost Information
2.1 Description of Financial Elements of the Programme

The Fund is targeting an 11% Net IRR return to investors.1 The Manager has provided scenario analysis
on the financial projections of the Fund below. We have included a sensitivity analysis including 3 cases:
Target Case, Moderate Case, and Downside Case.
LP Investor Returns Potential Lives Impacted

Cash on Net Type # Lives
Target Achievment of Impact Target Cash IRR Success 3 4,000,000
Case Full Social Impact Target Achieved 1.7x 11.1% Steady 3 1,000,000
Minimum of Impact Target Not Achieved 1.9x 13.0% Loss 4 0
Totals 10 15,000,000
Investor Returns Potential Lives Impacted

Moderate Return Metric Cash IRR Success 2 3,000,000
Case Full Social Impact Target Achieved 1.4x 7.1% Steady 3 500,000
Totals 10 7,500,000
Investor Returns Potential Lives Impacted

Downside Return Metric Cash IRR Success 1 3,000,000
Case Full Social Impact Target Achieved 1.2x 4.2% Steady 4 500,000
Totals 10 5,000,000
Early stage enterprises require equity capital to finance growth until positive cash flow is achieved,
whereby they can attract debt capital. This Fund will provide both equity and debt capital to companies based
on their individual capital requirements. The long-term life of the Fund, 12 years with two 1 year extensions,
provides the time these innovative, early stage companies to develop, iterate, refine, and build financially
viable business models that have scaled social impact. The companies the Fund will invest in will be
addressing the needs of off-grid households, which are typically rural, low-income and difficult to reach. Thus,
the type of long-term investment capital that the Fund is required to invest in these enterprises as traditional
investors are weary of the risks and relatively long-time it takes to build companies and achieve a financial
return.
1 The Fund will make investments based on the Manager’s estimates or projections of internal rates of return and current
returns. Investors have no assurance that the Fund will achieve its total return objectives on its investments. In addition,
the Manager may adjust targeted returns to reflect any changes in market conditions.
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The Fund will invest in 10-15 enterprises. Acumen will conduct detailed diligence on all relevant aspects
of each investment, including the cost structure of each enterprise and the financial viability of each
enterprise. As such, the underlying cost components of each investee company will be detailed in specific
investment memoranda for those investments.
Acumen expects that the majority, if not all, of its investments will be denominated in US dollars or EUR.
Given the economies in which Acumen’s investments will be operating, and the cost to hedge currencies of
those economies, Acumen may not be able to secure a hedge for investments. In order to protect against
fluctuations in the value of local currencies, the Fund expects that the vast majority, if not all, of its
investments will be US-dollar denominated or EUR denominated investments. The Fund will put a cap of 20%
on investments that are not US dollar or EUR denominated.
Technical Assistance Facility (“TAF”)
Acumen is seeking to raise a $10M Technical Assistance Facility (“TAF”) that will be funded by grant
capital. Acumen anticipates that the funders of the TAF will be a mix of private and public institutions. The
purpose of the TAF is to augment the Fund’s investment strategy of building profitable, scaling, and socially
responsible businesses that serve BoP markets and provide a financial return to the Fund and its investors.
Acumen has more than a decade of experience investing in early stage investments that serve BoP markets
and understands the increased level of social and financial resources required by such companies to scale,
reach profitability, and track and monitor social impact metrics. The TAF will identify and address the core
needs of portfolio companies that will enable their scale and financial viability.
It is contemplated that the TAF will be governed by a Technical Assistance Committee (“TAC”). The
structure and governing policies of the TAC are currently under development. The TAC will seek to engage
with relevant stakeholders when making decisions related to uses of capital in the TA facility. Engagement
with local and appropriate stakeholders in the context of skills training and any interventions related to the
capital ring-fenced for consumer protection will be especially important.
The table below summarizes the potential uses of TAF funds and more details around the potential uses
are included below the table. TAF resources will not be used for capital expenditures.
Facility
USD
Allocation
Funding from GCF for consumer protections in case any of 30% $3,000,000
the solar companies become insolvent and/or declare
bankruptcy
Business Development Services (BDS) and Management / 25% $2,500,000
Employee Training
Funding from GCF for gender specific interventions 20% $2,000,000
Impact Monitoring, Evaluation and Annual Assessments and 15% $1,500,000
ESG Audits
Other (TA Audit Fees / Legal Fees / Corp Governance 10% $1,000,000
Improvements)
Total 100% $10,000,000
The following are potential uses of TAF funds:

1. Funding from GCF for consumer protections in case any of the solar companies become insolvent
and/or declare bankruptcy. Potential uses may include the following items:
a. Capital to service installed solar home systems in the event a solar company goes bankrupt,
most likely through partnership with an existing service provider
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b. Capital to facilitate an acquisition of / partnership with a defunct company by a viable

company so that consumers will still receive after-sales support
c. Mechanism to provide some level of monetary value to consumers for their purchased
products in the event of a company bankruptcy and the products can no longer be serviced
2. Business development support and employee training which will increase company efficiencies and
augment portfolio companies’ ability to pursue growth strategies:
a. Improve financial controls (i.e. upgrade accounting system)
b. MIS review and upgrades
c. Market studies to better understand consumer behavior
d. Market Feedback Survey to assist with product development
e. Develop plans to transfer proven business models across different markets
f. Conduct feasibility studies to increase market access
g. Implement operational review to improve production process or reduce costs
h. Improve distribution platforms
i. Build capacity to provide high-quality after sales-support to ensure products function
properly and customers have a positive experiences
j. Executive recruitment services
k. Enable access to industry experts across different markets to advise company management
l. Expand current management skills for company expansion and growth
3. Funding from GCF for gender specific interventions. Potential uses of this funding could include the
following:
a. Provide training to women to become solar technicians, sales agents and other related job
opportunities of companies working in the off-grid energy sector
b. Provide market education and consumer awareness to women about the positive health and
safety effects of replacing kerosene usage with solar products at the household level
c. Work with women-focused MFIs and savings groups to create demand for and access to
clean energy products
4. Corporate governance improvements:

a. Improve transparency and corporate governance structures
b. Appoint experienced practitioners/advisers at the board or management level
5. Investment impact monitoring and evaluation frameworks:

a. Monthly tracking of core output-level data on lives impacted and jobs created or supported
b. Data on poverty level of customers based on Progress out of Poverty Index, or similar
relevant measure
c. Develop the collection plan of outcome-based data with the company, complemented by
independent observational-based surveying
d. Support for improved company data management systems for impact tracking, including use
of mobile technology and cloud-based data management
e. Annual progress reports on impact
2.2 Project Financing Information
Target Programme Size Share of GCF Participation

USD 100 million for equity investment USD 20 million for equity investment
USD 10 million for a Technical Assistance Facility USD 5 million for a Technical Assistance Facility
(Grant)
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2.3 Financial Market Overview

The Fund is unique in that social impact is built into the operations and incentive structure of the Fund.
The Fund Manager will only achieve a share of the Fund’s profits if both a financial hurdle rate and Impact
target have been achieved. The financial Hurdle Rate for the Fund is a 6% IRR and Impact Target is15 million
lives impacted. The Fund Manager will receive 20% of the Fund’s profits only if it achieves the financial
Hurdle Rate and the Impact Target. If the Fund achieves the financial hurdle rate but only a portion of the
Impact Target, the 20% share in profits will be adjusted downward in proportion to the percentage of the
Impact Target achieved.
The Fund will seek to exit its investments within a 5-7 year timeframe and will seek to deliver a Net IRR
to investors of approximately 11%. Given the relatively early state of the impact investing sector, and more
specifically venture capital and impact investments in off-grid markets in East Africa, there are limited
relevant and comparable data points from other funds that could provide support for this target rate. Acumen
understands that this target rate is an aggressive goal, but it is aiming to have transformative, scaled impact
and understands that the Fund will need to invest in innovative, high-growth companies that have the
potential to achieve financial returns at this level. This expected return is developed from Acumen’s history of
investing in these markets, its projected financial return of its current investment fund (ACM I), its focus on
the solar energy sector in East Africa, and it understanding of the business and macroeconomic (i.e. currency)
risks of the investments it intends to make from this Fund. The Fund will utilize equity, equity-like,
convertible debt, and self-liquidating investment structures in the investments it makes.
The Fund will initially focus on investments in Rwanda and Kenya, and may also expand its activities to
Uganda, Each country has different total banking assets, debt capital markets and equity capital markets
sizes. Please let us know if you need more specific information from us.
Country 1-year T-Bill 5-year rate 10-year rate

Kenya 10.808%2 13.193%3 13.31%4
Uganda 16.3695 16.8336 17.6937
Rwanda 5.5008 12.009 13.0010
Due to the nature of private investing vehicles, it is difficult to ascertain the expected and realized returns
of other funds that are comparable to this Fund. Further, this Fund would be one of the first, if not the first, of
its kind in the sense that it is a climate change focused fund that is targeting investments in SMEs that serve
low-income populations. The expected return on this proposed fund is higher than that of ACM I, Acumen’s
first fund, because this new fund will be entirely composed of energy investments in East Africa, which we
believe have a better overall financial return profile than 1) other sectors such as agriculture, health, and
education and 2) other geographical regions.
2 www.centralbank.go.ke
3 www.centralbank.go.ke
4 http://www.tradingeconomics.com
5 http://www.africanbondmarkets.org/
6 Bank of Uganda
9 National Bank of Rwanda
10 National Bank of Rwanda
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III. Detailed Programme Description
3.1 Strategic Context

Rwanda
In Rwanda, over 70 percent of the population (~8.5M people) live off the grid, and the current best
estimate is that cutting that figure to 30 percent will cost between $700 million and $1 billion per year for the
next several years. This cost, which amounts to 10 to15 percent of the GDP, will still leave 3.5 million people
in the dark. Moreover, the government’s current best plan reluctantly calls for 50 percent of the desperately
needed new power generation to be sourced from fossil fuels.
On the other hand, Rwanda has unique advantages in that the country has: 1) Abundant, undeveloped
renewable natural resources, including solar and hydropower, 2) A progressive government that has focused
sharply on reducing the non-electrified proportion of its population from 70 to 30 percent, and 3) more than
half of the power infrastructure planned for 2018 is not yet financed or under construction, so the generation
source is not yet locked in.
Households that do not have electricity rely on kerosene lanterns and candles to meet their lighting
needs. But these sources of light are dangerous, low quality and expensive. Customers pay $1 a week for
kerosene for lighting, and $1 more for phone charging. In Rwanda, electricity costs are among the highest in
the world, and higher than neighboring countries in region, with grid-connected users paying
roughly$0.20/kWh compared to $0.12 in U.S. (high tariffs, heavily subsidized). In addition to high costs,
power supply is unreliable. Rwanda sees the high cost and insufficient and unreliable supply as the number
one barrier to stronger business and industrial growth.
The Rwanda Environment Management Authority (REMA) is the non-sectorial institution mandated to
facilitate coordination and oversight of the implementation of national environmental policy and subsequent
legislation. REMA has a key role to play towards the achievement of the national goal of sustainable
development as set out in the National Development Vision 2020.
The protection and management of the environment are among the pillars of Vision 2020. The objective
of the Government is that by 2020, it will have built a nation in which pressure on natural resources,
particularly on land, water, biomass and biodiversity, has significantly been reduced and the process of
environmental pollution and degradation has been reversed.
The environment is also one of the first priorities identified by the Poverty Reduction Strategy in Rwanda
and is among the leading fundamental programs selected within agriculture transformation and rural
development. The Poverty Reduction Strategy recommends actions in the energy sector by promoting the
rational use of wood and the promotion of alternative sources of energy.
Rwanda depends heavily on imported oil to run diesel generator power plants— one key reason
Rwanda’s electricity cost is high relative to the region. Power plant fuel imports represent a large share of the
total national import burden. Oil price volatility has an immediate impact on Rwanda’s ability to fund other
budget priorities. Supply security and strategic reserves are low.The government is keenly aware of this, and
is actively seeking to reduce its dependence on oil, and replace high cost diesel and fuel oil generation with
lower cost renewable sources.
Rwanda has a number of agencies and policies dedicated to promoting renewable energy sources for off-
grid communitites. The overall energy planning process is driven by the government and supported by
international donor organizations (e.g., World Bank, AfDB, DFID, EU). EWSA implements most programs.
Recent examples include:
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 Capital Access for Renewable Energy (CARE2): Global Village Energy Partnership (GVEP). GVEP
project manager Herbert Nyagas. GVEP Funded.
 Increase Rural Energy Access in Rwanda through Public Private Partnership (IREA RPPP) 11
(2008-2013): Contracts with private sector to install/operate PV systems for schools, health centers;
350 institutions electrified. EU funded.
 Prepaid Energy: Rent-to-Own solar systems Off-Grid12 (2014-current): EWSA and Mobisol
provide energy solution to the rural poor. EU Funded.
 Electricity Roll-Out Action Program II (EARP)13(2013-2018): the 14 African Development Bank
funded.
 Results-Based Financing Program (2014)—Financing solar lighting and village grids; private firms
paid by Urwego Opportunity Bank upon results. EnDev funded.
Policies and Plans to Support Off-Grid Power

Several other policy intentions and plans are laid out in the Energy Sector Strategic Plan:
 Tax reform to reduce consumption of kerosene and increase use of solar: Goal is to phase out
kerosene use through affordable solar alternatives. Currently kerosene is the only fuel exempt from
excise duty. The government plans to study impact of phasing out kerosene “subsidy,” and to
reintroduce excise duty on kerosene and promote solar solutions instead.
 Piloting innovative partnerships to increase rural access: Innovative public-private partnerships

to be tested, including for deployment of solar home systems or solar/hybrid mini-grids in the
medium-term. Goal is to attract funding from FONERWA and other climate and renewable energy
financing from development partners. Intend pilots to be accompanied by awareness campaigns to
support market development and be rigorously evaluated to determine impact.
 Facilitate private sector off-grid activities: The private sector is expected to deliver the majority of
off-grid electricity to end-consumers. Along with the development of an off-grid strategy and
innovative PPPs, GoR plans to continue to improve the legal and regulatory framework to support the
private sector. Depending on the outcomes of the off-grid strategy, this will include increasing
consumer awareness.
 Rooftop Solar Installations: Small rooftop solar installations ($50- $500 depending on the
appliances they power) are a priority, delivered by the private sector. Government willing to support
the industry by sharing information, helping define a deployment approach, educating the local
population, and testing innovative solutions.
 Mini-grid and SPDs - Simplify licensing and stimulate small-scale (off-grid) power
distributors: The GoR’s simplified licensing framework is being revised, based on experience with
private sector pilots, to make the regulatory environment clearer and more facilitating to SPDs. GoR
intends to examine eventual inclusion of SPDs and mini-grids into the grid as the grid expands, but
doesn’t have a plan or policy today. To ensure affordability and accountability, community-based
consultations to deliver informed decision-making on energy technologies are to take place and be
documented as part of the required Environmental Impact Assessment and license application
process. EARP will publish electrification plans in the public domain, which will be valid for a period
11 http://database.energyfacilitymonitoring.eu/acpeu/project/4331/.
12 http://database.energyfacilitymonitoring.eu/acpeu/project/4616/.
13 http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/Rwanda%20-
%20Scaling%20Up%20Energy%20Access%20Project%20-%20Appraisal%20Report.pdf.
14 The 2013-2018 Energy Sector Strategic Plan (June 2013) call out off-grid in two key sections: 3.3.1 EARP Program and
Off-Grid Solutions and 3.3.1.2 Off Grid Solutions.

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of 3 years. This will make it clearer to both consumers and private developers where potential for
off-grid activities exists.
 Off-grid hydro projects: Off-grid hydro projects will be encouraged through mini-grids where
economically feasible and the least-cost option. This will be done by establishing enabling regulatory
frameworks and licensing that promote mini-grids; consumer education and awareness of off-grid
energy solutions; and providing training and financial incentives to rural communities to operate
micro hydro systems.  
Guiding Policy Documents

 Vision 2020 (2000): Outlines vision to fundamentally transform Rwanda into a middle-income
country by 2020.
 Medium-Term Economic Development and Poverty Reduction Strategy for 2013-2018
(EDPRS-II): High-level guidance on energy sector development to provide appropriate, reliable,
affordable energy that will enable Rwanda to become a middle-income country by 2020.
 Rwanda Energy Policy (2015): Provides high-level direction on long-term goals, priorities and
approaches needed in the sector.
 Energy Sector Strategic Plan (ESSP) (2013-2017): Focused action plan measuring short-term
progress towards longer-term goals and objectives. Updated annually, with sub-sector Action Plans
for seven areas including solar.
 National Energy Strategy (2008-2020): Objectives for the development of renewable energy and
energy efficiency are included in the strategy.
 Green Growth and Climate Resilient Strategy (2011): Launched at COP17 with a vision for
Rwanda to be a developed climate-resilient, low-carbon economy by 2050 with economic growth and
poverty reduction.
Anticipated Policy & Regulatory Developments

 The development of a regulatory framework for renewable energy is considered integral to the
National Energy Policy. This is still being developed and is expected to be finalized soon.
 The planned off-grid policy is likely to include provisions for maintenance and support, “anti-
obsolescence” and eco-sustainability (recycling and disposal).
 EWSA will attempt to transition away from operational subsidies and become a financially
independent grid utility.
 Law on Public-Private Partnership (PPP) in final draft, pending approval by Cabinet
 Consolidation and integration of various laws and regulations into a unified national energy code
Kenya
In Kenya, only 20% of the population is connected to the grid, leaving 35M people without access to
affordable and reliable electricity. This lack of grid connectivity hinders the productivity as it limits daily
activities such as schoolwork, household chores, and business at night or in the early morning. Given the slow
rates of electrification coupled with high population growth, the grid supply versus demand crises will only
be exacerbated. 92% of rural households rely on kerosene for lighting but it is expensive and takes up a huge
proportion of family budgets15. Rural Kenyan households spend around 26% of their income on lighting, or
roughly $.42 per day on kerosene fuel at a far higher rate per hour of lighting than if the same was provided
by the grid.
The Environment and Policy Management Component under the Natural Resource Management
Programme (NRMP) supports the Government of Kenya in the implementation of the first medium-term plan
15 SolarAid Kenya Country Report 2014.

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(2008-2012) in general and, particularly, in relation to strategies and goals for environmental planning and
governance.
The mandate of the Ministry of Environment and Mineral Resources (MEMR) is to “to protect, conserve
and manage the environment and mineral resources through sustainable exploitation for socio-economic and
political development” and its mission is “to promote, conserve, protect, monitor and sustainably manage the
environment and mineral resources for national development”.
MEMR produced a strategic plan for climate change, entitled “National Climate Change Action Plan 2013-
2017”. Excerpts from the plan that show how the Fund’s activities fit within the plan are below.
Kenya Vision 2030 – the long-term development blueprint for the country – aims to transform Kenya into
“a newly industrialising, middle-income country providing a high quality of life to all its citizens in a clean and
secure environment.” A low carbon climate resilient development pathway, as set out in this National Climate
Change Action Plan (NCCAP), can help meet Vision 2030’s goals through actions that address both sustainable
development and climate change. This pathway can also help the Government achieve the Millennium
Development Goals (MDGs) and other internationally agreed development goals without compromising the
environment and the natural resource base.
The Government and other stakeholders are implementing many interventions that have direct and/or
indirect relevance to climate change adaptation and mitigation. The interventions cover a wide range of
sectors including: agriculture, water, energy and infrastructure. Examples include:
 Agriculture: promoting irrigated agriculture, promoting conservation agriculture, value addition to
agricultural products, developing weather indexed crop insurance schemes, support for community-
based adaptation including provision of climate information to farmers, enhanced financial and
technical support to drought resistant crops.
 Energy: promoting the use of alternative energy including geothermal, wind, solar and mini hydro
power generation; and the promotion of improved cook stoves.
Vision 2030 – Kenya’s long-term development blueprint – aims to transform Kenya into a newly
industrializing middle-income country by 2030. As Kenya moves to achieve its development aspirations,
greenhouse gas (GHG) emissions will rise. This mitigation assessment, available in detail in the Mitigation
Analysis Reports, concludes that transitioning to a low-carbon development pathway would ensure that the
country’s contribution to global emissions remains low and, importantly, deliver other important benefits:
 International climate finance – Nesting low carbon development within Vision 2030 and Kenya’s
development planning process means that development partners can ensure their climate-related
investments align with Government of Kenya priorities. International climate finance for low carbon
development options can potentially be obtained through bilateral and multilateral support, the
Green Climate Fund, the emerging NAMA and REDD+ mechanisms or the carbon markets.

Kenya’s low-carbon development opportunities
a) Energy:
The analysis of low-carbon development options in the energy sector considered two categories: 1)
electricity supply; and 2) energy demand – including options such as energy efficiency and fuel switching.
In terms of electricity supply, the installed capacity in Kenya in 2011 was 1,411 megawatts. Generation
was dominated by hydroelectricity, geothermal power and medium-speed diesel, which respectively
accounted for 49, 29 and 21 per cent of electricity sent to the national grid. Rapidly increasing demand for
electricity and fluctuating hydroelectric output have led to an increase in diesel-based generation in recent
years. In addition, there has been a strong focus on expanding geothermal power, which is considered a key
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enabler for Kenya’s economic growth. Although geothermal is the most promising renewable energy source,
Kenya also has excellent bioenergy, solar, wind and hydro resources for the supply of electricity.
Uganda
The electrification rate of Uganda ranges from roughly 10% - 18%, depending on various sources.16 While
electrification has reached almost 43% of the urban households, rural electrification is still very low at 4%.
Only 0.4% of the population has access to modern cooking fuel and almost 86% still rely on fuel wood for
cooking.17 An average Ugandan household spends between USD 4 and 10 per month on kerosene for lighting
and between USD 1 and 2 per month on phone charging. 18
The primary energy sources consist of biomass, imported oil products and hydro. Total installed
electricity capacity (2010) is 539.5 MW (Thermal 31.5%, Hydroelectric 65.4% and Biomass (bagasse) 3.1%).
With droughts severely affecting the water levels in Lake Victoria and River Nile, Uganda’s overdependence
on large scale hydro power may prove problematic. 19
Renewable energy generation and potential:

An estimated 200MW of Solar PV electrical capacity exist. There is also significant potential for Solar
cooking with a large number of the population living in well insolate areas. There is hydropower potential for
3000MW in the country but only less than 10% has been exploited. There is as estimated geothermal
resource potential of 450MW and feasibility studies are recommended to promote its development. Wind
power is insufficient for large-scale power generation but possible uses include water pumping and small-
scale power generation in mountainous areas. There is also identified potential for biomass cogeneration
from agricultural waste and the existing ‘peat’ resource. 20
The Rural Electrification Agency is working to connect over 500,000 new customers to the main or
independent grids, or to solar PV systems over 2013-22. The goal: universal access by 2035. Uganda has been
a renewable energy fledgling to date but the government hopes that its ‘GET FiT’ program will help change
this. It aims to fast-track some 15-20 small renewable projects a year, through a results-based top-up on
Uganda’s existing feedin tariff, as well as grant funding for solar PV projects. 21
The Renewable Energy Policy 2007- 2017 (REP) was approved in 2007 following Government’s
commitment through NEP 2002 to the development and utilization of renewable energy resources and
technologies. The overall policy goal is ‘’to increase the use of modern renewable energy from the current 4%
to 61% of the total energy consumption by the year 2017’’. The objectives include increasing access to
modern, affordable and reliable energy services as a contribution to poverty eradication. This comprises
general public access to electricity and enhancing the modernisation of biomass conversion technologies. REP
also established a Standardised Power Purchase Agreement and Feed-in Tariffs for renewable energy
generation projects.22
16 http://data.worldbank.org/indicator/EG.ELC.ACCS.ZS; https://hivos.org/sites/default/files/uganda_profile.pdf.
17 https://hivos.org/sites/default/files/uganda_profile.pdf.
18 http://www.barefootpower.com/index.php/social-impact/74-impact-in-uganda.
19 https://hivos.org/sites/default/files/uganda_profile.pdf; Renewable Energy Country Profiles (IRENA 2010), Policy and
regulation review (REEEP), Uganda Gap Analysis (SEFA).


21 http://global-climatescope.org/en/country/uganda/#/details.

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Excerpts from Uganda National Climate Change Policy

Energy: Sectoral Context and Challenges:
 Uganda depends predominantly on biomass energy—mainly from firewood and charcoal
 The country also depends on hydropower for electricity
 Electricity shortages in the recent past caused an energy crisis that led to an increase in thermal
electricity generation
 However, the country’s energy demand is increasing. With climate change, the situation is likely to
worsen, as extreme events like frequent and prolonged droughts lead to a reduction of water levels
in dams and reservoirs, thereby reducing hydropower production potential
To address these challenges, the GoU will pursue the following policy priority. Specific strategies for tackling
this sectoral policy priority will include the following:
 Promote and participate in water resource regulation so as to ensure the availability of water for
hydropower production Promote and participate in water catchment protection as part of
hydroelectric power infrastructure development
 Diversify energy sources by promoting the use of alternative renewable energy sources (such as
solar, biomass, mini-hydro, geothermal and wind) that are less sensitive to climate change
 Promote energy-efficient firewood cook stoves and solar and liquefied petroleum gas (LPG) cookers
 Conduct research to determine the potential impacts of climate change elements like rainstorms on
the country’s power supply chain
3.2 Programme Objective Against Baseline

[Baseline Scenario]
The United Nations Sustainable Development Goals identify electricity as essential to eradicating poverty.
The goal of the Sustainable Development Goals is to ensure universal access to affordable, reliable, and
modern energy services to all by 2030.
More than 1.5 billion people lack access to electricity, most relying on kerosene lanterns and candles for
their lighting needs. But these sources of light are dangerous, low quality and expensive. Customers pay $1 a
week for kerosene for lighting, and $1 or more for phone charging. Burning of kerosene also creates
significant Indoor Air Pollution, which is very harmful to people’s health.
Kerosene lamps produce carbon dioxide (CO2). It is estimated that each kerosene lantern with a weekly
fuel consumption of one liter of kerosene produces 0.1 tons of CO2 each year. In general, fuel-based lighting in
the developing world is a source of 244 million tons of CO2 emissions to the atmosphere each year. This
amounts to 58% of the CO2 emissions from residential electric lighting.23
The portfolio will seek to address the challenges of lack of electricity and high kerosene use through
affordable household clean energy products and services, such as solar powered lanterns, solar home systems
and mini-grids to connect those currently without access to electricity. Due to the rapidly declining price in
solar technology, specifically the cost of solar panels over the last two decades, solar products are cost
competitive with traditional fuels, such as kerosene and diesel. For cheaper products, such as lanterns that
cost between $5 - $40, consumers can buy these products with cash upfront and receive a payback period of
just a few months as they no longer need to pay a $1 a week ($4 per month) for kerosene. For more expensive
systems, such as a $150 solar home system that provides 3 lights, a phone charger, and a radio, the cost of the
solar home system is still cost competitive to kerosene over time, but often the consumer needs to pay for the
23 http://www.lightsforlife.org/need.
GCF/B.11/04/Add.05
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product over time because they don’t have enough money to pay for the entire system upfront. In these
instance, companies charge a down-payment at point of purchase, but then users make payments on a weekly
or as needed basis for usually 12 – 36 months (depending on the size of the system), until they have paid for
the system. Different models exists where either the customer takes ownership of the system or the customer
continues to pay for the energy provided as a service.
[Goal and anticipated outcome against the baseline scenario]

The main goal of this project is to create an energy access and climate change focused fund that serves
low income populations in East Africa and attempts to bring off-grid solar power to 15 million people in East
Africa. The Fund believes that its investment capital could be leveraged on a roughly 6:1 basis as the
companies it invests in will require, and attract, investment capital from co-investors and grant capital for
specific technical assistance initiatives. This Fund seeks to create a blueprint for a clean-energy future that
can be followed by other nations and that could attract billions of dollar of private capital. Key to this is to
prove that off-grid solar can power a region to full economic development, and is therefore is not a temporary
solution while the grid is expanded, but rather a permanent model for providing meaning levels of productive
power to off-grid communities. The social enterprises Acumen will invest in will be providing critical goods
and services to the poor in order to address the unfortunate baseline scenario described above, providing
safe-reliable electricity and decreasing kerosene use.
The Fund will aim to bring clean and renewable energy products and services to off-grid populations and
also to reduce CO2 emissions through the displacement of kerosene used at the household level. The Fund
will report on multiple impact metrics, including the following three categories.
Lives Impacted: Target of 15 million lives reached

- The Fund expects that its investment capital will be leveraged roughly 6:1 as the companies it will
invest in will require additional investment capital from co-investors and will also receive targeted
technical assistance funding for specific business and impact related purposes. Within the impact
investing industry, it is the industry standard to account for lives impacted based on the total lives
reached by the company, not just lives that are attributed to the portion of capital and single investor
invested.
- The analysis below provides a high-level summary of how the target of 15 million lives could be
achieved through investments in illustrative companies and their scale. The analysis assumes that
the companies grow at 30% year. We know that some existing companies are growing at 100% per
year, but would expect that growth to decrease over time. The Fund may invest in these types of
companies after they have operated for a few years, so the Fund would not be able to claim credit for
all lives impacted, however this analysis is just to provide a rough example of how a portfolio of 4
solar home system companies and other enabling companies could reach 15 million lives.
Units Sold from Year 3 - Year 8

Assumes Annual Growth of 30.0% 8 Year Holding Period
Operational 3 Yrs. Cumulative Forecasted Growth Cumulative
Company Yrs Units Lives Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Units Lives
Company A 3 200,000 1,000,000 100,000 130,000 169,000 219,700 285,610 371,293 1,375,603 6,878,015
Company B 3 120,000 600,000 60,000 78,000 101,400 131,820 171,366 222,776 825,362 4,126,809
Company C 3 30,000 150,000 15,000 19,500 25,350 32,955 42,842 55,694 206,340 1,031,702
Company D 3 30,000 150,000 15,000 19,500 25,350 32,955 42,842 55,694 206,340 1,031,702
Totals 2,613,646 13,068,229

Others* 386,354 1,931,772
Target 3,000,000 15,000,000
* Includes mini-grids and enabling companies, such as mobile payment providers and remote monitoring / metering devices that enable products and grids to reach people.
GCF/B.11/04/Add.05
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CO2 Emission Reductions: Target of 1.5 million tonnes of CO2 reduced

- Details of this target are provided in the sections below
Gender Impact
- Acumen is currently finalizing its formal Gender Policy, which it will submit to the GCF in the coming
week.
- The Fund will develop specific metrics to track and report on related to gender impact of its
investments. The summary of the intended reporting related to gender impact is as follows:
- The Fund will invest in companies that bring clean, solar energy to households and thus will benefit
women as they are part of the household and will benefit from any displacement of kerosene. The
Fund will use surveys and market research to report on how many women are reached from its
investments.
Acumen has seen evidence from previous investments that women are often employed as sales
agents or other employees of clean energy companies. The Fund will report on the number of women
employed by its portfolio companies.
The Technical Assistance facility will have dedicated funds for gender specific initiatives, such as training
women solar technicians and creating increased awareness about the benefits of clean energy products at the
household level, thus creating direct impact on women. The fund will report on the number of women
technicians trained / employed.
3.3 Programme Description

The Fund intends to target solutions that provide access to clean, safe and affordable energy for those
living at the BoP. The Fund will invest approximately $80M in 10-15 companies, with in investment range of
approximately $2M - $10M per portfolio company. In accordance with Acumen’s accreditation, the Fund will
not invest greater than $10 million in one portfolio company and will ensure that investments fall within ESS
Category C of companies that have minimal or no adverse environmental and/or social risk and/or impacts.
We estimate that approximately 60-70% of investments will be in businesses that have proven solutions to
bring energy access to the masses such as solar lanterns, solar home systems and solar mini-grids, while 30-
40% will be invested to build-out parts of the eco-system, which are weak or missing. Examples of
investments in the latter category include consumer financing vehicles, mobile payment and remote
monitoring / meter technologies, and working capital facilities.
3.4 Background Information on Programme Sponsors

Acumen was launched in 2001 and has been investing for the past 13 years. Acumen’s initial focus was on
funding health care technology start-ups that could provide widespread benefits to BoP populations, such as
(a) a low-cost hearing aid; (b) an inexpensive electromagnetic immunosensor for early detection of diseases;
and (c) a handheld device for gathering and disseminating health information quickly and affordably. As
Acumen grew, it searched for global innovations that could offer a voice to low-income communities and
encouraged the market to develop businesses offering a broader array of critical goods and services to low-
income communities. The first two years of operations taught Acumen the limitations of funding healthcare
technology start-ups, in particular the challenges of effective and cost-efficient distribution of products to BoP
populations.
From 2002-2003, Acumen enhanced several core investment processes, including: (a) formalizing a due
diligence process to vet financial viability and projected social impact; (b) organizing investments into
thematic portfolios (e.g., healthcare, energy and agriculture); (c) implementing a metrics reporting system to
GCF/B.11/04/Add.05
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help portfolio companies focus on financial and social goals while allowing Acumen to learn from their
performance; and (d) shifting away from providing grants toward debt and equity investments. Underlying
this final change was a recognition that debt and equity investments, combined with hands-on management
assistance from Acumen, represent a more effective use of resources than grant making. By 2004, Acumen
had identified suitable business opportunities in India, Pakistan, Tanzania, Kenya, South Africa and Egypt and
had completed investments in an organic products company, a telemedicine venture with a renowned eye
hospital, a microfinance operation, an anti-malarial bed net manufacturer, a network of personal digital
assistants (PDAs) for disease monitoring, a low-income housing development, an HIV/AIDS treatment service
and a health care franchise network.
In 2006, Acumen began preparing for the next five years of growth by deepening and solidifying
investment processes while expanding local bases of support. Recognizing that it needed local knowledge and
local experience to build deal flow and to best support portfolio companies, Acumen committed to an on-the-
ground presence in each of its target investment geographies, leading to more decentralized operations and
the opening of offices in Karachi, Pakistan and Hyderabad, India (subsequently moved to Mumbai). These
new offices introduced increasingly viable investment opportunities for Acumen in existing business
enterprises serving low-income customers. In 2007, Acumen followed suit in East Africa, launching another
regional office in Nairobi, Kenya. Acumen continued to expand its sector and geographic focus in subsequent
years, launching an energy portfolio in 2007, an agriculture portfolio in 2008, an education portfolio in 2011,
and a West Africa office in 2011.
In 2009, Acumen raised a small private equity fund, Acumen Capital Markets I LLC (“ACM I”), to invest in
small- and medium-sized enterprises that have social impact missions consistent with those of Acumen, but
whose business models had been de-risked and thus had a greater probability of commercial viability.
As of December 31, 2014, Acumen had disbursed $68.6 million of aggregate investment capital into 68
companies and ACM I had disbursed $11.0 million of aggregate investment capital into 12 companies. As of
the same date, Acumen had $39.8 million in investments under management in 52 enterprises, net of $15.6
million of capital returns, $3.0 million of write-offs and $10.2 million of impairments. ACM I had $9.0 million
of investments under management in 11 enterprises, net of $0.7 million of capital returns and $1.3 million of
write-offs.
In 2009, Acumen closed ACM I, a $15.9 million private equity fund that invests in small- and medium-
sized enterprises that operate in the healthcare, energy, agriculture, education, housing, and water and
sanitation sectors and have social impact missions consistent with that of Acumen. The key difference
between ACM I and Acumen’s philanthropically backed investments is that ACM I targeted enterprises which
were later-stage in the lifecycle of a business, and which thus presented a relatively lower-risk investment
with increased potential for financial return.
ACM I’s investment strategy was consistent with Acumen’s charitable mission, and Acumen served as its
Portfolio Manager. Acumen, as the Portfolio Manager of the fund, leveraged its existing investment process
and global team in India, Pakistan and East Africa to identify potential investment targets for ACM I, to work
with the management of prospective portfolio companies to refine business strategies, to understand the
associated risks and to provide guidance on financing, marketing, and operational issues, amongst other
items. To pursue its social impact and financial return goals, ACM I adopted the following investment criteria:
o Market-based delivery of a critical good or service (such as healthcare, energy, agriculture,

housing, or water and sanitation) to a BoP market
o Location in Acumen’s target geographical areas
o Enterprise with an established business model and revenue stream
o Innovative product or service with high scale and/or replication potential
o Top-quality leadership and management with a proven track record and demonstrated
commitment to targeting BoP markets
o Potential for Acumen to add significant value through its expertise and networks
GCF/B.11/04/Add.05
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o Willingness to work collaboratively and to meet pre-determined milestones

o Typical investment size of approximately $250,000 to $2.0 million
As of December 31, 2014, ACM I had disbursed $11.0 million of capital to 12 companies. The investment
period of ACM I ended in 2014, and no more capital investments will be made into new companies. Acumen
anticipates that ACM I may generate an approximate cash-on-cash return multiple of 1.5x.
Social and Financial Impact to Date
Since 2001, through its investment portfolio, Acumen has impacted 125 million lives, creating access to
critical goods and services such as clean energy, clean water, improved agricultural inputs and quality
healthcare. Acumen’s portfolio companies have collectively created more than 60,000 jobs. Ten of Acumen’s
portfolio companies have impacted at least 1 million people.
Acumen has received just over $17.0M dollars in investment returns from its portfolio from 19 exits. The
majority of these investment returns have come from repayment of debt principal and interest payments.
Energy
Since 2007, Acumen has invested $14 million in 14 energy companies in East Africa, India and Pakistan.
Acumen has invested in a wide-range of energy companies, including mini-grids (solar, hydro and biomass),
solar lantern and solar home system companies, and cookstove companies. Acumen’s energy portfolio has
reach approximately 50 million lives and has reduced approximately 4.5 million tons of CO 224. In East Africa
alone, Acumen has invested 5.4 million in 6 investments across solar, biomass and cookstove companies,
reaching approximately 27 million lives and reducing approximately 2.5 million tons of CO 2. 25 Below are
estimates of Acumen’s energy portfolio impact to-date by specific investment.
Region Sub-Sector Company Lives Impacted Tons of CO2 Reduced

India & East Africa Solar Lanterns A 51M 4M
India & East Africa Solar Home System B 370K 110K
East Africa Solar Home System C 1M 260K
East Africa Solar Home System D 815K 6K
India Mini-Grid E 200K 60K
India & East Africa Cookstove F 270K 270K
India Cookstove G 21K 8K
In 2015, Acumen achieved a very successful exit from one of its energy portfolio companies. The details
of the transaction are confidential, but Acumen achieved greater than a 5.0x multiple on its initial equity
investment. The company is a solar home system company that operates in Africa.
Acumen is currently raising a new impact fund that will be comprised of portfolio companies in the
energy sector in East Africa that provide overlapping impact with the objectives of the GCF. We are requesting
$20M of funding from GCF that will be invested in the Fund. We are targeting a $100M total fund size for the
Fund. The Fund will seek to invest approximately $80M in 10 – 15 companies in the clean energy and
agriculture. We are also requesting $5M of grant capital from the GCF for specific technical assistance
activities such as creating a capital reserve to finance consumer protection interventions if a company goes
bankrupt and training women to be solar technicians.
24 Metrics are approximations derived from industry research, company data, and various assumptions and
methodologies and have not been verified by a 3rd party.

GCF/B.11/04/Add.05
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The Fund will be managed by a wholly owned subsidiary of Acumen. Acumen will invest up to $5 million
in the Fund and seek outside investments for a total of $100 million fund size. There will be a 20% carry to
Acumen above a hurdle rate of 6% and if the Impact Target of 15 million lives impacted is achieved.
3.5 Market Overview

[Market Overview]
Energy is critical for human development and determines access to critical basic goods and services like
food, water, healthcare and sanitation. Still approximately 2.4 billion people globally lack access to reliable
electricity, including approximately 1.5 billion people who lack access to any electricity at all, the majority of
which live in sub-Saharan Africa.
The market for off-grid solar products has seen rapid growth over the last 5 years as the costs of solar
panels and decreased and innovative business models have emerged in order to distribute and finance solar
lanterns and solar home systems. Institutions such as the IFC, through its Lighting Global programs, and
ENEA Consulting have conducted market research and provide estimates of the market size for solar
products. Estimations for market size for solar lanterns and solar home systems in the next 10 years range
from roughly $5bn - $10bn. Current penetration are still low, with estimates ranging from about 5% - 10%.
Acumen’s investees bring innovative new models of delivery that are affordable and sustainable, and
scalable solutions that have the potential to create big impact. As an example, d.light, one of Acumen’s
investees, was founded in 2007 with the goal of replacing kerosene lamps with solar energy. d.light has
developed a suite of solar home products and is now brining energy to over 50M people in the developing
world.
[Key Competitor]
The Fund expects to invest in multiple companies within the energy sector in East Africa. We cannot
guarantee specific investments at this time although we do have a robust pipeline of investments. As such,
competitive dynamics will vary based on each investment opportunity. Acumen considers these factors
within its investment process and these will be reflected in the investment memorandums.
In summary, there are 5 primary types of energy products / services that form the competitive
environment in which the Fund’s investments will operations. These include 1) status quo products such as
kerosene, charcoal, biomass, and wood for lighting and cooking purposes; 2) solar lanterns; 3) solar home
systems; 4) community level mini-grids, and 5) the national grid. Different countries have different tariffs and
regulatory policies towards these different buckets of energy products and services as well as different levels
of subsidies. Off-grid communities that are rural and difficult to reach by the grid will be served by solar home
systems, lanterns, and mini-grids, and companies that provides those services will compete with each other
and will also compete with the status quo fuel alternatives. For communities that are close to the grid, solar
home systems and mini-grids will face competition from the grid if it expands into those communities.
[Pricing Structure]
The Fund expects to invest in multiple companies within the energy sector in East Africa. We cannot
guarantee specific investments at this time although we do have a robust pipeline of investments. As such,
pricing structures will vary based on each investment opportunity. Acumen considers these factors within its
investment process and these will be reflected in the investment memorandums.
In general, solar solutions for off-grid markets in East Africa make economic sense given their relative
price for consumers and the price of alternatives – such as kerosene and diesel for lighting and power needs.
The price of solar lanterns and home systems have declined rapidly over the last decade due in large part to
the price reduction in solar panels. These price reductions have made the products more affordable to low
income populations and many companies are now seeing these populations as viable markets for commercial
GCF/B.11/04/Add.05
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sales of solar products. We also anticipate that governments will look to help scale solar solutions with
programs such as credit guarantee mechanisms for consumer financed sales and improved regulatory and
tariff policies which “level the playing field” against heavily subsidized fossil fuels.
To date, solar lantern and solar home system companies have operated outside of government’s
regulations related to power providers (i.e. the utility companies). Subsidies and tariffs vary by country and
by solar product, so the Fund will diligence the relevant regulatory and tariff policies with regard to each
investment opportunity.
3.6 Regulation, Taxation and Insurance

The Fund will carry out the relevant due diligence on its portfolio companies to understand if they
comply with the appropriate regulatory environment and under the applicable licenses.
Acumen assesses regulatory, tax and insurance concerns in the diligence process of each investment
opportunity. Acumen expects that the social enterprises it invests in operate within the appropriate
regulatory environment and obtain all the appropriate licenses within each country. Acumen will monitor its
portfolio companies and ask for relevant documentation and information proving continued to compliance
with relevant laws and regulations.
3.7 Institutional / Implementation Arrangements

Acumen Capital Partners is a wholly owned subsidiary of Acumen. ACP and the Fund will adhere to
all the relevant policies of Acumen that the GCF reviewed in the accreditation of Acumen. There will be
some policies that differ between ACP and Acumen because ACP, unlike Acumen , is not a tax exempt
entity. These policies will be relevant for tax purposes and not related to the fiduciary, social and
environmental, anti-corruption, and investment diligence processes upon which Acumen was
accredited. During the implementation, Acumen will provide oversight and quality assurance in
accordance with its policies and procedures and any specific requirements in the Accreditation Master
Agreement (AMA) and project confirmation to be agreed with GCF. A diagram of the legal structure for
Acumen, ACP, the Fund, and Investors is below.
GCF/B.11/04/Add.05
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Acumen Fund, Inc.

(the “Promoter”)
(501c3 not-for profit corporation in *Ex. Green Climate Fund,
New York) Acumen, and other
investors.
100% Ownership Service Level Agreement
Acumen Capital Partners LLC Limited Partners

Limited Partners
(Exempt investment advisor) Limited Partners*
(the “Manager”) (Delaware)
Fund management services

Management Shares
Class A
$ for services
$
Participating
for shares
Legal Entity to Receive Shares
Carried Interest
(Delaware)
$
for shares
Class B
Participating KawiSafi Ventures Fund
Shares
(the “Fund”)
(Mauritius)
All members of the Investment Team will have multiple years of experience in banking, private equity,
emerging market investing and/or impact investing. The proposed structure of the team includes the
following team members:
 1 Managing Director
 2 Portfolio Managers
 2 Portfolio Associates
 1 Investor Relations Associate
 1 Office Assistant
All due diligence and deal execution of Fund investments will be led by an Investment Team
member. In addition to their own resources, Investment Team members will also leverage the
resources of Acumen’s global portfolio team and Acumen’s broad networks in the sourcing and
execution of new investments. All investments that meet the Fund’s investment criteria will be dire cted
to an investment professional on the Investment Team who will lead the diligence and execution of the
investment. Each Portfolio Manager will follow the investment processes of the Fund. The Managing
Director of the Investment Team will review Acumen’s entire pipeline of potential investments to
ensure that all available investment opportunities consistent with the Fund’s investment criteria are
appropriately considered for investment from the Fund.
The Investment Committee of the Fund (the “IC”) is the core decision -making body for the Fund and
controls all decision gates in the investment process prior to its final approval or rejection of a deal and
in connection with exits.The primary responsibilities of the IC will be to:
GCF/B.11/04/Add.05
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1. Approve/reject deals at key decision gates in the investment process and at exit
2. Review current pipeline, post-investment management activities and deal outcomes
3. Review investment and portfolio performance against annual goals and recommend potential
corrective action, if necessary
4. Review and provide guidance on global investment and portfolio management strategy
The IC will typically meet at least two or three times per prospective investment prior to the final
meeting at which a deal is approved or rejected. A majority of the members of the IC will constitute a
quorum. Any decision by the IC must be unanimous by those participating in a meeting where a quorum
is present. The IC will be comprised of up to five members. Initiall y, the IC will include, Jacqueline
Novogratz, CEO of Acumen, Sachin Rudra, Chief Investment Officer of Acumen, C. Hunter Boll, Formerly
Managing Director of Thomas H. Lee Partners, and the Managing Director of the Fund.
IV. Rationale behind GCF involvement
4.1 Value Added for GCF Involvement

Investment from the GCF will enable Acumen to create the world’s first climate change fund focused on
BoP populations in developing countries that seeks to generate social, environmental and financial returns.
The brand and resources of the GCF will excite other investors and provide a strong incentive for them to
partner with Acumen and GCF in this Fund.
GCF’s investment will be catalyzed to create the first climate mitigation fund to utilize SMEs to affect the
lives of low-income populations in developing countries. We expect GCF’s investment will catalyze capital
from leading foundations, development institutions and impact investors.
GCF is enabling Acumen to build further expertise and a deep track-record in the renewable energy
sector, which will enable Acumen to raise more money in the future, make more investments, and increase its
impact in the world.
4.2 Exit Strategy

Preparing for successful exits is a core element of Acumen’s investment strategy. Acumen’s investment
professionals expend significant effort understanding the strategies and operational components of each
portfolio company that can create a financially sustainable enterprise and help attract a later-stage purchaser.
Overall, Acumen seeks to create investment structures that will allow for a clear path to exit, create
liquidity in the medium term, and compensate for the risk of the investment. As a result, the Fund is expected
to invest in preferred equity (with or without a dividend), convertible debt, debt with warrants, and debt with
a share of revenue or EBITDA. Potential exit opportunities are expected to include sales to a later-stage
growth investor, a strategic buyer or a management buyout. Initial public offerings are not seen as practical
exit opportunities, and, in lieu of identifiable exit opportunities at the time of investment, Acumen may
structure the Fund’s investments using self-liquidating, quasi-equity instruments.
The Investment Team of the Fund will have ongoing relationships with potential strategic acquirers of
portfolio companies and growth stage investment firms to help improve exit opportunities for the Fund’s
investments. We have seen larger investment firms start to make small investments in companies that serve
off-grid markets as they want to learn about the economic viability of these markets. Examples of these
investment firms include Google Ventures, RRE, Draper Fisher Jurvetson, and Deutsche Bank. We have also
seen many large energy companies start to invest in companies that are providing solar systems for off-grid
GCF/B.11/04/Add.05
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homes and businesses. Examples of these companies that have invested are Schneider Electric, Caterpillar,
First Solar, and General Electric.
These companies represent potential acquirers for companies that Fund is seeking to invest in if those
companies are successful in scaling their operations. The Fund’s catalytic investment in early stage SMEs in
off-grid markets will enable them to reach economies of scales, which will reduce the cost of products and
services and create financially viable business models. Successful companies will serve as proof points for
later stage investors and corporations that the off-grid solar market is economically viable and companies can
build profitable business models.
The Portfolio Manager will prepare an exit memorandum (the “Exit Memo”) at the completion of each
investment, which occurs when the Fund is no longer a stakeholder in the portfolio company. The purpose of
the Exit Memo is to summarize the key takeaways from the entire investment process in order to improve
Acumen’s understanding of effective strategies for marketing critical goods and services to the poor, and
assessing performance against intended impact and financial return goals.
V. Expected Performance Against Investment Criteria
5.1 Impact Potential

5.1.1 Mitigation / adaptation impact potential
 Climate impact potential

o Demonstrating that nations can leapfrog fossil-fuel grids to clean energy
o Reduction of CO2 emissions through displacement of kerosene use at the household level
from adoption of solar lanterns and home systems and reduction of CO2 emissions from
displacement of diesel generators and other dirty fuels through renewable energy mini-
grids.
 Paradigm shift potential

o This Fund will be the world’s first climate change fund that is focused on SMEs that serve
BoP populations in developing countries. With partnership from the GCF, this Fund will
allow Acumen to demonstrate that nations can leapfrog fossil-fuel grids to clean energy. The
Fund will create a blueprint to a clean-energy future that is aligned with GCF’s goals and can
be followed by other nations.
o The Fund’s investments will develop, prove and scale innovative clean energy technologies
and products that will reduce the need for grid extension and construction of new grids that
are reliant on dirty fuel (i.e. coal). Success stories from such investments should attract
further private sector capital into those same companies and similar companies that arise to
compete, which ultimately will serve to increase the scale and impact of clean energy
companies operating locally within countries.
 Sustainable development potential

o Due to Acumen’s focus on BoP populations, Acumen’s investments will also bring livelihood
improvements to low-income populations. Such benefits could include increased income,
safer and healthier household environments, improved food/water security and increased
access to information.
o The Fund’s focus on clean energy and renewable energy investments, such as solar-powered
home systems and appliances and mini-grids, are considered environmentally sustainable
and produce both economic and environmental benefits to end users.
GCF/B.11/04/Add.05
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 Needs of the recipient

o Acumen targets low-income populations in developing countries, which is different than
many traditional emerging markets focused investment funds. Acumen has experience
working in a number of countries in South Asia and Sub-Saharan Africa and expects to have
investments in Least Developed Countries (“LDCs”).
 Country ownership
o Acumen is committed to local country operations and expertise. Acumen has local offices in
each of the regions it invests in (East Africa, West Africa, India, Pakistan and Latin America)
with local employees that understand consumer needs and cultural context. Acumen’s team
works with relevant local government, NGO and private sector partners to execute on its
investment and impact goals.
o All of the Fund’s investments will have significant, if not all, operations within the specific
countries of focus. Such investments serve to create employment opportunities, local
institutional knowledge that can be shared within public and private sectors, strengthen
local supply and distribution channels required for scaling sustainable businesses.
 Efficiency and effectiveness

o Acumen has a track record of deploying and returning capital. Acumen has appropriate
internal controls to monitor its investments and report to investors. The Fund will conduct
an annual review of its portfolio companies and will collect monthly and/or quarterly data
from its portfolio companies to monitor performance and assist in execution of strategy and
operations. Acumen has an ESG policy that the Fund will adhere to for all portfolio
companies. The Fund will use a portfolio management system developed by eFront, an
industry leader in portfolio management systems for private investment firms. Members of
the Investment Team or other representatives of the Fund will normally sit on the board of
the portfolio companies to assist in strategic decisions and growth of the company. The Fund
will seek to generate a positive financial return to investors.
5.1.2 Key Impact Potential Indicator
125,000
Annual
Expected tonnes of carbon dioxide equivalent (t CO 2
eq) to be reduced or avoided (Mitigation only) 1,500,000
Lifetime
GCF core 15,000,000

Total
indicators Expected total number of direct and indirect
beneficiaries (reduced vulnerability or increased 16% of the total
resilience); number of beneficiaries relative to total population of the three
Percentage
population (adaptation only) target countries (93.7
(%)
mil)
Other  Expected increase in the number of households with access to low-emission energy
relevant o 2.1 mil households with access to low-emission energy through solar
indicators lanterns, solar home systems and mini-grid systems
The calculation of “CO2 Reduction” for each portfolio company is as follows:

 Acumen’s research and knowledge of existing portfolio companies, as well as industry research and
standards for reduction of specific interventions, have informed these estimates of the number of CO2
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emissions reduction from its investments. A CO2 reduction factor over a product’s lifetime is applied
to the estimated number of products sold within the investment.
 Solar Lanterns: A solar lantern will reduce approximately 0.1 tons of CO2 per year. Assuming a 3-
year lifetime for solar lanterns, Acumen estimates each solar lantern investment reducing
approximately 0.3 tons of CO2.
 Solar Grid Systems: A solar home system will reduce approximately 0.2 tons of CO2 per year.
Assuming a solar grid system can last a family 4 years, Acumen estimates each solar grid system
reducing approximately 0.8 tons of CO2 emissions.
 Mini Grids: Each mini-grid connection will displace approximately 2 kerosene lanterns and will
therefore reduce approximately 0.2 tons of CO2 per year. Assuming a 7-year lifecycle, Acumen
estimates each mini-grid connection reducing approximately 1.4 tons of CO2 emissions.
CO2 Emissions Reduction Model
Portfolio Assumptions
Target Fund Size 100,000,000
GCF Investment 20,000,000
Lives Impacted 15,000,000
Households 10,500,000
Institutions 4,500,000
Household Multiplier 5
# of Households Imapcted 2,100,000
# of Investments 10
Consumer Product/ Distribution 4
Mini-Grid Power Generation 2
Mobile based Credit Scoring 2
Mobile Technology Enablers 2
CO2 Baseline Assumptions

Annual Tonnes Product Life
Product Lifetime (Yrs.) # Kerosene Lamps CO2 Reductions CO2 Reductions Comments
Kerosene 0.1 CO2 emmissions
Solar Lanterns 3 1 0.1 0.3 offset 1 kerosene lantern
Solar Home Systems 3 2 0.2 0.6 offset 2 kerosene lantern
Mini-Grid Power Generation 6 2 0.2 1.2 offset 2 kerosene lantern
CO2 Reductions Calculation

# of companies # of Households Tons of CO2 Reduced
Portfolio 6 2,100,000 1,500,000
Solar Home Systems 4 1,700,000 1,020,000
Mini-Grid Power Generation 2 400,000 480,000
CO2 Cost Calculation

Tons of CO2 Reduction (Lifetime) 1,500,000
Estimated cost per tCO2eq $ 66.67
Estimated GCF cost per tCO2eq removed
$ 13.33
Acumen will work with the GCF to develop appropriate social impact metrics related to climate change
mitigation and adaptation. The Fund will focus on portfolio companies that provide critical goods and
services targeting the needs of BoP populations. Further, each potential portfolio company must demonstrate
the ability or plan to grow its operations significantly
The calculation of “Lives Impacted” for each portfolio company is as follows:

 Where there is a 1:1 correlation between one unit of a company’s product or service and one
individual reached (e.g., an individual visit to a health clinic), Acumen currently uses and Acumen will
GCF/B.11/04/Add.05
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similarly use data from the portfolio companies on products or services sold as equivalent to Lives
Impacted.
 Where a product or service impacts the lives of more than one individual (e.g., wiring a home with
electricity), Acumen currently multiplies, and will similarly multiply, data from the company’s
products or services sold by a multiplier. This multiplier is agreed with the company and verified
either by field visits, and/or using census data as appropriate, to arrive at a total beneficiaries figure.
For the majority of Acumen’s historical and current investments, the social impact multiplier used is
“household size,” and typically is approximately 5 people per household. Acumen will use the
“household size” multiplier for the Fund’s investments.
standards for reduction of specific interventions, have informed these estimates of the number of CO 2
In order to estimate the number of CO2 emissions reduction from its investments, Acumen also looks at
best practices and industry reports in the field.
 Solar Lanterns: The United Nations Framework Convention on Climate Change estimates 0.092 tons
of CO2 per solar lantern per year and assumes a 5-year lifetime for solar lanterns. This number is in
line with Light for Life and Lighting Africa programs which estimate 0.1 tons of CO 2 per solar lantern
per year.
 Solar Grid Systems: The Energy Technology Systems Analysis Program's Off Grid Power in Rural
India study estimates a solar home lighting system reducing ~0.3 tons of CO2 per year. A UNFCCC
report, which estimates that a high-power level 3 certified solar system replacing kerosene would
reduce 0.723 tons of CO2 over its lifetime.
 Mini Grids: Electricity sold through microgrids displaces generator fuel used by commercial users at
approx. 0.5 litres/kWh sold. Conversion factor: 0.00232 Tonnes of CO2/litre of petrol. Electricity sold
also displaces kerosene use at approx. 0.1 litres/household/day. Conversion factor: 0.00254 Tonnes
of CO2/litre of kerosene26
Acumen has invested $14 million in 14 energy companies in East Africa, India and Pakistan. Acumen’s
energy portfolio has reach approximately 50 million lives and has reduced approximately 4.5 million tons of
CO227. In East Africa alone, Acumen has invested 5.4 million in 6 investments across solar, biomass and
cookstove companies, reaching approximately 27 million lives and reducing approximately 2.5 million tons of
CO2. 28 Below are estimates of Acumen’s energy portfolio impact to-date by specific investment.
26 http://www.eia.gov/environment/emissions/co2_vol_mass.cfm.

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These metrics are approximations derived from industry research, company data, and various assumptions
and methodologies, as described above, and have not been verified by a 3 rd party.
5.2 Paradigm Shift Potential

5.2.3 Potential for Scaling up and replication
The Fund will be the world’s first climate change fund that is focused on SMEs that serve BoP populations
in developing countries. With partnership from the GCG, this Fund will demonstrate that nations can leapfrog
fossil-fuel grids to clean energy, and create a blueprint to a clean-energy future that can be followed by other
nations and that will attract billions of dollars in private capital. This will allow Acumen to develop a strong
track record and will enable Acumen to raise future, larger funds to invest in more companies that are aligned
with the GCF’s impact goals.
By investing in for-profit companies, Acumen, GCF and other investors in the Fund will be creating
financially sustainable enterprises that continue to operate through internal profits and follow-on investment
capital even after the Fund has made its investments. By investing in these companies and creating a track
record of success, Acumen can raise a second fund in year 5 or 6 of the Fund to invest in more companies that
are aligned with the impact objectives of the GCF. Thus, GCF is enabling Acumen to build further expertise and
a deep track-record in the renewable energy sector, which will enable Acumen to raise more money in the
future and make more investments.
The Fund’s investments will develop, prove and scale innovative clean energy technologies and products
that will reduce the need for grid extension and construction of new grids that are reliant on dirty fuel (i.e.
coal). Success stories from such investments should attract further private sector capital into those same
companies and similar companies that arise to compete, which ultimately will serve to increase the scale and
impact of clean energy companies operating locally within countries. The Fund’s focus on clean energy and
renewable energy investments, such as solar-powered home systems and appliances and mini-grids, are
considered environmentally sustainable and produce both economic and environmental benefits to end
users.
All of the Fund’s investments will have significant, if not all, operations within the specific countries of
focus. Such investments serve to create employment opportunities, local institutional knowledge that can be
shared within public and private sectors, strengthen local supply and distribution channels required for
scaling sustainable businesses.
Investing in for-profit, financially viable companies can create enterprises that are sustainable over the
long-term. While it is true that products have useful lives, the benefits of investing in financially sustainable
companies is that those enterprises can continue to serve customers with new products once products have
reached their useful lives. Also, the company is incentivized to provide ongoing service and maintenance for
its products to ensure that its customers are satisfied with their product and experience and keep being
customers of the company.
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In order to contribute to the long-term sustainability of the impact on consumers, the Fund will dedicate
a portion of its Technical Assistance Facility to specific initiatives that contribute to long-term impact.
Examples of these initiatives include a reserve fund to help provide maintenance and service to customers if a
company they bought a product from goes bankrupt and funds to help train women become solar technicians
so that they can achieve employment and income generation.
5.2.4 Contribution to the creation of an enabling environment
Acumen is requesting that the GCF invest equity capital into a 12-year fund. This vehicle, and GCF’s
anchoring investment, will enable Acumen to raise additional capital from like-minded investors that want to
achieve the same goals of the GCF and Acumen. We think we can leverage GCF’s capital on a 4:1 ratio. Acumen
will use the Fund’s capital to make equity, equity-like and convertible debt investments in SMEs that are
serving low-income populations and achieving the desired environmental impacts. The 12-year time horizon
of the Fund will enable the companies Acumen invests in several years to scale their businesses and impact.
Further, the Fund will enable Acumen to invest both equity and quasi-equity capital, both of which are
needed by the targeted investment. By organizing the Fund as a for-profit fund, Acumen and GCF can crowd-
in private sector capital that is looking for a financial return on its investment.
Additionally, not only will Acumen be attracting capital from outside investors, but Acumen’s investment
in companies will help bring in other capital into those companies, or will help fill out a round if other
investors are there first, thus enabling the company’s intended impact to be achieved.
Further, many of the companies that the Fund will target often utilize grant capital from foundations or
public subsidies from governments to test-out innovation and jump-start markets. Thus, SMEs play a critical
role in demonstrating how partnerships with civil organizations and government can be effective, especially
when targeting low-income populations. Over time, insights from these partnerships and from operating
experience in the market can prove out successful business models and attract larger sums of investment
capital and enterprises that are striving for social and environmental impact.
The Fund will target investments in SMEs whose business models employ innovation at the product,
service and/or operating level that enables the SME to affordably and profitably serve its intended
population. Such innovations require highly risk-tolerant capital to allow the models to iterate and learn from
market and customer feedback. The investment capital from GCF through this Fund will enable these
companies to achieve their intended impact. Further, once new technologies and business models are proven,
these innovations can be replicated by other actors in the economy.
5.2.3 Contribution to regulatory framework and policies

This Fund will be the world’s first climate change fund that is focused on SMEs that serve BoP populations in
developing countries. This Fund will contain approval of the local NDAs and be operating within the goals and
regulations of the national policies referenced in section E.5. This investment vehicle will serve as a way for
investors with climate focused impact strategies to achieve these country environmental goals.
5.2.4 Potential for knowledge and learning

Acumen shares the insights learned to make us collectively more effective. Acumen has used the data
drawn from its portfolio to author sector-defining reports such as From Blueprint to Scale alongside Monitor
Inclusive Markets, and most recently Growing Prosperity: Developing repeatable business models to scale the
adoption of agricultural innovation, in collaboration with Bain & Company. Acumen also shares its expertise
on impact measurement in a range of forums and advisories. In the last year alone, we held positions on the
IRIS strategic advisory board, Clinton Global Initiative Metrics Advisory Council, and the Progress out of
Poverty Index Strategic Task Force.
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We analyze the data we gather to teach us new information about our impact performance on our
individual investments. With data collected across multiple companies, sectors and geographies we can also
synthesize this to generate new crosscutting insights.
Acumen will be open to providing a report on the actions and outcomes of the Fund.
5.3 Sustainable Development Potential

5.3.5 Environmental, social and economic co-benefits, including gender-sensitive
development impact
 Economic co-benefits
Due to Acumen’s focus on BoP populations in developing countries, Acumen’s investments will provide
economic savings and/or livelihood improvements. Such benefits include increased income due to the
displacement of kerosene from the cheaper solar alternatives. Saving for a household can range from
approximately $75 - $200 per year depending on the daily cost of kerosene, the amount of kerosene
displaced, and the cost of the solar lantern / solar home system in the specific geographic market. Further,
more powerful Solar Home Systems have the ability to power micro and small business to increase income
for consumers. Thirdly, the solar home systems can be used for agricultural inventions – such as solar
powered irrigation pumps and refrigeration – which can increase farmer yields and ultimate incomes.
 Social co-benefits
- Improved access to education
Families report that solar lights are predominantly used by children to do their homework after dark. With
access to this bright, safe and clean light, children are doing an extra hour of homework each day 29
When children do well at school, they are likely to stay there longer and gain a higher level of education
benefiting themselves, their families and their communities.
- Improved health and safety
Each solar light bought by a household results in the elimination of the regular use of one kerosene lamp
and this means there is less indoor air pollution. Over half of families notice an improvement in health as a
result; including a reduction in coughing, chest problems, eye irritation and illness. 30
 Environmental co-benefits
- Improved air quality
Each solar light bought by a household results in the elimination of the regular use of one kerosene lamp
and this means there is less indoor air pollution. Over half of families notice an improvement in health as a
result; including a reduction in coughing, chest problems, eye irritation and illness. 31
 Gender-sensitive development impact

- Proportion of men and women in jobs created
Many of the goods and services provided by the companies the Fund expects to invest in will have direct
impact on women, such as solar lanterns and home systems which can lead to the reduction of kerosene use
and related indoor air pollution. Given the direct impact of these goods and services on women, many of
these companies also hire women employees, providing income and empowerment for women. Acumen will
seek to understand the impact that its investments have on women through company-provided data,
diligence visits and company visits by members of the Fund’s investment team, and 3rd party research and
29 http://solar-aid.org/impact/
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data collection. Historically, Acumen has conducted its own research on the impact on women of certain of
its portfolio companies and has also partnered with organizations like the International Center for Research
on Women to research and better understand gender impact. Acumen expects to provide similar research
for investments made by the Fund and will share that with the GCF.
Acumen is currently finalizing its formal Gender Policy, which it will submit to the GCF in the coming weeks.
The Fund will develop specific metrics to track and report on related to gender impact of its investments.
The summary of the intended reporting related to gender impact is as follows:

- The Fund will invest in companies that bring clean, solar energy to households and thus will
benefit women as they are part of the household and will benefit from any displacement of
kerosene. The Fund will use surveys and market research to report on how many women are
reached from its investments.
- Acumen has seen evidence from previous investments that women are often employed as sales
agents or other employees of clean energy companies. The Fund will report on the number of
women employed by its portfolio companies.
- The Technical Assistance facility may be able to use funds to train women solar technicians, thus
creating direct impact on women. The fund will report on the number of women technicians
trained / employed.
Acumen is working with the International Center for Research on Women (ICRW) to better
understand how our companies are engaging women, and how engaging women can affect the social and
business performance of a company. After conducting the broad review of trends in the gender lens impact
investment sector and assessment of what social enterprises are doing to engage, reach and impact women
across various sectors, ICRW conducted a deeper analysis of some of the enterprises in which Acumen
invests. Together with ICRW, we have developed the framework for the study, which will be anchored in
identifying both the impact case and the business case for targeting women, and how the two can reinforce
each other. We expect to have the final report in October 2015. The report will offer sector-level insights,
identifying not only where our investees are currently targeting women but also places of opportunity,
things that are not yet happening, but should be in order to create impact for women and communities.
- Other
Due to Acumen’s focus on BoP populations, Acumen’s investments will also bringlivelihood
improvements to low-income populations. Such benefits could include increased income, safer and
healthier household environments, improved food/water security, and increased access to information.
5.4 Needs of the Recipients

5.4.6 Vulnerability of country and beneficiary groups
In Rwanda, over 70 percent of the population (~8.5M people) live off the grid, and the current best
estimate is that cutting that figure to 30 percent will cost between $700 million and $1 billion per year for the
next several years. This cost, which amounts to 10 to15 percent of the GDP, will still leave 3.5 million people
in the dark. Moreover, the government’s current best plan reluctantly calls for 50 percent of the desperately
needed new power generation to be sourced from fossil fuels.
In Rwanda, less than 30% of the population has access to stable electricity. Most Households that do not
have electricity rely on kerosene lanterns and candles to meet their lighting needs. But these sources of light
are dangerous, low quality and expensive. Customers pay $1 a week for kerosene for lighting, and $1 more for
phone charging. In Rwanda, electricity costs are among the highest in the world, and higher than neighboring
countries in region, with grid-connected users paying roughly—~$0.20/kWh compared to $0.12 in U.S. (high
GCF/B.11/04/Add.05
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tariffs, heavily subsidized). In addition to high costs, power supply is unreliable. Rwanda sees the high cost
and insufficient and unreliable supply as the number one barrier to stronger business and industrial growth.
In Kenya, only 20% of the population is connected to the grid, leaving 35M people without access to
affordable and reliable electricity. This lack of grid connectivity hinders the productivity as it limits daily
activities such as schoolwork, household chores, and business at night or in the early morning. Given the slow
rates of electrification coupled with high population growth, the grid supply versus demand crises will only
be exacerbated. 92% of rural households rely on kerosene for lighting but it is expensive and takes up a huge
proportion of family budgets. Rural Kenyan households spend around 26% of their income on lighting, or
roughly $.42 per day on kerosene fuel at a far higher rate per hour of lighting than if the same was provided
by the grid.
Uganda
The electrification rate of Uganda ranges from roughly 10% - 18%, depending on various sources. While
electrification has reached almost 43% of the urban households, rural electrification is still very low at 4%.
Only 0.4% of the population has access to modern cooking fuel and almost 86% still rely on fuel wood for
cooking. An average Ugandan household spends between USD 4 and 10 per month on kerosene for lighting
and between USD 1 and 2 per month on phone charging.
The primary energy sources consist of biomass, imported oil products and hydro. Total installed
electricity capacity (2010) is 539.5 MW (Thermal 31.5%, Hydroelectric 65.4% and Biomass (bagasse) 3.1%).
With droughts severely affecting the water levels in Lake Victoria and River Nile, Uganda’s overdependence
on large scale hydro power may prove problematic.
The main goal of this project is to create the world’s first climate change fund focused on bottom-of-the-
pyramid populations in developing countries. The Fund will seek to catalyze a thriving off-grid solar
ecosystem in East Africa, demonstrating that nations can leapfrog fossil-fuel grids to clean energy. The social
enterprises Acumen will invest in will be providing critical goods and services to the poor in order to address
the unfortunate baseline scenario described above, providing safe-reliable electricity and decreasing
kerosene use. The Fund will bring off-grid solar power to a target of 15 million people in East Africa and will
create a blueprint to a clean-energy future that can be followed by other nations.
Solar home systems and appliances will aim to completely eliminate the use of kerosene in the
household, eliminating the 0.1 tons of CO2 emissions per liter of kerosene per year.
The Fund also expects some of its portfolio companies to have cross-cutting impact across the GCF’s
mitigation and adaptation goals. With specific regard to adaptation goals, it is likely that a number of the solar
companies the Fund invests in will provide solar products and systems to institutions such as schools, agri-
businesses, and small and micro businesses that create incremental income for vulnerable populations. One
of Acumen’s current investees, SolarNow, has several solar systems that are being used by schools and
affecting hundreds of children in each school. Other companies are also using solar power for various
agricultural related activities. Examples of these include solar-powered irrigation pumps and power for small
businesses such as rice processors. Farmers also use lanterns when they work in the field for safety reasons
and to enhance productivity. Other than agri-businesses, entrepreneurs are using solar systems for income
generating activities such as mobile phone charging, cosmetic services, cooling services, and simply extending
business hours.
It is hard to predict what percentage of solar systems will serve households, businesses, and schools.
However, we have identified targets for what that mix may be based on only a few data points we know of
from existing solar companies in the market. These are very rough estimates and are largely unsubstantiated.
The Fund will report on the breakdown of systems used at homes, schools and healthcare facilities, and agri-
business and other businesses.
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The estimates for the distribution of systems are as follows:

 Homes: 70%
 Agribusiness / Other Business: 20%
 Schools / Healthcare facilities: 10%
5.4.7 Financial, economic, social and institutional needs
Over the last decade, numerous social enterprises have been formed to address the needs of people living
at the BoP. However, many of these enterprises have struggled to obtain investment capital for growth, in
part because many traditional investors typically will not accept the financial risk and reward profile of these
enterprises. Concurrently, several funding organizations and vehicles known as “impact investors” that target
both social impact and financial return (and who often accept lower than market rates of financial return in
exchange for outsized social impact of an investment) have formed to address the financing needs of these
enterprises and capitalize on the potential commercial opportunity presented by them. However, early- to
mid-stage social enterprises have struggled to attract investment capital even from impact investors as the
majority of those investors have provided capital to relatively later-stage companies with lower risk, or have
focused on the small sub-segment of these enterprises that present a higher financial return profile. Thus,
even self-described impact investors often avoid the higher risk, lower margin businesses that directly touch
the needs of individuals living at the BoP. A 2011 study of the social enterprise landscape in Africa done by
Monitor Group highlights this point, noting that “only 6 of 84 funds investing in Africa offered early stage
capital.”
Over the last 13 years, Acumen has developed deep sector knowledge and local market insights, through
its investing work and extensive research projects, such as From Blueprint to Scale: The Case for
Philanthropy in Impact Investing written by Harvey Koh and Ashish Karamchandani of Monitor Group and
Robert Katz of Acumen in 2012. From Blueprint to Scale explains how impact investors are constrained by the
tough realities of inclusive business, and introduces the phenomenon of the pioneer gap; describes the
emerging practice of enterprise philanthropy, and how it is the key to establishing the inclusive business
models into which capital can then be deployed; and analyzes a number of companies from Acumen’s
portfolio to understand both successes and setbacks.
Acumen believes there is an attractive opportunity to invest in an increasing number of post-proof-of-

concept business models that serve BoP markets in a sustainable and scalable manner and provide the
opportunity for a combination of social impact and financial return to investors. By investing in local growth-
oriented investments, Acumen will help to build the distribution and service value chains, which are currently
lacking, to provide critical goods and services to those at the poor.
5.5 ountry Ownership

5.5.8 Existence of a national climate strategy and coherence with existing plans and policies,
including NAMAs, NAPAs and NAPs
Acumen is committed to local country operations and expertise. Acumen has local offices in each of the
regions it invests in (East Africa, West Africa, India, Pakistan and Latin America) with local employees that
understand consumer needs and cultural context. Acumen’s team works with relevant local government,
NGOs and private sector partners to execute on its investment and impact goals, and ensure alignment with
local policies. Country ownership will be ensured in that Acumen will receive a letter of “no objection” from
relevant NDAs. Acumen will ensure that it receives a letter of “no-objection” from the relevant country NDA
ahead of the Fund investing in any companies in that specific country.
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Below are environmental policies for Kenya, Rwanda and Uganda. These policies directly align with
Acumen’s investment strategies and goals within these countries.
Kenya:
The Environment and Policy Management Component under the Natural Resource Management
Programme (NRMP) supports the Government of Kenya in the implementation of the first medium-term plan
(2008-2012) in general and, particularly, in relation to strategies and goals for environmental planning and
governance.
The mandate of the Ministry of Environment and Mineral Resources (MEMR) is to “to protect, conserve
and manage the environment and mineral resources through sustainable exploitation for socio-economic and
political development” and its mission is “to promote, conserve, protect, monitor and sustainably manage the
environment and mineral resources for national development”.
MEMR’s strategic plan includes reducing environmental degradation and strengthening the role of
environment and natural resources in reducing poverty. 32
Uganda
The National Environment Management Authority (NEMA) is the Manager agency in Uganda, charged
with the responsibility of coordinating, monitoring, regulating and supervising environmental management
in the country. NEMA spearheads the development of environmental policies, laws, regulations, standards
and guidelines; and guides the Government on sound environmental management in Uganda. NEMA
contributes to social-economic development and wise use of natural resources, focusing on providing support
to the Government’s main goal of ensuring sustainable development contributing to the National Vision, the
National Development Plan (NPD), regional and global commitments including the Sustainable Development
Goals (SDGs).33
Rwanda
Rwanda Environment Management Authority (REMA) is the non-sectorial institution mandated to
facilitate coordination and oversight of the implementation of national environmental policy and subsequent
legislation. REMA has a key role to play towards the achievement of the national goal of sustainable
development as set out in the National Development Vision 2020.
The protection and management of the environment are among the pillars of Vision 2020. The objective
of the Government is that by 2020, it will have built a nation in which pressure on natural resources,
particularly on land, water, biomass and biodiversity, has significantly been reduced and the process of
environmental pollution and degradation has been reversed.
The environment is also one of the first priorities identified by the Poverty Reduction Strategy in Rwanda
and is among the leading fundamental programs selected within agriculture transformation and rural
development. The Poverty Reduction Strategy recommends actions in the energy sector by promoting the
rational use of wood and the promotion of alternative sources of energy.34
5.5.9 Capacity of accredited entities and executing entities to deliver
Since 2007, Acumen has invested $14 million in 14 energy companies in East Africa, India and Pakistan.
Acumen has invested in a wide-range of energy companies, including mini-grids (solar, hydro and biomass),
32 http://kenya.um.dk/en/danida-en/nrm/annual-natural-resource-management-form/environmental-policy-and-
management/
33 http://www.nemaug.org/
34 http://www.rema.gov.rw/
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solar lantern and solar home system companies, and cookstove companies. Acumen’s energy portfolio has
reach approximately 50 million lives and has reduced approximately 4.5 million tons of CO235. In East Africa
alone, Acumen has invested 5.4 million in 6 investments across solar, biomass and cookstove companies,
reaching approximately 27 million lives and reducing approximately 2.5 million tons of CO 2. 36 Below are
estimates of Acumen’s energy portfolio impact to-date by specific investment.

India & East Solar Lanterns A 51M 4M
Africa
India & East Solar Home System B 370K 110K
Africa
India & East Cookstove F 270K 270K
Africa
In 2015, Acumen achieved a very successful exit from one of its energy portfolio companies. The details
of the transaction are confidential, but Acumen achieved greater than a 5.0x multiple on its initial equity
investment. The company is a solar home system company that operates in Africa.
Please see attached two appendices for further detail on Acumen’s prior investments in the energy
sector.
Acumen strongly believes that being able to utilize Acumen’s local presence in the markets in which it
will invest is critical to the success of the Fund. This presence will allow the Investment Team to continue
developing a deep understanding of the local market dynamics in which Acumen’s portfolio companies
already operate, and to continue building strong relationships with local advisors and networks that already
support the work of Acumen.
While the India and Pakistan offices focus on their single country of location, the Ghana and Kenya offices
serve as regional hubs looking to make investments throughout the broader regions of West Africa and East
Africa, respectively. Similarly, the Colombia office is a developing hub for the Latin America region, with an
initial focus on Colombia and Peru. The New York office makes investments in companies that are global in
nature and also exists to help source and develop potential investments in all regions. Companies deemed to
be “global” are those that (i) domiciled outside of East Africa, West Africa, South Asia or Latin America but
have significant operations in those geographies.
Through its local presence, Acumen has attracted experienced in-country senior leadership and built a
strong network of well-respected local advisors who are influential members of their respective business
communities. Due in part to this network, Acumen has built a powerful brand and is recognized as a leader
amongst investing peers and entrepreneurs operating in the social impact sector. Acumen and the Investment
Team will have access to in-country senior leadership and local advisors, and will leverage Acumen’s
prominent brand recognition to source and facilitate investment opportunities.

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All of these factors provide Acumen with a competitive advantage in sourcing deal flow, specifically,
allowing Acumen to source deals which are not seen by investors who lack the same local presence. Acumen
is also plugged into many of the incubators and accelerators in the social impact sector, which serve as
resources for potential Fund investments. Acumen actively monitors approximately 30 accelerators,
incubators and business plan competitions that provide sources of early stage investment opportunities,
some of which may be appropriate for the Fund.
5.5.10 Engagement with civil society organizations and other relevant stakeholders
The Fund will work with governments and other partners to create the right market ecosystems to
support rapid growth for clean energy. Acumen is currently in conversations with multiple Development
Finance Institutions (“DFIs”), foundations, and High Net Worth individuals that are interested in investing in
this Fund. African investors, companies and/or government are also expected to be investors in the Fund.
Further, Acumen has already identified 3 companies that are ready for investment and a number of other
companies that could receive investment capital over the course of the next 6 – 12 months. Acumen has also
been in contact with the GCF NDAs in Kenya, Uganda, and Rwanda, and expects to confer with the other
relevant NDAs in countries in which Acumen intends to invest.
5.6 Strategic Context

5.6.11 Cost effectiveness and efficiency
achieve the same goals of the GCF and Acumen. We think we can leverage GCF’s investment capital in the fund
on a 4:1 ratio by raising a $100M fund. We are also targeting a $10M Technical Assistance Facility, so GCF’s
grant capital of $5M could be leveraged on a 1:1 ratio.
Acumen will use the fund’s capital to make equity, quasi-equity and convertible debt investments in SMEs
that are serving low-income populations and achieving the desired environmental impacts. The 12-year time
horizon of the fund will enable the companies Acumen invests in several years to scale their businesses and
impact. Further, the fund will invest both equity and equity-like capital, both of which are needed by the
targeted investment given the relatively early stage nature of the enterprises and the risks involved in scaling
the enterprises. By organizing the fund as a for-profit fund, Acumen and GCF can crowd-in impact-oriented
private sector capital that is looking for a financial return on its investment as well as social impact. Given the
impact focus of the fund and the risk / reward profile offered by the underlying investments of the fund,
traditional private commercial capital is not interested in funding such an investment vehicle. Thus, the GCF’s
involvement will in no way b be crowing out private capital, but on the contrary, will potentially crowd-in
private capital that is looking to achieve social impact along with financial return.
Lastly, Acumen has a strong track record of deploying and returning capital. Acumen has appropriate
internal controls to monitor its investments and report to investors. The fund will seek to generate a positive
financial return to investors.
Based on our proposed investment vehicle and the resulting reduction cost of $66.67 per tCO 2eq detailed
in section E.6.5, we believe this proposal to be competitive amongst other interventions that have aimed to
reduce CO2 emissions.
EPA and other federal agencies use the social cost of carbon (SCC) to estimate the climate benefits of
rulemakings. The SCC is an estimate of the economic damages associated with a small increase in carbon
dioxide (CO2) emissions, conventionally one metric ton, in a given year. This dollar figure also represents the
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value of damages avoided for a small emission reduction (i.e. the benefit of a CO 2 reduction). The EPA
estimates the social cost of CO2 to be between $12 and $220.37
According to the journal of Natural Climate Change, the cost of one ton of CO2 emissions is estimated to be
around $220, significantly above the previous estimates of $37 per ton, which a government study had
concluded.38
Vattenfall, a Swedish utility, estimated in 2005 the average cost of reducing one ton of CO 2 emissions in
different regions of the world. This report found that the marginal abatement costs, in terms of Gross
Domestic Product, are 4.5 times higher among the poorest countries than among the wealthiest ones, the
average cost of CO2 reduction for countries outside of North America, Europe, OECD, transitional economies
and China was €18.2 ($24) at the time.39
We believe our proposal provides a cost effective means of reducing CO2 emissions while also having
significant social impact at the household level for BoP customers.
5.6.12 Co-financing, leveraging and mobilized long-term investments (mitigation only)
achieve the same goals of the GCF and Acumen. We think we can leverage GCF’s capital on a 4:1 ratio.
The Fund is intended to create a blueprint to a clean-energy future that can be followed by other nations
and that will attract billions of dollars in private capital.
5.6.13 Financial Viability
Acumen is targeting an approximate 11% Net IRR return to investors in the proposed Fund. Without the
anchoring investment of the GCF, Acumen believes it would be extremely difficult to raise such a Fund, if even
possible at all.
By creating this new Fund, the GCF is enabling a new and unique investing vehicle to target clean energy
interventions that reduce CO2 emissions while also positively impacting the lives of low-income populations
in developing countries. If this new Fund can prove that there are viable investment opportunities in this
target sector over the next couple years, Acumen and other investors could raise multiple funds on the back
of this success, which will serve to scale the GCF’s mitigation and adaptation goals. Thus, the GCF’s investment
in this first Fund could catalyze multiple follow-on investment vehicles. Further, because this Fund is focused
on for-profit enterprises, these companies should be able to continue to scale and remain financially viable
once the investment capital from the Fund has been returned.
Overall, Acumen seeks to create investment structures that will allow for exits, either through 1) sales to
a later-stage growth investor, a strategic buyer or a management buyout or 2) self-liquidating instruments
such as convertible debt and quasi-equity investment structures (i.e. instruments with shares of revenue or
EBITDA). Initial public offerings are not seen as practical exit opportunities given the relatively immature
capital markets in the economies in which the fund will invest.
As an investor in Acumen’s proposed Fund, the GCF will receive its share of financial distributions from
the fund when any liquidity events occur from the underlying portfolio companies. Such liquidity events
could include a sale of the Fund’s shares of the company or payment of principal, interest and/or dividend
37 http://www.epa.gov/climatechange/EPAactivities/economics/scc.html
38 http://news.stanford.edu/news/2015/january/emissions-social-costs-011215.html
39 http://www.econweekly.com/2007/09/on-cost-of-reducing-co2-emissions.html
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payments from a portfolio company to the Fund. The specific timing and manner of financial distributions
from the Fund to the GCF will be agreed upon in a Shareholder’s agreement between the GCF, the Fund, and
other investors in the Fund.
5.6.14 Application of Best Practices
Acumen invests in innovative companies that are bringing high quality products to vulnerable
populations. Those products consist of break-through technologies as well as older technologies whose costs
have come down over time, thus making them accessible to Acumen’s target market of low-income
consumers. Such technologies include, refined solar panel technologies, innovative remote monitoring
technologies, mobile payment, data and systems, emerging credit scoring models and algorithms to assess
customer bankability as well as human centered design practices for product development.
5.6.15 Key efficiency and effectiveness indicators
Estimated cost per t CO2 eq, defined as total investment cost / expected lifetime emission reductions:
(a) Total project financing US$ 100,000,000
(b) Requested GCF amount US$ 20,000,000
(c) Expected lifetime emission reductions overtime 1,500,000 tCO2eq
(d) Estimated cost per tCO2eq (d = a / c) US$ 66.67 / tCO2eq
(e) Estimated GCF cost per tCO2eq removed (e = b / c) US$ 13.33 / tCO2eq

standards for reduction of specific interventions, have informed these estimates of the number of CO 2
In order to estimate the number of CO2 emissions reduction from its investments, Acumen also looks at
best practices and industry reports in the field.
 Solar Lanterns: The United Nations Framework Convention on Climate Change estimates 0.092 tons
of CO2 per solar lantern per year and assumes a 5-year lifetime for solar lanterns. This number is in
line with Light for Life and Lighting Africa programs which estimate 0.1 tons of CO 2 per solar lantern
per year.
 Solar Grid Systems: The Energy Technology Systems Analysis Program's Off Grid Power in Rural
India study estimates a solar home lighting system reducing ~0.3 tons of CO2 per year. A UNFCCC
report, which estimates that a high-power level 3 certified solar system replacing kerosene would
reduce 0.723 tons of CO2 over its lifetime.
 Mini Grids: Electricity sold through microgrids displaces generator fuel used by commercial users at
approx. 0.5 litres/kWh sold. Conversion factor: 0.00232 Tonnes of CO2/litre of petrol. Electricity sold
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also displaces kerosene use at approx. 0.1 litres/household/day. Conversion factor: 0.00254 Tonnes
of CO2/litre of kerosene40
Acumen has invested $14 million in 14 energy companies in East Africa, India and Pakistan. Acumen’s
energy portfolio has reach approximately 50 million lives and has reduced approximately 4.5 million tons of
CO241. In East Africa alone, Acumen has invested 5.4 million in 6 investments across solar, biomass and
cookstove companies, reaching approximately 27 million lives and reducing approximately 2.5 million tons of
CO2. 42 Below are estimates of Acumen’s energy portfolio impact to-date by specific investment.

These metrics are approximations derived from industry research, company data, and various
assumptions and methodologies, as described above, and have not been verified by a 3 rd party.
Expected volume of finance to be leveraged by the proposed programme:
achieve the same goals of the GCF and Acumen. We think we can leverage GCF’s capital on a 4:1 ratio.
By anchoring the Fund with a $20M investment, we believe Acumen can raise an additional $80M from
other investors, including up to $5M from Acumen. Further, the creation of this new investment vehicle, and
the resulting investments from this Fund, will attract capital from co-investors into the underlying portfolio
companies as Acumen has a strong reputation and multiple value-add resources it can offer the portfolio
company. It is harder to estimate an exact amount of how much capital will be invested in these companies as
a result of Acumen investing in them with this Fund, however it is reasonable to expect that GCF’s creation of
Acumen’s Fund will catalyze further capital from co-investors in the underlying portfolio companies of the
Fund.
We think a $20M anchor investment from the GCF is not only catalytic but also crucial to Acumen’s ability
to raise this Fund. Furthermore, we believe being able to raise a 100M fund and leveraging GCF’s capital in a
4:1 ratio is a strong use of GCF’s capital.
A $20M investment from GCF will enable Acumen to create the world’s first climate change fund focused
on BoP populations in developing countries. This anchor investment will be not only catalytic but also crucial
to enable Acumen to create the first climate mitigation fund to utilize SMEs to affect the lives of low-income
40 http://www.eia.gov/environment/emissions/co2_vol_mass.cfm

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populations in developing countries. We believe being able to raise a $100M fund and leverage GCF’s capital
in a 4:1 ratio is a strong use of GCF’s capital.
VI. Appraisal Summary
6.1 Economic and Financial Analysis

The forecasted financial return of a 11% Net IRR to the GCF and other investors in this Fund accounts for,
amongst other factors, Acumen’s expectations of the ability of its underlying investments to scale and reach
profitability, the size of the impact capital and commercial capital markets that are willing to take the risks
stated above and invest in companies, and potential movements in foreign currency relationships over the life
of the Fund.43 The economics of the Fund also account for the expenses that will be incurred in managing a
portfolio of companies that operate in these challenging operating environments.
The analysis below shows Acumen’s assumptions for financial return of the portfolio and the economics
of the Fund in terms of disbursed/returned investment capital and operating expenses that influence the
overall financial return of the Fund. Higher-level macro-economic factors such as currency risk and political
risk are factored into the forecasted financial return of each investment.
The Fund expects to make investments in illiquid markets, which have disproportionate risk relative
to financial returns given the Acumen’s significant social objectives. As such traditional commercial
capital, and even segments of “impact investors” that are still focused on achieving “market rate
returns” are not interested in taking the risk of investing in the types of investment opportunities that
Acumen’s Fund will be targeting. Specific risk factors and reasons that justify the concessionality of the
GFC funding include 1) Liquidity Event/Exit, 2) Inflation and Interest Rate Risk, 3) Foreign Currency,
Exchange Rate and Market Risks, and 4) Accounting Standards, Limited Availability of Information, and
Due Diligence.
6.2 Technical Evaluation

Acumen invests in innovative companies that are bringing high quality products to vulnerable
populations. Those products consist of break-through technologies as well as older technologies whose costs
have come down over time, thus making them accessible to Acumen’s target market of low-income
consumers. Such technologies include, refined solar panel technologies, innovative remote monitoring
technologies, mobile payment, data and systems, emerging credit scoring models and algorithms to assess
customer bankability as well as human centered design practices for product development.
6.3 Environmental, Social Assessment, including Gender

Considerations
Acumen has formalized robust ESG diligence, monitoring and reporting processes, which are based on
industry standards, as well as guidelines outlined by several prospective Investors for its global portfolio
(elaborate by stating the checklists that will be used) from leading organizations like the IFC and FMO. The
ESG diligence process and reports include assessment of the 8 IFC Performance Standards and an overall
43 The Fund will make investments based on the Manager’s estimates or projections of internal rates of return and current
returns. Investors have no assurance that the Fund will achieve its total return objectives on its investments. In
addition, the Manager may adjust targeted returns to reflect any changes in market conditions.
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rating on Environmental, Social, Business Integrity, and Corporate Governance risks of the enterprise Acumen
will include a formal ESG process for conduct a formal ESG process for all investments of the Fund. Acumen
will designate a person in charge of all ESG matters related to the Fund and its investments, and will also
ensure all members of the Investment Team have been adequately trained with respect to appropriate ESG
processes. As per its accreditation by the GCF, and with respect to ESS risks, the Fund will only target
Category C projects for investment.
As with any solar related project or intervention, one of the environmental issues to contemplate is the
waste management of solar products after their useful lives. Some countries have policies and processes in
place to handle waste management, while others are still developing the appropriate regulations and
procedures. The Fund will seek to ensure to the best of its abilities that its portfolio companies comply with
the relevant local policies and procedures regarding effective waste management. Example of initiatives that
are being developed in places like Rwanda include recycling programs, quality standards to ensure products
have long useful lives, and trade-in programs.
In Initial Due Diligence, the Portfoliot Manager will analyze potential ESG risks and financial management
and governance risks, based in part on the company’s sector, sub-sector and geography, as well as on an
initial understanding of the company’s operations. Based on these factors, the deal team will rate potential
ESG risks as Low, Medium or High. These risks ratings will be presented as part of the Preliminary
Investment Memo (“PIM”), and will ultimately serve to guide the team as it prepares its formal diligence plan.
During Formal Due Diligence, the Portfolio Manager will conduct extensive ESG diligence, focusing on
areas highlighted from the initial ESG risk evaluation. The ESG diligence is meant to uncover ESG risks,
identify potential risk mitigants and/or the lack thereof, as well as evaluate areas for potential ESG
improvements. Upon completion of formal ESG diligence, the Portfolio Manager will rate each of the ESG risks
as Low, Medium or High and come to a conclusion on whether the investment remains appropriate given this
assessment. The Portfolio Manager will also complete an ESG Action Plan, which outlines steps that the
company will take going forward to remedy or mitigate any ESG issues or risks deemed unacceptable. These
elements will be presented to the IC in the Investment Memo (“IM”).
In areas where the Portfolio Manager identifies high ESG risks, and which require specific and deep
domain expertise (e.g., supply chain audit), Acumen will typically engage external experts as consultants to
aid in diligence and verification. Acumen will, to the extent available, attempt to cover the costs of these
external consultants from the Technical Assistance (“TA”) Facility raised in conjunction with the Fund, but
such costs will otherwise be borne by the Fund.
Given that the Fund will be focused on SME, the environmental and social risks are less than compared to
larger infrastructure projects. Having said that, Acumen does understand these risks as they related to SMEs
and has an ESG process, outlined above, in place that all investments will have to undergo before Acumen’s
approves investment in them. This ESG process was built from industry standard practices of the IFC and its
Performance Standards. Because of the relatively low environmental impact of the SMEs that the Fund will
target, as well as the limited resources of the SMEs, Acumen does not typically require a formal ESMS at its
investment companies. However, in situations in which potential more materials ESS risks are identified,
Acumen would seek to leverage technical assistance funding to enable portfolio companies to implement an
ESMS and those provide more robust monitoring and reporting capabilities. However, the Fund will adhere to
Acumen’s ESG diligence and monitoring policies and will thus inherently require the portfolio company to
provide sufficient information and risk mitigating practices related to ESS, even if the company does not have
a specialized ESMS in place.
With specific regard to women, many of Acumen’s investments positively impact women in such areas as
health, safety, and livelihood. Solar lanterns can replace the use of kerosene, thus making lighting in the
household higher quality and reducing the fumes that women and children are exposed to.
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Acumen is currently formalizing its Gender Policy, which will outline specific gender issues related to the
governance and human resource aspects of Acumen the institution, as well as the specific gender indicators
that the Fund will report on with respects to the gender impact of its portfolio companies. This policy will be
approved by Acumen’s board and will be posted on the website so it can be seen and reviewed by the public.
Acumen will have this formal Gender Policy in place before disbursement of any funds from the GCF to
Acumen.
Regarding gender impact, many of the goods and services provided by the companies the Fund expects to
invest in will have direct impact on women, such as solar lanterns and home systems which can lead to the
reduction of kerosene use and related indoor air pollution. Given the direct impact of these goods and
services on women, many of these companies also hire women employees, providing income and
empowerment for women. Acumen will seek to understand the impact that its investments have on women
through company-provided data, diligence visits and company visits by members of the Fund’s investment
team, and 3rd party research and data collection. Historically, Acumen has conducted its own research on the
impact on women of certain of its portfolio companies and has also partnered with organizations like the
International Center for Research on Women to research and better understand gender impact. Acumen
expects to provide similar research for investments made by the Fund and will share that with the GCF.
Acumen is working with the International Center for Research on Women (ICRW) to better understand
how our companies are engaging women, and how engaging women can affect the social and business
performance of a company. After conducting the broad review of trends in the gender lens impact investment
sector and assessment of what social enterprises are doing to engage, reach and impact women across
various sectors, ICRW conducted a deeper analysis of some of the enterprises in which Acumen invests.
Together with ICRW, we have developed the framework for the study, which will be anchored in identifying
both the impact case and the business case for targeting women, and how the two can reinforce each other.
We expect to have the final report in October 2015. The report will offer sector-level insights, identifying not
only where our investees are currently targeting women but also places of opportunity, things that are not
yet happening, but should be in order to create impact for women and communities.
6.4 Financial Management and Procurement

Acumen has appropriate internal policies and procedures in place with regards to financial accounting,
disbursement, wiring and receipt of Fund, and audits of financials. Acumen undergoes a financial audit ever
year and can share audited financial statements and/or auditor engagement letters upon request. Acumen
can also share any requested details on internal controls related to disbursement and wiring procedures and
policies regarding Acumen’s Finance and Audit Committee.
In its due diligence of investment opportunities, Acumen conducts, and the Fund will conduct, in-depth
analysis and diligence of the financial and procurement operations of potential portfolio companies. Amongst
many other items, diligence includes assessment of internal financial controls, relationships with suppliers
and relevant procurement policies, and accounting systems and reports. Acumen requires that is portfolio
company have audited financial statements once the company receives investment from Acumen. Acumen
also ensures that its portfolio companies are in compliance with its anti-money laundering and anti-
corruption policies.
The Manager plans to utilize investment capital from the Fund for growth-oriented investments in
portfolio companies that are more developed than start-up enterprises, but are still relatively early-stage,
high-risk companies in the context of traditional investing. The Manager will target portfolio companies that
have shown proof of concept, have established business models and that have a clear path towards
profitability. The Manager will also prioritize a strong management team with a track record of execution and
operational experience.
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The Fund will seek to make minority (i.e.,less than 50% ownership) equity and equity-linked debt
investments totaling from $2.0 million to $10.0 million per portfolio company. Detailed investment criteria of
the Fund with respect to target portfolio companies and investment structures are described in the table
below.
KSV Target Investment Criteria

 Experienced entrepreneur with proven ability to execute
Company Leadership
 Complete or plan for completing management team
 Proof of concept around business and revenue model
Idea
 No ambiguity around proving product or market
 Clear and quantifiable path to scaling operations and impact
Execution*  Historical operations showing ability to execute; at least 1 year of
operations
 Revenue generating
Financials*
 Positive gross margins
Organization  Basic structure and systems in place
Market & Consumer  Proof of customer adoption and market receptivity
Competition/Substitution  Identified as a potential leader in the defined market
Regulatory & Legal  Defined and established legal and regulatory environment
ESG status  Satisfactory results from environmental, social, and corporate
governance assessment
Integrity standards  Satisfactory result from Patriot Act/Anti-Money Laundering checks on
entrepreneurs, senior management, board members, and existing
investors
* Up to 20% of the portfolio companies in which the Program invests may be in an earlier stage; in such cases,
the investment committee should approve that a company warrants early-stage investments for clear
reasons, which must be elaborated in the investment memo for the company.
VII. Risk Assessment and Management
7.1 Risk Assessment Summary

As an investment fund focusing on innovative businesses in developing markets, the Fund and the
portfolio companies in which it plans to invest may face a host of challenges. Acumen believes that these
challenges can be summarized in three categories, across 1) Execution Challenges and Risks, 2) Financial
Risks, and 3) Legal and Regulatory Risks. Acumen’s general strategies for risk management in each of these
risk categories are outlined in the sections below.
The Managing Director and Investment Director will regularly evaluate the overall risk of the Fund and its
investments. They will also prepare a quarterly report for the IC, which identifies risks from the previous
quarter and includes recommendations for procedures to mitigate and address such risks.
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7.2 Risk Factors and Mitigation Measures

RISK FACTOR 1
Probability
Description Risk category Level of risk of risk
occurring
Execution Challenges & Risks
 The Fund will invest in early stage, innovative
companies. By definition, these enterprises
operate with a lot of unknowns around
business model, company operations, and
market dynamics. These enterprises may fail
or may take longer than anticipated to
achieve financially viable business models
 The Fund generally will seek significant
minority stakes with strong contractual
rights, though it sometimes may have a
majority position in consortium with other
co-investors. As such, the Fund does not
expect to control the activities of its portfolio
companies. Medium (5.1-
Technical and
 Many of the Fund’s investments will involve 20% of project Medium
operational
selling and distributing consumer goods in value)
rural, off-grid markets. These areas typically
have very poor infrastructure and accidents
can happen with respect to damages of goods
and services while in transport and during /
after product purchase or installation.
 The Fund will invest in enterprises that
provide high quality products, those
companies will face competitive pressure
from cheaper and lower quality products
 Products provided by the Fund’s investees
are intended to last for multiple years. Issues
related to quality of the products,
environment and weather, and user error
could affect the actual useful life of products
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Mitigation Measure(s)
The Fund has rigorous due diligence processes which include analysis of financial, operational, market and
ESS issues. The due diligence process provides the Fund with the ability to asses high quality investment
opportunities and select enterprises with strong management teams, high quality products, and strong
brand names and reputation. The fund will not only provide investment capital, but will provide strategic
advice and additional resources through such actions as sitting on the Board of companies, identifying and
working with co-investors, providing access to local networks of experts and value-add partners, and
offering specific technical assistance programs. Example of technical assistance programs could include a
financial reserve to service products after purchase if a company goes bankrupt, training of women to
become solar technicians, implementation of MIS and ESM systems, market research and impact
measurement.
RISK FACTOR 2
Probability
Description Risk category Level of risk of risk
occurring
Legal Challenges & Risks

 Countries in which the Fund seeks to invest
lack fully developed legal systems, and many
of the countries in which the Fund seeks to
invest control the repatriation of investment
income, and capital and profit that result from Medium (5.1-
Technical and
foreign investment. Some of the Fund’s 20% of Medium
operational
investments may work in partnership with project value)
local, regional and/or national governments.
Risks for corruption and bribery could be
heightened within these partnerships
 Understanding of local legal frameworks in
multiple countries in East Africa could be
difficult
In order to mitigate legal risks, Acumen will rely on its experienced, local, in-house legal team as well as
outside counsel. Acumen’s General Counsel has over 15 years of corporate law experience. Acumen has
developed strong relationships with global law firms and local law firms in the countries in which Acumen
invests who provide guidance and support on deal execution and other legal matters. The in-house legal
team also is involved in deal research, diligence, structuring, closing and as needed, post-investment
monitoring. The team develops strategies and processes for navigating regulations pertinent to specific
geographies, industries and situations. Additionally, the legal team works to recommend deal structures
that minimize legal challenges and risks. With regard to issues of repatriation of investment income and
other capital, the risk exposure of the Fund of such capital controls seems to be relatively lower in the
three target countries of Kenya, Rwanda and Uganda compared to other countries in the region. Excerpts
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from documents from the US Department of State regarding capital controls in these countries are
provided below.
Kenya: (http://www.state.gov/e/eb/rls/othr/ics/2012/191175.htm)
“Kenya’s Foreign Investment Protection Act (FIPA) guarantees capital repatriation and remittance of
dividends and interest to foreign investors, who are free to convert and repatriate profits including un-
capitalized retained profits (proceeds of an investment after payment of the relevant taxes and the
principal and interest associated with any loan). Kenya has no restrictions on converting or transferring
funds associated with investment. Kenyan law requires the declaration of amounts above Ksh 500,000
(about $5,600) as a formal check against money laundering. Foreign exchange is readily available from
commercial banks and foreign exchange bureaus and can be freely bought and sold by local and foreign
investors.”
Rwanda (http://rwanda.usembassy.gov/investment_climate_.html)
There is no difficulty obtaining foreign exchange, or transferring funds associated with an investment into
a usable currency and at a legal market-clearing rate. In 1995, the government abandoned the dollar peg
and established a floating exchange rate regime, under which all lending and deposit interest rates were
liberalized. The central bank holds daily foreign exchange sales freely accessed by commercial banks.
Investors can remit payments only through authorized commercial banks. There is no limit on the inflow of
funds, although local banks are required to notify the central bank of all transfers over USD 10,000 to
mitigate the risk of potential money laundering. Additionally, there are some restrictions on the outflow of
export earnings. Companies generally must repatriate export earnings within three months after the goods
cross the border. Tea exporters must deposit sales proceeds shortly after auction in Mombasa. Repatriated
export earnings deposited in commercial banks must match the exact declaration the exporter used
crossing the border. Rwandans working overseas can make remittances to their home country without
impediment.
It usually takes two to three days to transfer money using SWIFT financial services. Other financial services
companies such as Western Union and Money Gram are also available to investors seeking to transfer
funds.
Since January 2007, the Rwandan franc (Rwf) has been convertible for essentially all business transactions.
Rwanda has a liberal monetary system and complies with International Monetary Fund (IMF) Article VIII
and all Organization for Economic Cooperation and Development (OECD) convertibility requirements.
Uganda (http://www.state.gov/e/eb/rls/othr/ics/2013/204753.htm)
Uganda keeps open capital accounts, and Ugandan law imposes no restrictions on capital transfers in and
out of Uganda. Investors can obtain foreign exchange and make transfers at commercial banks without
approval from the Bank of Uganda in order to repatriate profits and dividends, and make payments for
imports and services. Investors have reported no problems with their ability to perform currency
transactions.
The Fund is registered in Mauritius as the country has a well-developed regulatory framework and
understanding of investment fund operations due the vast amount of funds that are already registered in
the country. Mauritius also has tax treaties with several countries, which is beneficial to investors in the
Fund. Non-US investors prefer investment funds that are registered in Mauritius as opposed other areas
because of the tax treaties and the favorable regulatory environment.
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RISK FACTOR 3
Probability
Risk
Description Level of risk of risk
category
occurring
Exit and Valuation Risks

 The Fund will invest in companies in markets
which have limited options for liquidity events /
exits due to lack of developed financial markets,
including lack of an abundance of private equity
and venture capital firms
 Many of the countries in which the Fund seeks to
invest control, to some extent, the repatriation of
investment income, and capital and profit that
Medium (5.1-
result from foreign investment.
Financial 20% of project Medium
 Accounting standards in the countries in which value)
the Fund seeks to invest do not generally
correspond to international accounting standards,
and national accounting, auditing and financial
reporting standards are not yet in place in many
target countries Many portfolio investments will
generate revenue that is denominated in foreign
currency, and changes to exchange rates may
affect the value of the Fund’s investments in
portfolio companies.
In order to mitigate financial risks, the Fund expects to develop investment structures reflective of market
conditions. For example, the Fund wil invest equity capital when appropriate, but will also look to invest in
debt instruments and equity-like instruments that have a pre-determined liquidation date to help improve
the likelihood of financial exits. The Fund also expects to capture ongoing upside through vehicles such as
dividends and warrants to help offset the unpredictability of markets. The Investment Team of the Fund
will have ongoing relationships with potential strategic acquirers of portfolio companies and growth stage
investment firms to help improve exit opportunities for the Fund’s investments. At times the Fund may
employ currency-hedging strategies if those are available and affordable. The Fund will carefully monitor
investments and utilize regional team to stay abreast of changing markets and company conditions. The
Fund will require its portfolio companies to have financial audits in order to improve transparency of
financials and accounting systems.
GCF/B.11/04/Add.05
Page 44
VIII. Logic Framework

8.1.1 Paradigm Shift Objectives and Impacts at the Fund Level
Objective: Shift to low-emission sustainable development pathways
This Fund will be the world’s first climate change fund that is focused on SMEs that serve BoP populations in
developing countries. With partnership from the GCF, this Fund will allow Acumen to develop a strong track
record and will enable Acumen to raise future, larger funds to invest in more companies that are aligned with
the GCF’s impact goals.
Means of Target
Expected Result Indicator Verification Baseline Mid- Assumptions
(MoV) Final
term
Fund-level impacts
Each
M1.0 Reduced 1,500,000 kerosene
Tonnes of
emissions through Company tons of lantern
carbon
increased low- data and 3rd CO2 displayed
dioxide 0
emission energy party reduced equals
equivalent
access and power validation reducing 0.1
(tCO2eq)
generation and tons of CO2
measurement per year
8.1.2 Outcomes, Outputs, Activities and Inputs at Programme Level
Means of Target
Expected Result Indicator Verification Baseline Mid- Assumptions
(MoV) Final
term
Project/programme
Outcomes that contribute to Fund-level impacts
outcomes
Number of
The number
households, and
of household
M6.0 Increased individuals
Number of (5
number of small, (males and
the direct 15 million individuals at
medium and large females) with 0
beneficiaries individuals average) to
low-emission power improved
purchase
suppliers access to low-
Solar Home
emission
System
energy sources
Given the nature of equity investment, output could not be defined based on log-frame theory approach.
Nonetheless, once the equity investment will be delivered, ACUMEN will track the number of sales/services
GCF/B.11/04/Add.05
Page 45
delivered by each beneficiary company. This includes track social impact metrics within the portfolio of
companies where ACUMEN has invested
8.2 Arrangements for Monitoring, Reporting and Evaluation

Acumen will track social impact metrics of the portfolio companies and report those to the GCF. Acumen
will work with the GCF to define the appropriate metrics. Potential metrics could include number of lives
impacted, number of individuals/households with improved energy products, number of tons of CO 2 reduced,
amount of renewable energy generated, and increased income of smallholder farmers.
Along with detailed ESG analysis and monitoring, Portfolio Managers will work to understand the
potential impact of a portfolio company as a function of multiple components, including: Focus on the Poor,
Breadth of Impact and Depth of Impact; and appropriate metrics related to climate change mitigation and
adaptation as defined by Acumen and GCF. Acumen currently has a dedicated Impact team that can work with
Portfolio Managers and portfolio companies to assess the social impact of its portfolio companies. Portfolio
Managers will have access to Acumen’s knowledge and resources and will work with the Fund’s portfolio
companies and external parties to assess social impact through the Portfolio Managers’ own diligence and
analysis, metrics and insights provided by portfolio companies and partnerships with third parties interested
in completing research and field studies.
Through close relationships with portfolio companies, developed in part by obtaining board seats or
board observer roles for information and access to the extent such roles are available, Acumen will monitor
numerous factors in relation to the health and activities of the Fund’s portfolio companies. These factors
include standard financial metrics, social performance tracking, ESG metrics, competitive positioning and
ongoing market trends in the industries and geographies in which the Fund’s portfolio companies operate, in
each case as reported and audited by portfolio companies.
With respect to financial reporting, Acumen will pay particular attention to top and bottom line trends,
cash balance, cash flow requirements as well as any other significant changes in financial performance and
health. Acumen will also monitor operational metrics and ongoing working capital needs. With respect to
social performance tracking, Acumen will monitor metrics which are agreed upon with each portfolio
company’s management at the time of initial investment. These typically include units sold as a proxy for
Lives Impacted as well as other important social data points that are gathered as part of ongoing operations.
Acumen will actively monitor ESG matters in portfolio companies from point of investment onwards. This
will typically include 1) monitoring ESG risk areas, 2) assessing progress made on the ESG Action Plan, and 3)
evaluating any changes in the business, which might create additional ESG risks. The Portfolio Manager is
expected to report all serious ESG issues (such as labor or manufacturing accidents) to Acumen. Additionally,
Portfolio Managers and the Managing Director, with the support of Acumen’s investor relations professionals,
will update the investors on ESG progress, risks and other pertinent ESG updates as part of the Annual
Review process (described below).
To monitor ongoing market trends, Acumen will typically inquire about key hires and departures,
strategic priorities and any ongoing regulatory and legal processes. In some cases, the Fund’s investments
will be structured in tranches, with specific requirements for additional disbursements. In these scenarios,
Acumen will monitor progress against established milestones in order to anticipate future disbursements.
GCF/B.11/04/Add.05
Page 46
Specific documents, systems and processes used to carry out the above monitoring include:
a) 100-Day Plan
Portfolio Managers for Fund investments will develop a “100-Day Plan” at the time of an investment in
collaboration with the management of the relevant portfolio company. This document identifies the key near-
term action items the company has committed to completing, as well as the challenges the company may face
and the actions that can be taken to mitigate those challenges. The Fund’s internal processes will require a
100-Day Plan to be drafted before the Fund will disburse funds. The 100-Day Plan will typically target three
to four key priorities that can each be broken down to two to three specific tasks with clear timeframes and
lines of responsibility. Examples of areas that the 100-Day Plan may focus on include corporate governance,
management capacity building, sales and marketing, and operations and information management. The
Portfolio Manager will monitor the progress of the action items included in the 100-Day Plan, typically
through monthly reports from the portfolio company along with general communication with its
management.
b) Performance Management and Metrics

i. eFront FrontInvest
The Manager will utilize eFront’s FrontInvest product, a leading portfolio management platform for private
equity and venture capital firms. This platform will be used to house all data related to pipeline tracking, deal
execution and management, and portfolio level analysis and valuation. The platform will also be used to
produce regular reports, including on portfolio company operations and impact.
c) Annual Review Process

The annual review process is a culmination of the monthly and quarterly reviews that occur throughout
the year. The purpose of the annual review is to assess the performance of the Fund’s portfolio companies on
financial, operational and social and environmental impact metrics; to identify those portfolio companies that
are facing significant challenges as well as those that have seen superior performance; to foster detailed
discussion and thought amongst the Investment Team members and the IC as to how best to support the
portfolio companies going forward; and ultimately to inform strategic decisions related to the overall
portfolio strategy.
The annual review document is supplemented by a Post-Investment Management Plan (“Post Plan”) that
outlines an engagement strategy with respect to each investment. The Post Plan is developed along the same
timeline as the annual review document and is discussed in the same forum. The Post Plan identifies key post-
investment management priorities and outlines quarterly deliverables for each. The annual review
documents will also include an update report on ESG matters.
In conjunction with the above-described annual review, the Investment Director will conduct a review of
the Fund’s underlying portfolio investments and make any adjustments deemed necessary to the valuation of
each of the investments, including write-downs of any impaired investments. Acumen will also host an annual
investor conference for the investors.

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FP005: KawiSafi Ventures Fund

Kenya and Rwanda | Acumen Fund, Inc. | Decision B.11/11

October 26, 2015

I. Brief Programme information

1.1 Programme Executive Summary

II. Financing / Cost Information

2.1 Description of Financial Elements of the Programme

LP Investor Returns Potential Lives Impacted

Investor Returns Potential Lives Impacted

Investor Returns Potential Lives Impacted

Technical Assistance Facility (“TAF”)

The following are potential uses of TAF funds:

b. Capital to facilitate an acquisition of / partnership with a defunct company by a viable

4. Corporate governance improvements:

5. Investment impact monitoring and evaluation frameworks:

2.2 Project Financing Information

Target Programme Size Share of GCF Participation

2.3 Financial Market Overview

Country 1-year T-Bill 5-year rate 10-year rate

III. Detailed Programme Description

3.1 Strategic Context

Policies and Plans to Support Off-Grid Power

 Piloting innovative partnerships to increase rural access: Innovative public-private partnerships

Off-Grid Solutions and 3.3.1.2 Off Grid Solutions.

Guiding Policy Documents

Anticipated Policy & Regulatory Developments

15 SolarAid Kenya Country Report 2014.

Renewable energy generation and potential:

regulation review (REEEP), Uganda Gap Analysis (SEFA).

regulation review (REEEP), Uganda Gap Analysis (SEFA).

regulation review (REEEP), Uganda Gap Analysis (SEFA).

Excerpts from Uganda National Climate Change Policy

3.2 Programme Objective Against Baseline

[Goal and anticipated outcome against the baseline scenario]

Lives Impacted: Target of 15 million lives reached

Units Sold from Year 3 - Year 8

Totals 2,613,646 13,068,229

CO2 Emission Reductions: Target of 1.5 million tonnes of CO2 reduced

3.3 Programme Description

3.4 Background Information on Programme Sponsors

o Market-based delivery of a critical good or service (such as healthcare, energy, agriculture,

o Willingness to work collaboratively and to meet pre-determined milestones

Social and Financial Impact to Date

Region Sub-Sector Company Lives Impacted Tons of CO2 Reduced

methodologies and have not been verified by a 3rd party.

3.5 Market Overview

3.6 Regulation, Taxation and Insurance

3.7 Institutional / Implementation Arrangements

Acumen Fund, Inc.

Acumen Capital Partners LLC Limited Partners

Fund management services

IV. Rationale behind GCF involvement

4.1 Value Added for GCF Involvement

4.2 Exit Strategy

V. Expected Performance Against Investment Criteria

5.1 Impact Potential

 Climate impact potential

 Paradigm shift potential

 Sustainable development potential

 Needs of the recipient