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May 19, 2012

Deal Alert: Lok Capital and Acumen invest Rs. 7 Crore in Hippocampus Learning Centres

From the Press Release:

LokCapital, one of the largest dedicated funds in India for businesses focused onserving the lower income and base of the pyramid (BOP) customer segments and Acumen Fund, a pioneering nonprofit global venture firm addressing poverty in South Asia, East and West Africa, today announce Rs. 7 crore investment in Hippocampus Learning Centres (HLC), a for-profit rural education service provider in India. This is Lok Capital’s and Acumen’s first investment in Education and marks the launch of their respective education portfolios. Based in Karnataka, India, HLC provides affordable, quality education by employing and training local female teachers who coach students between the ages of 3-12 in both pre-school and primary instruction.

Education has traditionally been a public sector service but public education systems globally have struggled to meet the learning needs of low-income populations. In a rapidly developing economy like India, more than 50% of children between the ages of 15 and 19 are currently unemployed or out of school. Those that go to school receive low-quality instruction that often focuses more on rote memorization than on real learning.Rural India faces the greatest challenges –more than half of rural 5th standard students cannot read a 2nd standard level text and only 28%can do a basic division problem.

“The private sector has a critical role to play in creating education innovations that serve the poor. These customers are increasingly demonstrating their willingness to pay for quality solutions and demand accountability for them,” said Ankur Shah, Interim India Director at Acumen Fund “That is precisely what we want to promote. We believe the public sector in turn must play a role in enabling these solutions to scale and see many opportunities to partner with governments.”

HLC’s goal is to create positive and tangible learning outcomes for children in rural India, using its in-house curriculum which allows children of various age groups to learn at their own pace. This curriculum is designed by veteran educationists. The learning and pedagogy at HLC is creative, facilitative (not chalk-and-talk), non-threatening and enjoyable, which is a clear contrast to the largely common rote learning approach. HLC not only aims to address the learning crisis for children in rural India but also unlock potential for local women by creating attractive employment opportunities. Currently HLC’s pilot in 39 villages has generated significant lessons learned with 50 teachers and 700 students across two districts in rural Karnataka. With this investment, the company plans to focus on delivering learning outcomes to over 7,000 students through 300 teachers in 100 villages serving in the next two academic years.

HLC’s founder and CEO, Umesh Malhotra has extensive education and entrepreneurial experience in India as the founder of Hippocampus Reading Foundation, a network of over 250 libraries, and as co-founder of Bangalore Labs, India’s first IT infrastructure management firm. “Our emphasis must be on building strong delivery systems rather than just products,” Malhotra said. “HLC has a tremendous opportunity to provide quality education to a massive group of young children – forever changing their future. HLC’s pedagogy, ability to impart learning through centers, teacher training processes, center administration and focus on learning outcomes will ensure robust instructional delivery at scale.”

Announcing the funding, Mr. Ganesh Rengaswamy, Partner, Lok Capital said “We are excited to partner with Hippocampus Learning Centres as our maiden investment in the affordable education space. Education is a crucial game changer in addressing social and economic inequalities of present and future. Private investments in sound and replicable business models like HLC and joint PPP initiatives with government in school management are pivotal in addressing the primary education imperative.’

Going forward, Lok Capital and Acumen Fund will continue to partner with more entrepreneurs working in the sector focused on improving the quality of education, at an affordable price, with a clear focus on customers at the lower income or base of pyramid segments in rural and urban India.

About Hippocampus Learning Centres
The goal of Hippocampus Learning Centres (HLC) is to offer high quality education services to children in the villages of our nation. We establish education centres which offer both Kindergarten and After School programs. The after-school programs teach English, Math and Kannada. Each of our centres boasts of a library and a LEGO kit and conducts activities on art,craft and science to give these children a well rounded education. Our goal isto ensure that these children stay ahead of their class requirement and get an equal opportunity to participate in the progress of the nation. We employ women from the local community as teachers. They are then trained and provided continuous support. Within 2 years of its establishment, Hippocampus is working in 90 villages, employs 300 people and reaches out to 5,000 children. For more information contact Umesh Malhotra on umesh@hippocampus.in

About Acumen Fund
Acumen Fund is working to create a world beyond poverty by investing in social enterprises, emerging leaders and breakthrough ideas. We invest patient capital in business models that deliver critical goods and services to the world’s poor, improving the lives of millions. Since 2001, Acumen Fund has globally invested more than $75 million in 69 enterprises across South Asia, East and West Africa. And we are building a global community of emerging leaders that believe in creating a more inclusive world through the tools of both business and philanthropy. In India, we have approved and invested over $30 million in 24 enterprises that have provided over 10 million low-income individuals access to water, health, energy, and agricultural services.
With anchor philanthropic commitments from the AfJochnick Foundation, the World We Want, Giving Wings, and Motwani Foundation,Acumen Fund has launched a dedicated Education Portfolio that will support private sector innovations that increase access to low-cost, high-quality learning and employability services for the poor. With this first investment in place and a pipeline of additional investments in development, Acumen Fund’s Education Portfolio is positioned to grow quickly in support of Acumen Fund’s global goal of impacting the lives of 150million people by 2015. For more information on Acumen Fund’s activities and investments, visit www.acumenfund.org.

For additional information on Acumen Fund’s Education Portfolio and its investment in Hippocampus Learning Centres, please contact Molly Alexander at malexander@acumenfund.org(India)or Elizabeth Patella at epatella@acumenfund.org(Global)

About Lok Capital
Lok Capital is one of the most active venture capital funds investing in high potential financial inclusion and broader inclusion enterprises (Education,Healthcare, Livelihoods), serving the lower income and bottom of pyramid (BOP)segment. Lok Capital has under management currently, two funds with ac orpus of almost $90 million. Lok Capital aims at impact investing; to promote inclusive growth by supporting the development of social enterprises to deliver basic services to serve the BOP segment in a scalable, affordable and commercially viable manner. Lok seeks to partner with visionary entrepreneurs to help take these social enterprises to new levels of sustainability, scalability and professionalism and thus multiply the ‘impact’ on the BOP segment.

Lok Capital was founded by Rajiv B. Lall in the year 2000 with a seed grant from the Rockefeller Foundation. Other co-founders include Donald Peck and Vishal Mehta. The Lok portfolio includes the likes of Ujjivan, Basix, Janalakshmi, Asirwad, and RuralShores, among others. For more information on Lok Capital’s Funds and activities, visit http://www.lokcapital.com