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Desi Hangover
& Acumen

Had it not been for Acumen’s timely infusion of patient capital, Desi Hangover would have had to shut shop and lay off the 110 artisans they support.

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Zero-Interest Convertible Note

Convertible Notes are short-term debt that converts into equity. Investors loan money to an organisation and rather than get their money back with interest, they receive shares of preferred stock as part of the company’s initial preferred stock financing, depending on the terms of the note. Convertible notes are hybrid security instruments with both debt-and-equity-like features. 


₹45.6 L



5 yrs


50% - 50%


₹2.7 Cr





80% - 90%


Desi Hangover is a social enterprise that has evolved into a contemporary, D2C Kolhapuri footwear brand. Their products are handcrafted, upcycled, and durable. They leverage technology and traditional techniques to co-create superior quality ethnic footwear that creates sustainable livelihood opportunities for a marginalised community of artisans in Maharashtra and Karnataka. Their omnichannel strategy drives sales through diversified online channels and offline retail partners.

Artisans — 50% of them women — get paid fairly and far above prevailing market rates, resulting in a rise in income by




Desi Hangover was clear from the start that the business had to ensure artisan livelihoods but also have a solid, market-centric business model that was profitable. Banks are not an easy source of capital and tend to invest in different sectors, often with access to collateral but in Desi Hangover’s case, a lot of the early investment came from a regular bank — primarily against the HCM’s balance sheet which showed consistent growth, revenues and profits. Everything was going according to plan until COVID-19 hit.


Working capital had always been a challenge and as they scaled, they needed greater sums of money, which was hard to come by. With businesses coming to a standstill everywhere owing to COVID-induced lockdowns, Desi Hangover needed to find empathetic capital that would support their plans for growth and expansion while ensuring their artisans did not go unpaid during COVID-19.

“One of the biggest challenges we faced was trying to juggle creating a profitable brand at the front-end while leveraging a mission-driven model to create social impact at the back-end. And these are two entirely different spaces altogether. A traditional VC would be on board with the front-end aspects of creating a brand versus an Impact Fund that would want to see last-mile impact on the ground.”




Acumen released the Acumen Emergency Fund* of ₹42 lakhs ($52,500) as a Convertible Note instrument (5-year term) wherein they asked Desi Hangover about the timelines for repayment and were flexible with repayment options. As an Acumen fellow, Hitesh was eligible to apply for support to tide through the initial disruptions caused by the pandemic. 61% of the loan was to be directly channelised to women staff and beneficiaries. The fund had a minimal interest rate for the tenure of 5 years and the option to convert to equity at the end of the tenure. If the repayment was not done in the agreed-upon 5 years, it would convert at a market evaluation rate done by a third party evaluator.

*Acumen’s emergency fund is a capital facility created to support their investees and Fellows — entrepreneurs working with low-income communities — during COVID-19. The facility has deployed $3.3 million in debt and grants to help enterprises withstand the crisis and respond to new challenges.

Acumen invests patient capital in businesses whose products and services are enabling the poor to transform their lives. Through the fellowship, Acumen also invests in a larger community of social innovators who are willing to embrace the challenges of the world's toughest problems.

Acumen’s conviction in Desi Hangover’s mission helped signal their impact potential to other investors.

Social Alpha and YSB followed through with additional investment which allowed Desi Hangover to build out their front end (D2C presence, online and brand identity) without compromising their backend (artisan welfare, sustained livelihoods, operations) which was the core of their existence.

Thanks to Acumen’s timely, de-risking intervention, Desi Hangover was able to cement a partnership with Fabindia once they sustained their operations as a direct result of Acumen’s capital. Subsequently, Desi Hangover raised a Qualified Financing Round to the tune of ₹1.35 crore ($168,750) from Social Alpha and CIIE.CO, which they are using to strengthen their D2C channels and offline distribution. They have also repaid 25% of the fund amount back to Acumen and the remaining 75% is scheduled to be repaid in the next 6 quarters.


While Acumen’s Emergency Fund did help during COVID-19, it’s important to note that artisan welfare was covered through crowdfunding using Milaap while the investment received through Acumen was primarily useful for business continuity.

“Acumen’s patient approach did not come with unrealistic expectations. They gave us time to grow and sustain. It was also hugely helpful that they tailored their approach to our specific needs instead of adopting a cookie-cutter approach. They asked us how we wanted to pay them back, letting the borrower decide the terms instead of the lender (Acumen) setting the terms. Which makes sense given that we would know our cash cycles best.”



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Ensure a for-profit social enterprise continued to grow and expand in a tough, capital-bereft, post-COVID landscape

Features of catalytic capital in this case:


Patient and Concessionary: An approach that understood the HCM’s ability and intent, made capital with below-market interest rates available quickly and easily to help the enterprise manage volatility in revenues and stabilise operations during COVID.

Accepts High Levels of Risk: Capital infusion despite uncertainty around its repayment demonstrates faith in the Desi Hangover’s model and its plans for expansion; this allowed the enterprise to strengthen its position where follow-on investors and major retail clients saw merit in the model.

Flexible + Non-Traditional: Flexible repayment timelines and non-traditional terms allowed Desi Hangover to retain control over how capital is used and how it is repaid.

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