South America

There is nothing I can write about India that hasn’t already been written.  The land of a thousand paradoxes.  What I can do, is write the truths that I have seen in my time here.  I think I have seen humanity at its ugliest and most beautiful.  The visions of families, hard-working with low wage jobs, sleeping on the concrete on the side of the road.  Making dinner over coals on the sidewalk.  There is no privacy in a country of 1 billion people.  All the bodily functions are seen, people defecating, vomiting, urinating, spitting, farting, burping; nothing is masked behind frivolities of manners.  Children seem to grow up too fast, working jobs washing dishes at roadside cafes, or begging in traffic, or just being left alone for hours to care for themselves or more often a younger sibling.  A four year old girl that is left to care for her toddler brother who is pants-less and covered in the pollution of the traffic rushing past.  The stench of chicken and fish being sold in noon day Indian heat out of the back of a miniature van with no refrigeration or even Styrofoam cooler.  The sewage that rises during the monsoons and floods the streets, until the sun evaporates the liquid, leaving just the traces of solid sewage pieces behind.  Honking, constant honking.  Loud, unruly fireworks and prayer calls and dog barking that occurs at all hours of the day and night.  This is the daily street scene.  This is what I glimpse as a passing foreigner.

But, as my time has continued on here, I have also seen beyond these shallow scenes.  I have seen the humanity of families that have very little giving and sharing amongst themselves.  I have been shown kindness in the simplest acts.  An old man in line at the post office, trying desperately to assist in his broken English.  A family sharing their chocolate biscuits with me while on a long, tired train ride.  The stares and curious glances melt away when school children run up to say “hello” and practice their English skills – giant smiles on their faces.  The aromas of delicacies pouring from homes and huts, recognizing the scent of now familiar spices, wondering if the family is making chapatti or paratha to eat alongside their paneer and subsi dishes.  The beautiful colors that are woven into every aspect of life here; fashion, home, scooter, art, religion.  Flowers decorate homes, offices and roadside altars.  The sight of so many species of birds.  I have never dreamed of so many different bird and lizard species that are present while walking from home to work.  Some are songbirds, some screech, some drive me crazy with their whiny pitch, but recognizing the birds with their calls is a first.  Being welcomed into home after home with such sweetness.  Seeing a classroom full of children that have never met a foreigner before, where the concept of a country (like India but different) is hard to imagine and seems funny.  The scenery so breathtaking… paddy fields, boulders, valleys, mountains, exotic forests with palms big and small.

The juxtaposition of old and new in every feature of life here is dizzying.  It seems beautiful and magical and at the same time disappointing.  It’s troubling to see so much development abutted to despair.  I read a novel while I was here that was set in an anonymous Indian city in the 1970s.  The descriptions of daily struggles in the character’s lives, the corruption, reliance on underworld financing, government bullying, can be seen today.  It’s hard to reconcile that in the 40 years that has seen the rise of Indian technologies eclipse that of the first world, that the social struggles of yesteryear remain.  Troubling still is the feeling of powerlessness to even act.

I had the pleasure to help organize and run the second installment of Tech4Impact, an accelerator program being run jointly by CIIE and Village Capital.  Entrepreneurs go through a 3 month accelerator and are taught how to evaluate one another’s businesses, and multiple times during the program entrepreneurs publicly rank one another according to the Village Capital investment criteria.  The accelerator focuses on technology ventures operating in the agribusiness, livelihoods, cleantech & sustainability, healthcare and sanitation, education and mobile/ICT.

Entrepreneurs had the opportunity to speak with business professionals, mentors, customers and peers to shape their business model and develop their ideas.  The ventures worked hard and had several 15 hour days using the time to meet with business professionals and refining their pitches.

Ranking the cohort pitches

Pitches were presented on the fourth day, where the ventures ranked their peers in regards to 6 categories: Team, Product/Service, Customer Validation, Profitability, Impact and Scale.  Each category is ranked from 0 – 5, with a maximum score of 30.  After the peer ranking, the top two enterprises from this round are:  Sanchayan and Aakar.  Sanchayan, delivers comprehensive financial planning, literacy & financial services like savings, banking, etc to low-income BOP populations.  Aakar is producing a biodegradable sanitary napkin product for the BoP woman consumer sold by women in a hub & spoke model across India.

Chatting with a co-founder of Sanchayan

Personal Reflection on Workshop #2

The workshop ran fairly smoothly, but I would make some major changes.  Firstly, it seems that the cohort doesn’t quite understand the criteria still which they are ranking each other on, which is an enormous problem.  For example, the ventures did not present on an exit strategy, even though this is 1/6 of the grading criteria.  I find this to be an enormous flaw.  Another major issue is that the ventures are not able to properly quantify their social impact.  In my opinion, too much time of the workshop has been spent on “MBA course-like” work – which can be supplemented by any incubator program.  CIIE and Village Capital needs to do a better job at distinguishing their accelerator program by preparing the cohort better to pitch to impact investors.  Lastly, I believe that this cohort needs to learn brevity when speaking about their enterprises.  A diatribe about poverty in India is NOT the way to begin a pitch to investors and the cohort needs to learn perspective on audience.

Areas of focus for final workshop:

• EXIT STRATEGY!
• Social impact measurement
• Brevity in presenting
• More storytelling to convey mission and impact of business

While doing research for my MIIS capstone project, I have come across readings referring to the birth of the social enterprise sector. Many of the readings refer to the growth of the third sector leading to social business. The third sector is what falls between public, government run, and private, pure profit business. First, non-profits formed to bridge the gap that the market left behind; educating and providing health care for those left out of the traditional market. Then, large non-governmental bodies began to take over projects that sovereign governments failed to produce, namely infrastructure in developing countries. Social business has been a relatively new construct – becoming more popular in the 1980s with the widespread popularity of Dr. Yunus and others. The mission of a social enterprise is to solve social issues with traditional commercial business practices. Just as the NGOs and nonprofits fill a market gap, so does social business.

However, the more I see social businesses operating in developing countries, the more I wonder just how much impact the businesses will make, and how different the challenges are from traditional nonprofits. One of the greatest challenges nonprofits face in the developmental world is implementing programs that reach the root of the problem they hope to address or rather trying to solve for issues that are really effects of a greater problem (For example, mobile health clinics, which get short-term relief to otherwise unmet health needs, but fail to address the larger issues as to why certain populations are not receiving the health care needed regularly – poverty, rural underdevelopment, etc.). Here, I see similar social enterprises entering into a space that hopes to make an impact on short-term alleviation, but I have seen few that are working on interventions that cause long-term behavior change.

The next biggest issue is revenue stream. Although some nonprofits rely on multiple revenue streams, the majority rely on receiving grants in order to maintain their projects. Social businesses, in theory, differ greatly in this aspect as they rely on customers buying their product or service in order to stay open. However, from the businesses I have encountered, there have been few that have not started with a grant, convertible debt (with generous interest rates) and/or alternative revenue from partner organizations. If we in fact believe that consumer behavior can lead to social change, we would allow these businesses to struggle to survive, rather than continue to promote ones that would not make it in a traditional market.

Which brings me to the third big struggle or both nonprofits and social enterprises – measuring impact and when do you call it quits? Obviously, all development projects should have a timeline. Millennium development goals have a deadline of 15 years, culminating in 2015. The idea is that if the organizations that pledged to those goals have not made significant, measurable strides, then they should bow out and make space for those that can. The tricky thing about social businesses is truly measuring their impact and then deciding when it is time for them to close up and move on. Traditional businesses would love to live on for hundreds of years, and continue to expand – there are no deadlines set. So far, the social enterprise sector has said very little about setting timelines and milestones for success, and has instead focused on “scaling up,” and out, which reflects the traditional commercial sector. Determining impact metrics and setting timelines for success I believe is going to be the greatest challenge for the social enterprise sector.

SELCO, a leading solar energy company based in Southern India, has been producing and selling solar energy units to the rural poor since 1995.  SELCO works alongside state-owned andcooperative-owned banks in India, to provide loans to rural households in order to assist in the upfront costs of the solar lighting.  Families that switch to SELCO solar energy products experience both lifetime savings on energy costs and incalculable costs on healthcare that is prevented from cleaner burning energy.  In addition to providing homes with cleaner energy, it is also reliable; users cited that SELCO products increased productivity and quality of life.

Food Stall with SELCO lamp

The company model works by setting up centers in rural areas that are responsible for selling and servicing the products in their vicinity.  These centers are small enough that they know their customers and trust has been built between the consumer and the SELCO employee.  This is an important relationship since SELCO has taken responsibility for underwriting the loans the “unbankable.”  In addition, by placing their centers within close vicinity to the households served, SELCO technicians are able to respond within 36 hours if equipment is in need of repair.  It is important to SELCO’s founder, Dr. H. Harish Hande, that SELCO maintain a good reputation with their customers, as trust in the product is a driving factor in the consumer’s choice to buy SELCO’s products.

SELCO lanterns

Six years after inception, SELCO broke even in 2001.  Since then, the enterprise has gone through several pivots, investing in R&D, building partnerships and trying to keep its products competitive.  Although SELCO hopes to continue to grow at a steady pace, Dr. Hande believes that real impact will only continue by keeping their small-scale model.  SELCO management would prefer to assist others in replication of the model (in the North, East and West of India), rather than scaling up their enterprise.  As Dr. Hande explains, “It is better if we focus on developing other SELCO’s suited to the context where they would operate, rather than trying to grow this SELCO.  Ideally we should create an organization that can become investment partner for entrepreneurial entities – the SELCOs’ of the future. We can provide the seed capital and pass on to them our knowledge, things that we learnt the hard way. However, the new entities will have complete independence in the way they would develop their business, because their specific model needs to be suited to their context. We would like to do this in other parts of India first and thereafter, maybe, across the globe.”

Often, impact investors searching for investable social enterprises seek out businesses that have eventual scalability.  Profitability and impact are often examined hand in hand, and evaluated with the same weight, therefore making scalability a vital factor.  However, culture context is just one of a slew of issues that prevent many industries from scaling up.  Customer trust, social capital and depth of impact are challenges that scale may pose on a social business.  Perhaps, as SELCO’s management team would suggest, impact investors should re-evaluate their terms of measurement, examining the real trade-off between scale and impact.

Note: Information gathered and quotes are taken from: Mukherj, Sourav. “SELCO: Solar Lighting for the Poor.” UNDP Case Study: New York, NY, 2011.

… And new change of scenery.  Last summer, I was working for a social enterprise incubator in Bogota, Colombia.  This Spring/Summer, I am working at the Center for Innovation Incubation and Entrepreneurship (CIIE) on the campus of India Institute of Management – Ahmedabad, India (IIMA).  CIIE, in collaboration with Village Capital is hosting the Tech4Impact Incubator.  The incubator has a cohort of 14 start-ups, which will participate in the 2 month long business incubator in which 2 companies will receive funding of at least $50,000.

Meet the companies here.