On our last day in Mumbai, we met with two leading funding organizations that support social entrepreneurs and innovative enterprises in India. Following are some of the highlights of and reflections on what the organizations shared with the GWU team:
UnLtd, India functions as an incubator for NGOs. UnLtd, India Co-founder Pooja Warier described the critical gap in the market filled by her organization, which supports entrepreneurs who are in the one to four year stage of their project but oftentimes lack the necessary financial, business, and emotional support required to continue their enterprise. Ms. Warier made the interesting observation that apart from the national and international stars (at the level of Mohammad Yunus of Grameen Bank) and leaders (who manage enterprises at the state, local and community levels), UnLtd, India remains interested in those who may have been less successful in their entrepreneurial experience. The idea being that even people who have had one entrepreneurial experience are changed by that encounter and will go on through life and other interactions with an altered perspective. That is a very inspiring attitude in that it gives people the chance to experiment and try something different outside their expected or regular realm of living.
The other salient aspect of the UnLtd, India’s approach is the fact that the organization provides non-financial support to entrepreneurs in the form of networking, brokering of relationships, workshops and trainings on team building, legal issues, business plan development, and peer learning opportunities.These types of support are critical for the success of any enterprise, they help reinforce commitment to a project and inspire budding entrepreneurs to continue despite cultural and familial pressures.
Lastly, Pooja Warier noted the need for other funding organizations like UnLtd, India to be developed to reach as many social entrepreneurs as possible.
UnLtd, India’s definition of a social entrepreneur is one who has an idea to create social change by addressing the root cause of the problem and then carrying it through the implementation stage. Some of the criteria used to judge whether a project should be funded include the following elements: (1) having a personal connection to the cause or visionl (2) being resourceful in promoting the idea; (3) the potential for the idea to create an impact or the demand for the idea; (4) whether the person and the idea are a good match for each other (does the entrepreneur understand the ramifications of what they’re proposing and have they done their homework on background information; (5) what is the value added brought by the person to UnLtd, India and vice versa (can the entrepreneur contribute to the start-up community through mentoring or funding over time).
Some success stories funded by UnLtd, India include: (1) a non-profit that uses sports like soccer to disseminate health ideas around HIV-AIDS for children; (2) a for-profit corporate courier service that provides employment todeaf individuals; (3) a non-profit/for profit hybrid that provides bee boxes to farmers to increase productivity, yield and incomes.
Acumen Fund is focused on supporting innovative business models rather than on job creation per se. Furthermore, the Fund is unique in that it provides what is known as “patient capital” over a 6-13 year time period which is different from traditional venture capital providing models that provide funding for 3-5 years before expecting to see some returns on the investment. Acumen Fund plays an active role on the boards of organizations it funds, helps refine business plans, helps the organization understand segmentation of the market it aims to create, and helps create a market proposition that no other commercial venture is going to cover.
Currently the Acumen Fund focuses on several sectors with environmental impacts including the water, renewable energy, and agriculture sectors. Other areas of focus include healthcare, housing, and education. Currently, healthcare is the largest sector being funded by Acumen but renewable energy projects are expected to take the lead shortly.
Acumen Fund’s definition of a social entrepreneur and some of the so-called gating factors used to decide whether a project should be funded include the following elements: (1) does the proposed project mission include social impact at its core. Will 70-80% of the customers for the entrepreneurial venture come from a core target base the Acumen Fund wishes to focus on? (2) Does the proposed business model take financial sustainability (not necessarily profitability) into account? (3) Does the proposed business model incorporate scalability? Can the proof of concept on a unit level be scaled up for larger social impact? (4) What is the composition of the management team? What is their track record and commitment to execution?
The meeting with Acumen Fund yielded some interesting insights about the inherent challenges in funding social enterprises. With ten years of experience in the funding of social entrepreneurship around the world and especially in India, which represents the largest portfolio for the fund, the Acumen India team noted: (1) the difficulty in measuring impacts of the programs they fund. (2) Additionally, most social enterprises struggle with issues of customer adoption, convenience, affordability, quality and availability of services in designing their products and services. (3) How Indian Government laws and regulations, like the Right to Education Act (REA) limits private investment directly in the country’s education system. (4) Lastly, Acumen noted that the need for an idea does not necessarily equal the demand for that idea, which seems somewhat counterintuitive.
Examples of projects funded by Acumen Fund include: (1) an eye care hospital in Hyderabad, Andhra Pradesh; (2) Chikitsa Healthcare, a low-cost ambulance service across India which has now been incorporated into the Government 1298 (or 9-1-1 emergency response) system as a public-private partnership; (3) Lifespring Hospitals, a low-cost maternal healthcare chain of hospitals that provides services at 30-60% of the cost of private hospitals at about $4/day; (4) The Water Project Health Initiative to which the Gates Foundation has committed funds for developing metrics and evaluation tools.
All in all, learning about the different funding tools and challenges was an eye-opening experience that forced us to think about the practical issues surrounding social entrepreneurship! It also showed how an idea may be developed from the conception stage through to full-on implementation and the kinds of issues that must be taken into consideration to ensure a successful or productive outcome or impact.
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