Posts from the ‘ Social Entrepreneurship ’ Category

Despite a whole new generation of social ventures, both for-profit and not-for-profit, there are limitations in their potential to reform.  For one, there are a number of areas such as transportation and energy, where they often simply don’t have jurisdiction.  Also, given the scale of social problems, they are limited by the pace at which they can grow.  For example, Pratham, India’s largest education NGO, set up in 1994, touches 1 million people today.  However, they estimate there are over 100 million children that cannot read to their standard.  The role of government cannot be dismissed.  Only the government, with its formidable revenue generation and reach, can provide widespread access to education, security, infrastructure and health care—services that may not be commercially viable through private enterprise.

However, in countries such as India, the disconnect between citizens and their governments has reached an all time high.  This is no surprise.  Represented amongst the 543 elected members of the 15^th Lok Sabha are 150 with criminal records across 36 political parties. The first Parliament of India in 1947 still holds the dubious distinction of being the most educated Parliament in the history of independent India!  In the 2008 Transparency International survey on corruption, 61% of Indians surveyed admitted to paying a bribe to a public official in the past year.  As a result, most middle and upper income Indians and businesses would rather avoid government at all possible costs.  The use of “middlemen” to register property, obtain a license, or incorporate a company have become all too common.  Reliance on the private sector for education, security, water, garbage disposal, power and health care have become the norm.  India is one of the few democracies in the world where the urban middle class have a lower voter turnout than the rural poor, despite urban polling stations being significantly more accessible.  Politicians have become quintessentially despicable!

Over the years, there have been many-a-politician at the local and national level that has made an attempt to drive reform, with integrity and transparency.  However, they are usually lone posts in a sea of miscreants, which tends to render them dysfunctional or simply drives them away.  Social ventures are today evaluated by what is called the “triple bottom line,” referring to their profits, social impact and environmental impact.  In order to sustain change over generations, they will need to add a fourth bottom line—political impact.  While it may seem a distraction from their original charters, social ventures are in a unique position to gently, but definitively support fresh local political talent.  Successful social ventures tend to command high degrees of respect in the geographies where they operate.  They also develop deep insights on the people in their communities.  Large developing nations such as India have no shortage of respected, high integrity prospective candidates.  They need to be inspired and supported. More often then not, social ventures steer clear of the “politics” of their locality.  But this defeats their purpose.  By encouraging and supporting the right talent at a local, legislative level, social ventures would be ensuring their programs stand the test of time—through good governance.  Most importantly, social ventures and those involved in them are constituents too.  They must play a role in shaping their governments.

While India’s economy doubles in size roughly every 9 years, it is a shame that over half the population—600 million people—are yet not on the electric grid.  The country’s highly regulated energy sector continues to be mired in corruption and bureaucracy, curbing its growth.  Over 130 years after the invention of the light bulb, 1.6 billion people worldwide still have no access to electricity, mostly for similar reasons.  On top of that, most households with access to the grid get limited power.  The village of Bhandgaon, in the relatively prosperous industrial state of Maharashtra, gets just 12 hours of power a day, alternating between day and night each week.  As a result, most households still use dangerous kerosene lamps to read, cook or to simply walk around every day.

In 2007, Stanford MBA graduates Sam Goldman and Ned Tozun embarked on a journey to change all that.  As part of a class at Stanford’s Institute of Design, they designed a low cost solar-powered LED lamp prototype.  They decided to commercialize the project with the launch of D.light Design, and in less than 3 years have sold to over 1 million consumers in 30 countries.  D.light launched in India with a product called Nova.  The Nova provides up to 12 hours of bright light on a day’s charge, and doubles up as a mobile phone charger.  It is 8-10 times brighter than a kerosene lamp, 30-50% more efficient than a fluorescent light and costs about $30. Today, D.light has 3 products including the Solata and the Kiran.  The Kiran provides 8 hours of light on a day’s charge and is 4 times brighter than a kerosene lamp.  Launched in October 2009, the Kiran is dubbed the “kerosene killer.”  It costs just $10, making it the most affordable quality solar lantern in the world.  It provides 360-degree illumination, which is good for cooking, working, studying or traveling.

D.light is unique amongst companies in its space, in that its products are designed with tremendous consumer focus and using the world’s best design principles.  For example, the Kiran is portable, can be hung from a wall or ceiling, or placed on any surface.  The Nova was designed to be water resistant and protect from dust and large insects.  With 80 people and offices in India, China and Africa, the company has also built a deep sales and distribution infrastructure.  It has the backing of major venture capital firms including the Acumen Fund, Nexus Venture Partners and Draper Fisher Jurvetson, giving it the financial muscle to move quickly.  D.light aims to touch 100 million consumers by 2020.

D.light’s social impact is far reaching.  First, its products completely eliminate the need for kerosene lamps.  Low income households spend 5-30% of their income on kerosene, so D.light products pay for themselves in as little as 6 months.  Second, bright light supports income-generating activities such as agriculture and retail.  The United Nations Development Program estimates that families with improved lighting have up to a 30% increase in income due to improved productivity at night.  Next, D.light customers report that children’s study time increases by a factor of 2 to 4 times after purchasing a solar lantern, resulting in greater learning and higher test scores.  By removing the need for kerosene lamps, D.light products also solve the problem of indoor air pollution.  The UN Millennium Development Goals Report estimates that indoor air pollution from kerosene lamps claims the lives of 1.5 million people each year.  They are also the cause of numerous deaths from suffocation, burns and fires.  Finally, every kerosene lamp removed from a household removes 1 ton of carbon dioxide emissions into the atmosphere over 5 years.  Kerosene lamps are currently responsible for 100 million tons of carbon dioxide emissions into the atmosphere, making it amongst the largest sources of greenhouse gases in developing nations.  Planet Earth will certainly not miss them!  To learn more about D.light, visit http://www.dlightdesign.com.

Competing in the 100K Business Plan Competition at the Massachusetts Institute of Technology can be a daunting experience.  Judging it is both enthralling and humbling.  As the world’s leading brand in technology innovation, MIT has fostered a culture of entrepreneurship over decades—in many ways, without even trying.  A recent study by Edward Roberts at MIT and Charles Easley at Stanford estimates that there are 25,800 companies in existence today founded by MIT alumni.  These companies collectively generate over $2 trillion in revenue.  That works out to 14% of US GDP or 3.3% of global GDP coming from one university!  If they were a country, it would be the world’s 11^th largest economy.

The 100K Competition boasts its own set of impressive statistics.  In its 20 years of existence, it has facilitated the creation of 120 companies with aggregate exit values of $2.5 billion and a market capitalization of over $10 billion.  This year’s Development Track finals featured six unique businesses with students ready to relocate to Africa, Asia and Latin America to create profitable impact.  Some examples included Salud del Sol, which has developed a solar powered autoclave for sterilizing medical equipment in rural clinics with no access to electricity.  PerfectSight, another finalist, has developed a low cost tool for automated diagnosis of common refractive eye disorders.  On the services front, there was Doodh Bandhar, which is looking to provide breeding, feed and veterinary services for rural families to enhance productivity of indigenous cows in India.

The winner of the competition was SolSource 3-in-1.  SolSource has developed a patent-pending appliance, which uses solar energy for portable cooking, heating and electricity generation.  Today, 2.5 billion people in the world still rely on biomass such as wood and dung as their primary source of fuel.  In such households, women tend to spend 4 to 8 hours a day collecting fuel.  Moreover, it is estimated that 1.6 million people die each year of biomass emissions in or near the home.  The SolSource 3-in-1 appliance is just 6 kilograms, is emissions-free, and costs just $26.  Most strikingly, the team has been balancing graduate studies with spending up to six months each year for the past four years in the Eastern Himalayan region of Southern China.  They have piloted 10 devices in the region, and have fine-tuned their product based on a rigorous understanding of the problem.  SolSource has already received a number of accolades.  It was ranked as one of the “40 Transformative Design Projects of 2010” by ID magazine.  It is also the recipient of the MIT IDEAS Award for innovative design, the Yunus Innovation Challenge for indoor pollution abatement, and the Clinton Global Initiative Outstanding Commitment Award.  As the new winner of the MIT Development Track Business Plan Competition, SolSource is ready to launch!

University business plan competitions are certainly not what they used to be.  Of course, there isn’t much of a “used to be.”  The longest running university business plan competition in the US only goes back to 1984.  As one of the final round judges for this year’s New York University social venture competition, the experience was electrifying.  NYU ranks with the top universities in giving away the greatest prize money for the winners—$75,000 for the regular venture competition and $100,000 for the social venture competition.  This year, there were over 160 business plan submissions from teams across schools.  The teams are narrowed down to five finalists who present to a packed auditorium of students, faculty, investors and journalists.  The stakes are high—the winners not only get the prize money, but the prestige of winning gets them the attention they need from potential investors, customers and partners.

In today’s world of university competitions, teams must have much more than a plan to get to the final rounds.  They must have the expertise, a prototype of a product, one or more pilot customers, and a team that is committed to the venture upon graduation.  In that sense, it is much more than a student competition—it is a commitment toward being a change-maker as an entrepreneur.  Given the strengths of this year’s finalists, as judges, we had great difficulty in choosing just one winner. So, we chose two.  We decided that $25,000 would go to a venture called Water Canary and $75,000 would go to the venture America Smiles.

Water Canary was set up by a team of NYU business students and scientists that have developed a low cost water testing device for use in disaster relief.  Currently, it takes relief organizations days to determine whether the water supply in a particular locality is contaminated after a natural disaster.  Currently available testing equipment is also expensive and requires expertise to operate.  Water Canary has developed a device that can determine whether the water supply is safe in just one minute.  It requires no prior expertise to operate and can transmit that data wirelessly to relief organizations.  This way, relief organizations can map out a geography quickly and move fresh water to the most affected areas first, greatly increasing their efficiency.  Water Canary has partnered with UNICEF and begins pilot trials of its device in Uganda early next year.

America Smiles was set up by a team from the NYU College of Dentistry.  Currently, over 40 million people in the US lack timely access to dental care.  From a preventative health care perspective, this is a huge problem, as poor dental health can lead to a variety of diseases ranging from heart disease to diabetes.  Starting with a partnership with the NYU College of Dentistry, America Smiles plans to set up makeshift dental clinics in poor neighborhoods, with resident dentists providing oral care.  According to America Smiles, resident dentists are under-utilized and need more practical experience.  By providing oral care to the poor on a rotational basis, they get additional training, and the uninsured get a desperately needed service.  The revenue model for the venture is also quite intriguing.  Currently, most dentists in America do not accept Medicaid patients because of the low reimbursement rate.  However, for America Smiles, the rate of Medicaid reimbursement is sufficient as the cost of resident dentists and other inputs are comparably low.  We also expect that the model will attract attention from state and federal governments given the current focus on preventative health care approaches.

Congratulations teams and we all look forward to hearing about the success of your ventures down the road!

Since the pioneering origins of Grameen Bank over three decades ago, microfinance has grown into a formidable industry.  While the sector has been showered with praise for its contribution to ending the cycle of poverty, it has also been attracting its share of controversy. Muhammad Yunus’ vision of microfinance was to break the cycle of poverty by lending to the poor for small businesses that were not serviced by the existing banking infrastructure.  In his experience, with the lack of any other option, the poor were being exploited by loan sharks that charged up to 10% interest per day.  Grameen would change all that by offering micro-loans at a tiny fraction of that interest rate.  In order to scale the model, Grameen offered one simple loan product, which required equal weekly repayments over 52 weeks.  This way, loan officers could physically collect all payments from a village with one weekly visit.  Grameen dealt with collateral by requiring loans to be “guaranteed” by 4 other residents of the village.

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After 8 years at Microsoft, most recently at their research center in Bangalore, Sean Blagsvedt decided to leave and enter the world of social entrepreneurship.  He was inspired by a research paper by Anirudh Krishna at Duke University which concluded that the biggest reason why households in developing nations fall into poverty was ill health and health care costs, and the biggest factor for escaping poverty, as one would expect, was through income diversification and new jobs.  In India, new jobs, particularly amongst unskilled workers, are largely acquired through social networks and informal referrals.  So, in 2007, Sean set up Babajobs.com, with the idea of providing job seekers in the informal sector access to employers at a much larger scale and with much greater efficiency through the use of digital media. read more…

The growing abundance of social enterprises and NGOs focused on education, water, infrastructure and health care in rural areas today gives one a lot of hope.  However, the challenge of creating new jobs through enhancing revenues and value for rural enterprises remains a daunting one.  India, having the oldest continuous cultural history in the world, has a large percentage of rural households with unique skills in weaving, carpentry, or agriculture passed down from generation to generation.  However, current-day product development and marketing skills are hard to come by and access to markets is limited, making it difficult for rural enterprises to enhance value or to scale rapidly.  That’s where the vision of Reshma Anand and her team at Earthy Goods come in.  After spending 10 years in both urban and rural consumer marketing at Hindustan Unilever Limited (HUL) and Development Alternatives, she conceived the idea of Earthy Goods.  The organization would work with rural, agri-based businesses to help them produce marketable products, access retail markets, create financial viability and scale their operations. read more…

Last year, the younger than young team at Nextgen PMS in Bangalore set out to prove that food waste can not only make a serious dent in India’s hunger for power, but can do so without contributing to global warming.  Nextgen is a start-up incubated by 5 students from some of India’s top engineering universities with an average age of less than 21.  While in school, they developed and patented unique designs for generating power though biogas plants using food waste.  They even built one on their own campus, using food waste from the college canteen!  Generating power from waste is not new.  There are many small entrepreneurs and farmers that have built rudimentary biogas plants in India over the decades, mostly fueled by cow dung.  Nextgen’s design, however, is optimized for conversion efficiency, is customized for food waste, does not require any external power, is hygienic and takes very little space.  Plus, food waste as a fuel source is carbon neutral to the environment.  In less than a year, Nextgen has built a strong blue chip customer base from Infosys to the Hyatt Hotels to design and build biogas plants, and provide a range of consulting services in the area of carbon footprint and sustainability advisory. read more…

The Deshpande Foundation just opened its sleek Center for Social Entrepreneurship in February 2009 on the BVB Engineering College in Hubli, Karnataka.  Its modern, sleek design has a purpose—to send the message to the community that things are also happening in Hubli and you don’t necessarily need to flee to Bangalore or Pune.  The Deshpande Foundation, set up by technology entrepreneur Gururaj ‘Desh’ Deshpande, has been involved in a number projects over the past five years including funding Akshaya Patra for its mid-day meals facility, and Agastya International, which sets up science labs in Karnataka.

The Center for Social Entrepreneurship offers a 6-month residential fellowship program to 30 Indians every year, typically to people with an undergraduate degree and at least 1 year of work experience.  The fellowship program provides the best possible tools, including an incubation center, over 20 professional lecturers and dozens of international volunteers, to help incubate social businesses.  The center has just graduated its 2^nd batch of students and has incubated a variety of small businesses.  Examples include a security business with female personnel from rural areas and a commodities trading business in a rural area outside Hubli.  The Center also supports a number of NGOs in the area involved in everything from developing educational puppet shows to women’s empowerment.