Monthly Archives: April 2013

Paul Basil: A true pioneer in the world of social entrepreneurship

paul-basil
Pic courtesy: http://www.changemakers.com/

Paul Basil, founder of social enterprise incubator Villgro (previously called Rural Innovations Network or RIN), is a giant in the world of social entrepreneurship. Trained to be a mechanical engineer, Basil had his first taste of the hinterland when he went to the Indian Institute of Forest Management (IIFM), he joined the Kerala Horticulture Development Program thereafter, where he worked on several innovations. He launched a “farmers’ market”, kick-started a franchising system and introduced the sale of fruits and vegetables in supermarkets.

From his experience in rural areas Paul realized that there was plenty of innovation in rural areas but hadn’t been commercialized because of a lack support. This inspired him to found RIN, in 2001, a non-profit incubator focused on mentoring and funding rural innovations.

Basil’s career highlights include incubating 60 companies, launching the social enterprise conference Unconvention | L (UL), setting up the Centre for Social Innovation and Entrepreneurship at IIT-Madras and championing the India chapter of ANDE (Aspen Network for Development Entrepreneurs). He was made an Ashoka Fellow in 2002.

In a freewheeling interview, Basil spoke candidly about his origins, motivation, current state of the social entrepreneurship ecosystem in India, inspiring students and his future vision for Villgro.

Here are the edited excerpts.

What inspired you to start Villgro? What has kept you motivated all these years?
Very early on, I asked myself. If one is educated, makes enough money, and lets say not greedy, what should one be doing at a very high level? It was to take up causes, and make a big difference to the poor, but not by doing charity. Not because I didn’t like that, but I’m more kicked about models that are sustainable, economically. While it is about being market friendly, its not all about market forces, but also about innovation. If it were just about the market, then private enterprises would have served that purpose.

We need new solutions to century old problems of malnutrition, illiteracy and power. Villgro stresses a lot on innovation: what has been done in the past has not worked, its not just the idea or execution. Innovation is really required and Villgro is all about innovation. Younger entrepreneurs, their energy and enthusiasm are a source of constant inspiration.

Would you want to help create a billion dollar company or impact a million lives?
I am respectful of wealth creation. If Jerome Lemelson hadn’t created wealth, he wouldn’t have been able to fund these pressing problems, through his foundation. Somebody has to be rich to create a positive impact on a million people.

The question is how to create these companies. At our incubator, we incubate a lot of companies. Some will fail, and a few will become successful. This collective investing is exciting and has far more chances of survival as you de-risk your portfolio. The idea is not to stop with impacting a million lives.

When gunning for scale, how to manage investor aspirations and what’s good for the enterprise? The SKS Microfinance controversy showed us that going for scale doesn’t always end well, more recently, the founder of Rangsutra questioned the timing of Aavishkaar’s exit, which she claimed resulted in an increased valuation and thereby made it more expensive for their artisans to buy shares.

All of us are trying to crack one problem at a time, but a lot has been taken on. There are these dual or blended goals of for-profit, building scale and stakeholder interest. In the case of SKS Microfinance and Rangsutra clearly these goals were not aligned. Venture capital investing only works with certain entrepreneurs and business models. The question is whether Rangsutra was ready for venture capital and the VC model was good for them.

Compatibility between the companies and VCs may have not matured enough. But this is learning. There will be uncertainty and acrimony, before progress will be made. It will take some time, what’s needed is open communication without negative implications.

Larger networks like Global Impact Measurement Network (GIIN) GAIN and Ande (Aspen Network of Development Professionals), have the agenda to spread the message on impact metrics. The question is how fast can they reach the message.

What is the vision for Villgro?
I think there is large capital available like Aavishkaar, Grassroutes and Lok capital and it needs to be bigger because when companies become big mainstream funds wont cut it, social VCs need to invest at this point. Therefore we see impact investing has started seeing scalable business models, going forward, more funds will be required.

What’s needed is investment in the $100,000 to $200,000 (Rs 54 lakh to Rs 1.08 crore) range to prove new business models. We need to make economic sense of markets for poor. Most business models are about cost cutting or upping the quality of life, when we are working with the poor our concern is also how to improve incomes through livelihood creation, like Amul did. We need plenty of investments to enhance incomes.

If I had a pot of money, I would use 60-70 per cent to build scale and the rest of the 30-40 per cent should go into high-risk models.

We need investments in the early stage because funds are 10-12 year funds and they close in 3-4 years, so ventures need to grow so rapidly so that they are able to absorb $1 million.

Investment is important to incubate diverse business models that are innovative and different. If there is a lack of investment at this early stage in experimental ideas, there is a danger that the sector will run out of ideas even if there is more capital coming in the next few years:

What are Villgro’s future plans?
We dream of building a fleet of incubators that maybe Villgro branded that will be launched in India first, and then in other countries like Latin America and Africa.

Both in terms of quality and quantity, there are not enough incubators. We envision a network of incubators; we shall provide incubation services like capital, mentoring, and right talent.

Not exactly sure on how will it pan out; whether it will be giving them money, know-how, the challenge is the model. Currently our customers are entrepreneurs, as we enhance our scope, incubators will become our customers. We will be clear about the model by the end of next year.

The other piece is an entrepreneur-in-residence program for early stage budding entrepreneurs. The middle-class doesn’t understand villages, the needs and thereby lack customer insights. What we do is to take a bunch of younger entrepreneurs who are inspired to create change but not investment ready. This program may take sometime to launch, we are piloting something and have started seeing applicants.

How do we motivate more students to consider social entrepreneurship as a career?
In the world of student entrepreneurship, the culture is not supportive and parents are not encouraging.

Students are influenced by faculty, we should show people who have just graduated and have been successful in social enterprises. The problem is that faculty does not understand social entrepreneurship. Parents are also not convinced, as they don’t see it as a way to make money.

They need to nudge them in the direction of taking up a career in social enterprise. Changes are needed. Educational institutions need to support social entrepreneurship. There has been a start with business competitions like iDiya at ISB, the Global social venture competition (GSVC) and Eureka! at IIT Mumbai and also social entrepreneurship related courses at colleges like Loyola Institute of Business Administration (LIBA), IIT-Madras, Xavier Institute of Management- Bhubaneswar (XIM-B) and IIM-C. We have been doing our bit, the course we helped co-design at IIT- Madras in social innovation and entrepreneurship is one of the most sought after minors.

We need for these courses to spread, the faculty to understand what social entrepreneurship is about and engage in more research related activities. Currently consulting companies are doing research, this is the role of academics, whatever is being done currently is shallow, what’s needed is committed faculty focused on research. We are slowly engaging with faculty motivate them to do more research.

How is UL progressing?
There have been a few conferences; it has been helpful to all stakeholders. UL is a great brand, which is building the sector, but not everybody has the opportunity to make it and if they don’t then they have to wait for a full year. We felt that we needed smaller formats and thereby we had them at cities like Lucknow and Bhubaneswar. The focus is to create a deep platform on capacity building, creating awareness and interest among youngsters about what social entrepreneurship, and create a pipeline of new entrepreneurs.

This is a great opportunity, smaller towns are closer to the problems, we don’t need to sensitize entrepreneurs there are the problems, and they are more realistic and not very idealistic.

When we organized an UL in Bhubaneswar in association with TiE (The Indus Entrepreneurs) and National Entrepreneurship Network (NEN), 90 people turned up. We need to be patient, it takes time to become a platform, we can’t do it with brick and mortar, a tech platform would be apt. It needs to be scalable like a TED platform; UL could be the TedX of the social entrepreneurship world.

By the end of 2013-14, we hope to conduct 10 events, with 100 people attending each and discovering 20 such entrepreneurs.

Bangalore-based MSME lending company Kinara Capital raises $1 million Series A funding

kinara

Source: Kinara website

Bangalore-based micro, small, and medium enterprises (MSME) lending company Kinara Capital (Kinara), has raised about Rs 5.4 crore ($1million) in a series A round led by Sorenson Impact Foundation.

The other investors are John Ayliffe of 1to4 Foundation, Halloran Philanthropies and Kinara Capital Holdings, (a special purpose vehicle constituted in Singapore). Two of the investors, Halloran Philanthropies and John Ayliffe, were part of an earlier seed round of over Rs 2.7 crore ($500,000) that included the Unitus Impact Fund and private investors based in the US. “Majority of the capital raised will go towards funding small businesses; we also plan on building our operational resources and expanding our current team of four to 10 by the year end. This is a recognition of our model and the social impact we have created,” said Hardika Shah, Kinara’s founder-CEO. “

Kinara provides debt capital in the range of Rs1 lakh to Rs10 lakh with credit products such as short-term working capital loans and receivables discounting. Kinara plans on increasing its portfolio by 5x, from the current loan book of Rs 1.5 crore, to over Rs 5 crore by next year. “This will mean supporting the potential creation of at least 1000 new jobs and impacting 10,000 lives by funding 400-500 loans,” added Shah. Social impact metrics that Kinara tracks, and reports to its investors, include new jobs created, increase in business income and increase in entrepreneur income.

Typically, MSMEs find it difficult to procure debt from banks because sub-10 lakh loans are too little for them to lend. Micro-finance institutions shy away, because the Rs 1 lakh to 10 lakh amount, is too high an amount. Kinara’s loans are at 22 per cent to 26 per cent reducing interest per annum The company, so far, has supported 60 entrepreneurs, with zero defaults. To grow beyond Karnataka, Kinara has plans to open its first field office outside Karnataka. “Depending on the needs of the businesses and the thrust of our supply chain relationships, we might open a second field office next year, possibly in Coimbatore,” remarks Shah.

MSMEs background:
The Indian government has a specific agenda to develop MSMEs and has constituted a separate ministry to promote them. According to government website, there are over 26 million MSMEs, with 59.7 million employees. The sector accounts for about 45 per cent of the manufacturing output and around 40 per cent of the total exports.

Announcing Villgro’s annual fellowships for social entrepreneurs

fellowshipBG
Pic courtesy: Villgro website
Applications for the fifth installment of the annual Villgro Fellowships are now open. The fellowship provides professionals, with a one-year Leadership Development program, to get a taste of what it feels to work in the social entrepreneurship space. The program is a mix of classroom sessions, forums, field trips, hands-on mentoring and a close working relationship with a social entrepreneur. Its certainly a immersive, roll up your sleeves and get your hands dirty experience, that promises to give fellows a first-hand experience of what it takes to be a social entrepreneur. For the talent-starved socent industry, this is a great way to get access to world-class professional talent, in various areas like finance, marketing, HR and IT.

Since 2008 there have been Villgro 29 fellows, and a whopping 62 per cent of them have stayed back in the social enterprise (socent) sector. David Schafran, for example, was a fellow at rural BPO company Desicrew, and upon finishing his fellowship he went on to found his own social start-up

Want to know experiences of the 2012 Villgro Fellows? Follow all their experiences on the blog here

If you are convinced or just curious find more details on the Villgro fellowships here.

Other fellowships similar to Villgro’s include Acumen Global Fellows Program, Idex Accelerator Program, Dasra Fellows and Frontier Market Scouts.

Villgro background
Villgro (earlier known as Rural Innovations Network), was started by Paul Basil 11 years back, as a way to mentor and commercialize village innovations. Currently, they provide a variety of services, including mentoring, talent support, funding, marketing and access to socent networks. To date they have incubated around 64 companies and provided $40 million in seed funding. Villgro, also used to organize Unconvention, one of India’s largest socent conferences, till last year. It has partnered with Aavishkaar organized Sankalp, to form India’s largest socent summit, Sankalp Unconvention summit 2013. To support the ecosystem beyond Delhi, Bangalore and Mumbai, Villgro has launched Unconvention|L, which is targeted at uncovering socents in smaller cities and towns. The social incubator’s other initiatives include SEED, which gives unsuccessful social entrepreneurs a second shot at making it work, through a 8-month incubation that aims to sharpen the entrepreneur’s vision and raise first round of funding.

The fortune on top of the chimney.

damascus
Source: Company website

In 2011, Vivek Nair was in his final year of college at Sastra University, conducting research on carbon nanotubes (CNTs) when the inability to purchase them for his research, because of the prohibitive cost of $50 per gram, got him thinking. Carbon emissions are plentiful, released from industrial chimneys and automobiles. What if they could be captured and converted into carbon nanostructures? While there have been some theories on the possibility of converting CO2 to CNTs, through a process called ‘re-carbonization’, nothing solid had materialized. Nair was onto something big. He may not have sniffed it out then, but CNTs is currently, a billion-dollar business opportunity.

He got cracking on a science project, with the help of a bunch of friends, and shortly after, they had a breakthrough. “We got the science right and proved that it could be done,” says Abhishek Modi, a core member of the team and currently marketing head of Damascus Fortune (DF), the company that was born out of the efforts to commercialize the research. After success at the lab, they are currently testing the research model by deploying a small prototype at a metallurgical company based in Gujarat, which has been showing a lot of promise. Nair’s technology, which is now patented, processes carbon emissions using a regenerative catalyst to make industry grade CNTs through a process called ‘carbon vapor deposition’. They have plenty of applications, ranging from building space elevators, curing cancer and bendable electronics.

Next up: build a fully functional prototype and deploy across multiple industrial locations. Help to reduce the cost and time to build the prototype has come from unusual quarters- from Tom Chi, experience lead, Google X- considered a rapid prototyping genius. Modi met Chi, onboard a ship, which is part of a program called Unreasonable at Sea. “Chi suggested that instead of building the whole prototype and then testing it, we could build a few features connected to our goal, and test only those. His inputs helped us reduce our costs by 4x,” remarks Modi, talking via Skype from the ship, enroute to South Africa. Damascus is part of 10 different companies that are part of this journey at sea that stops at 14 different destinations. Besides the opportunity to interact with mentors like Chi, the bigger incentive is to meet with local entrepreneurs and investors, who could be potential clients.

Realizing that the bigger opportunity lies in North America and the Asia-Pacific region, DF plans to go global, sometime this year or early next year. They are also planning to diversify, and go beyond CNTs, by manufacturing carbon composites. CNTs are approximately a $1 billion industry, carbon composites, on the other hand is a $24 billion opportunity. Nair, CEO of DF, is currently finishing his PhD at Nanyang Technological University. His vision for DF is clear. “I want to see DF’s technology converting carbon emissions from almost all industries and automobiles with maximum efficiency into carbon nanostructures,” says Nair.

Nair’s dream will be good for India’ environment. “To make one gram of carbon nanotubes, there is a reduction of 35-40 grams of carbon dioxide. We are thinking of dealing in carbon credits, but for that we need scale,” adds Modi.

To go global, build scale and set-up their own R&D unit for testing and purification DF will raise a Series A round of funding in the next 12 months.

Welcome to Sankalp-Unconvention 2013- the Davos of the social entrepreneurship world.

sankalp
Courtesy: Sankalp website

First they were two. Then they became one. Sankalp-Unconvention Summit 2013 (SUS2013), the union of two of India’s biggest social entrepreneurship conferences into one mega event, is two weeks away. It will be held from April 17-18, at Hotel Renaissance, Powai, Mumbai.

Sankalp and Unconvention were both started in 2009 and have blossomed into events that bring together social entrepreneurs, investors, academics, foundations and other stakeholders. Sankalp, touted as Asia’s largest social enterprise conference began in 2009. It is the brainchild of Intellecap, a Mumbai-based company that provides investment banking, business consulting and knowledge service solutions for social enterprises. Unconvention, which debuted in the same year as Sankalp, began with a similar agenda of bridging the world of entrepreneurs and investors. Villgro, one of the pioneers in the social enterprise is behind Unconvention.

The organizers of SUS2013 claim that it’s the largest social enterprise focused conference globally with over 1000 entrepreneurs, investors, donors, policy makers and other stakeholders expected over three days. Speakers this year include Bala Deshpande, senior managing director of New Enterprise Associates India (NEA), Jayant Sinha, managing director of Omidyar Network India Advisors, Watanan Petersk, director, Lien Centre for Social Innovation and chair, Ashoka Singapore Advisory Council, Afeefa Sayeed, senior advisor, US Agency for International Aid (USAID) and Jayesh Parekh, co-founder of Sony Entertainment Television.

The theme for this year is Looking Beyond Impact: Seeking Transformational Change.’ SUS2013 will dwell on the fact that while metrics for measuring impact are important, are they also, in some ways restrictive? Does the industry gun for scale and replication or does it pause to refine the strategies and tools that currently in operation? Have the lives of individuals at the bottom of the pyramid really been positively impacted? Difficult questions to be answered in just two days perhaps, but SUS2013 will open up a debate on how social entrepreneurship will play out in the next few years in India.

If you haven’t registered yet, do it here. You can catch all the updates on Facebook.

Blue-collar recruitment company Babajob to introduce ‘Polly’: an Instagram for voice

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Sean Blagsvedt, co-founder and CEO of Babajob

Sean Blagsvedt, co-founder and CEO of blue-collar job company Babajob is always on the lookout for new ideas, and not afraid to throw out old ones to make way for new. For example, in 2009-10, 75 per cent of new job registrations were mobile driven. Realizing the dangers of being too dependent on big telecom players, Blagsvedt switched strategies to be more aggressive on the web. The result? Registrations on the web went from 2500 to 250,000 by 2011-12. “A great focus on ensuring we had relevant jobs wherever job seekers were searching and a significant web redesign that made searching and applying for jobs much easier,” answers Blagsvedt, on being asked, about how he managed the switch.

Now he has a glint in his eye when he talks about Babajob’s exciting new initiative that could revolutionize the way interactive voice response (IVR) systems are used in India. Say hello to Polly. A voice based telephone system that lets users record and send messages using a voice filter, which became wildly popular in Pakistan after the second version debuted in May last year. “Its sort of like an ‘Instagram’ for voice, we should be rolling out a pilot in Karnataka soon,” says Blagsveldt, obviously excited about Polly’s potential to make Babajob viral. Developed as a game by researchers at Carnegie Mellon University and Pakistan’s Lahore University of Management Sciences, Polly was soon used for practical purposes. Researchers scanned Pakistani newspapers blue-collar jobs, recorded them in Urdu, and uploaded them, where they could be browsed as a voice message. In less than a year, job postings have been listened to 372,151 times, and also been forwarded to potential job seekers. Overall, to date, Polly has snapped up 158,055 users, with an cumulative call volume of 2,394,005 calls.

Babajob’s pilot, will debut in Karnataka in April, and depending on the quality of response, it may soon find its way to other states. While Blagsvedt won’t comment on it, if Polly is a success, it could bring down the cost of new user acquisition and promoting jobs for Babajob because the heavy lifting is taken care of by users, for free. There are approximately 370 million blue-collar workers in India and most of them possess a mobile phone. Finding a cost effective way to reach them, which isn’t high touch and scales fast is a big problem for companies like Babajob. Polly could become the audio Facebook meets LinkedIn for blue-collar jobs. Like Babajob before, new companies that target blue-collar workers are looking to use mobile, like CanvasM’s (owned by Tech Mahindra) Saral Rozgar that tied up with Airtel to launch a new service. Blue-collar workers can dial 54141 on their Airtel numbers and register or apply for a job.

While Blagsveldt is not thinking of new initiatives like Polly, he obsesses over how data can help improve his original vision of democratizing the blue-collar job industry. He’s digging deep to understand the needs, behaviors and aspirations of blue-collar workers by studying the data gleaned from the 150,000 applications that Babajob processes every month. Data points that his team tracks of candidates include city, state, language, gender, expected salary, category and education. The insights he is privy to gives him answers to various questions. Why will somebody work for nearly half the money at a Café Coffee Day rather than be a live-in maid? If you are a maid why does it make sense to look for a job near Bangalore’s Diamond District than any other locality? Why do the mothers of security guards prefer them to work at a software park than an apartment complex? These are bamboozling questions, worthy of a column by Steven Levitt and Stephen J Dubner, of Freakanomics fame. These insights he feeds to employers, who use it to tailor make job descriptions, salary and benefits. He uses employer insights to inform candidates on how they can spruce up their resume and interview skills.

In the short-term he plans to roll out initiatives that ensure employees get fair wages, create visualizations like skill demand maps, boost awareness of their legal rights and health and accident insurance for job seekers. Keeping this in mind and other ways to create awareness and education on resume and interview etiquette Babajob is rolling out a series of educational videos soon. For example, a video could talk about why its important to add multiple details to a candidate’s resume. Data suggests that a candidate’s chances of being shortlisted for an interview go up from 9 per cent to 55 per cent if the name, number and photo are listed. “The videos will inform users how best to use Babajob, tips to prepare for the interview, Learning a language is tough, but learning a new skill is tough. Video can help in this,” adds Blagsvedt. All these initiatives, he hopes, will make Babajob an authority in the blue-collar recruitment world.

Small epiphanies could lead to big changes.

After all, one small insight was what got Blagsvedt inspired to co-found Babajob in 2007 with his step-father Ira Weise and Microsoft Research colleague Vibhore Goyal. He was a researcher at Microsoft Research’s Technology for Emerging Markets arm, when he discovered that there were discrepancies in salaries of maids with similar levels of competence, after stumbling upon research conducted by Duke University economist, Anirudh Krishna. And much like the white-collar world, where who you know contributes to success as much (or even more) than what you know, it had to do with knowing the ‘right’ people. His insight was that most maids are not socially mobile and have no contacts in upper class households, thereby their chances of earning a higher income was limited to the households that they already worked at. It has been six years since Babajob started as an experimental project. Currently, it processes 150,000 applications a month and has had marquee VCs like Vinod Khosla and Gray Ghost Ventures invest in his company.

For Blagsvedt, he’s just scratched the surface, there are more ideas sloshing around in head waiting to be implemented. One of them is a new approach to education, which uses the www.khanacademy.org platform, to get children to learn and take tests. He’s not ready to talk about it, at least, not just yet.