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.