Tag Archives: impact investing

Why India needs social entrepreneurship to succeed.

india

India is at the crossroads. After a decade of high GDP growth rates of around 7-9 per cent, the 2008 global recession poured cold water on the Indian growth story, in 2012-13, growth is expected to be a tepid 5 per cent. The growth post-liberalization, benefited the rich, (the increase in number of Indian millionaires was second only to China), and a newly created middle class. What of the rest? Most of India or 400 odd million people live on less than $1 a day. In the latest 2012 human development index (HDI) report, India languishes at 136, out of 187 countries .

The players who can affect positive change- the government and NGOs are trying, with varying degrees of success, but their interventions fall woefully short of what is needed to combat India’s pressing problems. Capitalism’s fruit was supposed to drop down to all, but the much touted trickle-down economics, hasn’t delivered. Income inequality has doubled in the last 20 years. Einstein said famously, “We can’t solve problems by using the same kind of thinking we used when we created them,” perhaps what is needed now is a business as unusual approach. This is where social enterprises (socents) can play a role. They use market-proven business practices to solve social and environmental problems. In the world of socents, business and philanthropy collide, and strive to create a more equitable and sustainable world. They may not be the silver bullet for all of India’s gargantuan problems related to agriculture, poverty, infrastructure, healthcare and education, but they may perhaps be our best bet.

With a business as unusual approach, socents are turning rice husk into electric power (Husk Power Systems), employing the power of the sun to bring light (Selco), bringing healthcare to rural areas (Vaatsalya Healthcare), introducing solar-powered ATMs to villages (Vortex Engineering), providing emergency ambulance services (Ziqitza Health Care), teaching English (EnglishHelper) and giving access to affordable potable drinking water. Socents are identifying markets and problems that have been ignored and solving them using innovative products and services. Most of the global case studies on successful socents are peppered with Indian examples.

Social entrepreneurship could also help India avoid the mistake China made with its growth. The Red Dragon’s phenomenal economic growth has come at the cost of air, water and soil pollution. Anger over pollution has replaced land disputes to become the chief cause for social unrest in China. Socents with their inherent vision of sustainable growth that is environmentally friendly are well equipped to balance growth with environmental concerns.

While India had made giant strides in the last decade in the area of social entrepreneurship, this is just the beginning and more is needed. Government needs to step up to the plate and make it easier for both foreign and domestic investors to invest in socents. A better regulatory framework, smoother taxation policies, creation of multiple investment bodies, using innovative investment vehicles like UK’s social impact bonds, co-investing in technology based socents, creation of a separate index like Singapore’s Impact Investment Index (IIX), are just some of things it needs to do.

One of the most interesting developments in the past few months has been the CSR bill proposed by the government where 2 per cent of profits for big companies will be used for social programmes that includes investment in social business ventures. This could be a huge boost for socents, and give them access to more than a billion dollars in precious capital, that is needed especially at the seed and early stages. Husk Power Systems, for example, benefited from the grant that it got from Shell Foundation in its early days of technology creation.

Growth in the next 100 years cannot follow the road that capitalism took us in the last century, the earth’s finite resources are already depleted, and the environment already reeling from over-exploitation. There’s already talk of social capitalism and creative capitalism in the US and Europe. India need not be far behind, and design its own version of capitalism, one that uses social entrepreneurship in abundance.

Apply for Rs 1 crore funding from the India Impact Economy Innovations Fund (IEIF) now.

Are you are a social enterprise (socent) or an organization associated with impact investing looking for funding?

dasra

Pic courtesy: Dasra

Here’s an easy way to procure more than Rs 1 crore ($200,000) as a grant. Dasra, Omidyar Network, and The Rockefeller Foundation are inviting proposals from organizations that are making a difference to the Indian impact economy, specifically spurring the growth of the impact investing industry and the socent sector.

The aim of the fund, dubbed India Impact Economy Innovations Fund (IEIF), is to support socents that use market driven solutions to alleviate poverty and promote sustainable development. Dasra will administer the fund, the lead investor in the fund is The Rockefeller Foundation, its also supported by Omidyar Network, the philanthropic investment firm founded by eBay founder Pierre Omidyar.

If you haven’t applied yet, the deadline is looming large; all proposals need to be submitted by March 15th, 2013.

There are 5-8 grants to be given away, for a period of 12 months, total funds that will be disbursed will be to a tune of approximately Rs 4.32 crore ($800,000). More than one grant proposal maybe submitted per organization. Applicants need to bear in mind the funding priorities, that stem from the directions set at the Impact Investing forum (IIF), held on January 16 and 17, 2013. The grant areas are early stage capital solutions, fostering entrepreneurial ecosystems, producing research on policy development, promoting and establishing impact investing industry infrastructure, developing market ecosystems for specific sectors and forming leadership and networking platforms for common actions.

Apply:  Interested organizations can apply by sending the completed forms and other required documentation to ieif@dasra.org, or by mailing it to the following address

Dasra
Attention: Inchara Shanthappa
M.R. Co-op Housing Society,
Bldg no. J/18, Relief Road,
Off Juhu Tara Road, Santacruz (W),
Mumbai 400 054

Finalists will be announced end-April, 2013 and the grants disbursed between May and June, 2013.

And so, it begins.

The beginning.

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Courtesy: http://www.freefoto.com

India is often referred to as a laboratory for social entrepreneurship, where innovation is brewing, and new products and services are being dished out thick and fast. Things are looking up after the doom and gloom post the 2007-08 recession and the micro-finance controversy that rocked the industry in 2010.

There are a lot of social enterprise focused VCs that are chasing deals at present. The trend in social investing started in the mid-2000s with VCs like Acumen Fund and Aavishkaar Venture Fund, and more have followed suit like Omidyar Network, Khosla Labs and India Social Fund (ISF). Now, there maybe close to a billion dollars chasing SE investment. These social VCs have been buoyed by SEs that are growing in scale and revenues, and even providing successful exits. Aavishkaar, which was started in 2001, has had a few exits, these include Rangsutra, an artisan-owned handicrafts company, Servals Automation, a rural energy solutions provider and Shree Kamdhenu Electronics, an electronic milk collection services company. According to the Intellecap SE study, most of the investments are bunched up around agriculture, education, healthcare and energy.

The industry requires talent; and that is being supplied by institutions, like the Tata Institute of Social Sciences (TISS), some of the IIMs, ISB and many other B-schools. The government too has recognized the huge potential SEs have in tackling age-old problems related to education, healthcare, agriculture, energy, water and sanitation. In January, 2013, Sam Pitroda, chairman for the National Innovation Council, announced a $1 billion fund to invest in enterprises that tackle problems at bottom of the pyramid.

But more is needed: attracting top talent, encouraging the growth of impact investing as an investment vehicle, an exchange purely for SEs to raise capital like Singapore’s IIX and less regulation and more incentives from the government.

From its first baby steps, the SE industry is ready for its next jump into adolescence and adulthood.

Billionbulbs will track this journey.