The presentation covers

1. Social Entrepreneurship: Changing the world ArunRamanujapuram arun_ramanuj@yahoo.com http://techseva.org October 2010

2. A world plagued with problems… ~10% of India jobless [ref] ½ the world < $2.50/day [ref] 30%-40% of India illiterate [ref] global mortality, <5 years – 67 per 1000 [ref]

3. Its all about social change… A social entrepreneur is someone who uses entrepreneurial principles to bring about social change Mohammed Yunus Grameen Bank, Bangladesh Microfinance Alleviating poverty

4. Social enterprises drive change Primary goal is “social impact” Livelihood or employment Better health Quality education Access to essential goods – water, power, medicines, … …essentially, create positive change at the “bottom of the pyramid” Profits are a means to “sustain” Novel business models Novel service delivery models High efficiency

5. Constraints are many… Undeveloped markets Inadequate infrastructure Lack of knowledge & skills Restricted access to finances Little or no regulations

6. …but, opportunities exist Meet basic needs of the poor Food, quality water, power, sanitation and health-care Increase productivity Stronger access to information, products & services Increase incomes Poor as producers with stronger market access Increase knowledge and skills More awareness, high-quality education, vocational training Large numbers – nearly 3B poor people to serve!

7. Some examples (scalable ones and new innovations)

8. SKS - Microfinance Microfinance to poor (incomes < Rs. 20,000/year) Started in 1997 73,00,000 customers, 2266 branches, Rs. 16670 crores (USD 3.9B) disbursed Mechanism Small loans Rs. 2000-12,000 to poor women - joint-group liability model Repayment rate > 99% Technology Smart-card based MF platform Web-based business intelligence portal Integrated & encrypted MPLS communication network and a mission-critical data-center Social benefits Alleviate poverty, improve livelihood http://www.sksindia.com

9. SELCO – Solar lighting 100,000+ solar lighting systems in 15 years Karnataka & Gujarat 46% of households in India with no electricity Technology Photo-voltaic (PV) solar systems for lighting Flexibility in usage How user’s pay 4-light home system: Rs. 18,000/- Cheaper than kerosene or dry-cell batteries Initial capital via micro-finance, increased incomes repays loan Social benefits Increase in incomes (longer work hours, savings on kerosene!) Improved health (no kerosene smoke inhalation!) Children can study well (no excuses!) http://www.selco-india.com

10. Safari’s M-Pesa – Mobile money Banked population Addressable Mobile market 19% 70% M-Pesa – mobile money Person to person transfer, individuals to business, cash withdrawals, loans 12.6M customers, ~20,000 outlets Started 2007 Benefits Banking to the millions Savings now possible “Eko” in India along with SBI 81% 30% http://www.safaricom.co.ke

11. Kiva - Microloans ~800,000 users; ~5000,000 lenders; $165M in loans; 98.9% repayment rate Business model Interest returned to lenders, part interest retained by Kiva Technology Web service for anyone to lend money Easily track your loans, see impact – all online (web or mobile) Benefits Alleviate poverty, improve livelihood In India: RangDe is similar http://www.kiva.org

12. Samaanguru– Mobile supply-chain management Strengthen rural supply-chains via mobile-phones Inventory management, Ordering Stock-level Optimization Started 2009 – pilots underway Technology Mobile-phone based data capture Cloud-based data processing Algorithms for inventory optimization Business model SaaS, transaction-based pricing Benefits Ensure availability of essential goods in rural areas http://www.samaanguru.org

13. Key Challenges and Lessons

14. Key Challenges How to get adoption? How to monetize? How to scale? How to organize efficiently? How to raise capital?

15. Social Enterprises are all-round innovation labs! Innovation and experimentation in every possible aspect of business creation: Customer development Business models Service Delivery Technology (and usability) Organization models Funding models

16. We need to build the runway first… Market creation (expect undue delays!) Towards monetization (expect false starts!) Sustainable (expect turbulence!) 3-5 years +1-3 years +3-6 years

17. Sustenance is key – varied models! Market research (early customer development) Self-sustenance by entrepreneur(s) Grant-based funding – esp. given its research for social good Customer development Angel and early-stage VC funding Monetization VCs – different ones at different levels of monetization Sustainable Business Customer revenues

18. Customer development takes time Customers are of many types: Private-sector organizations – e.g. a hospital with rural clinics Public-sector organizations - e.g. aid agencies NGOs – Who already have a field presence Government Village consumers – esp. for a consumer-based products Typically, a multi-partner model works best Trusted and relevant partners are critical Sales funnel should be crafted carefully Use case diversity, and probability of project success are important Strategically seeking customers/partners, pro-actively anticipating needs and adapting fast are critical!

19. Business models have to be novel Customers cannot pay much, or are not used to! Product pricing evolves over time Learn and evolve fast – customer is also experimenting! Cultural factors important – economics will not always work! Understand value-proposition and willingness to pay – jointly with customer! Extreme cost management is crucial Management personaland organizationalcosts determines runway (initially) and margins (later) Ensure BoP-friendly models and a deeply conscious ways of running a business!

20. Technology is essential to scale Scale can be achieved only with new technologies! Technology has to be disruptive & created anew High usability (in resource-constrained environs) Low cost Easy ramp-up Significant innovations are happening Water purification, solar lighting, smokeless stoves, low-cost bamboo housing, … Information & transaction services via the “Mobile-cloud” Low-cost technology has to be invented along with a deep understanding of usability

21. Measurements are critical Metrics are hard to define and measure E.g. Can we correlate number of school meals to improved literacy? Data matters, but is hard to come by! Not easy to collect and manage data – mostly on paper! Computers and mobile-cloud will make it easier Need careful and trustworthy measurements Done by credible individuals or organizations Efficient frameworks for collecting and visualizing metrics have to be designed upfront!

22. Scaling impact is really hard Pilot evaluations are easy, scaling is really hard! Takes time, risks are high! Needs: Low-cost technology that can scale Marketing to remote areas Scalable customer support Long-term capital This is where most enterprises struggle!Few examples of scalable models exist today.

23. Funding models are evolving New types of “social” investors Organized foundations E.g. Deshpande, Bill Gates, … Angels Social venture capitalists Social impact vs ROI Expect social outcomes Expect return on investments – perhaps, with lower margins “Patient capital”? Outcomes and timeliness of outcomes are unpredictable! Need a breed of investors who can wait!

24. Social enterprise timelines Start 5 years 13 years 15 years 8000 customers 73,00,000 customers SKS 100,000+ customers 500 customers SELCO Akshay Patra 1M+ Meals/day 5000 meals/day

25. Entrepreneur’s challenges are immense Getting funding Attracting talent Understanding remote villager’s needs Convincing customers Creating usable technology Getting customer to pay! Living frugally Managing costs efficiently! Coping with family pressure …

26. Most importantly…

27. It is a journey of personal change Build deep compassion Towards the underprivileged Develop strong passion Towards a social goal Persevere, persevere, & persevere Against all odds, over long periods Simplify life, achieve sustenance Voluntary simplicity – as found in villages today

28. Be the change you wish to see… Thank You! Let’s create a good future… arun_ramanuj@yahoo.com http://techseva.org

29. Reading List My Experiments with Truth, Mahatma Gandhi. Banker to the Poor, Mohammed Yunus. Innovator’s Solution, Clayton Christensen. Conscious Business, Fred Kofman. Voluntary Simplicity, Duane Elgin. Stanford Innovation Review [http://www.ssireview.org/] The Social Enterprise – Harvard Business School [www.hbs.edu/socialenterprise] Engineering Social Systems [http://ess.santafe.edu/] Top 25 Social Entrepreneurship Websites [http://e-180.com/2009/02/04/our-top-25-social-entrepreneurship-websites/]