Social Enterprises: The "Silver Bullet"?

As I mentioned in my previous post, I have been deciding what to share in my final post. Should I talk about culture in India? My personal adventures throughout this vast and diverse country? My life in the most cosmopolitan and populous city in India?

I could speak about my experiences but because I know I'm coming back soon (or at least to another emerging market), I've decided to share what I've learned from early-stage social entrepreneurs in India which  is far more interesting... well ,for me at least! So what have I learned?

Focus on doing one thing well: Early-stage entrepreneurs usually have limited resources to get their product or service to market and start gathering feedback and generating revenue.  Entrepreneurs have a choice: do many things poorly or focus on doing one thing (or a few things) well. From my conversations, the entrepreneurs that choose to focus on one thing tend to have a more coherent pitch, vision and plan of action to achieve the vision. As a MBA student, this lesson hits home even more. In business school, you are inundated with opportunities - professionally, socially, and academically. Would you rather attend that corporate presentation tonight, study for an upcoming exam, attend a social event for your favorite club, or go to a happy hour with your friends? Logistically, you can't do everything. Fortunately, what you decide underlies that which you value most thereby (hopefully) leading to a more defined focus.

Understand who your customers are and listen to them often: Rather than try to sell to everyone at once, entrepreneurs are more likely to succeed if they take the time to first understand who to sell to and work to meet their needs. Entrepreneurs that pay attention to their customers, peers, and even competitors have a much higher chance of survival. For example, during my conversation with Chachii, the co-founder had identified peers in India and abroad to better understand their models. With this analysis, the entrepreneur further differentiated her service while identifying potential exit opportunities. Another common thought among entrepreneurs is that "if you build it, they will come" which is especially prevalent for entrepreneurs with a technically superior product. Although your product or service may be the next best thing, the ultimate judge for any entrepreneur should be the market and their customers. Numerous cases, such as Betamax vs VHS or the more recent Blu-Ray vs HD DVD, demonstrate that business success hinges less on your amazing and technologically advanced product specifications than on your ability to listen to your customers and execute on your model.

Focus on business model first, social impact second: Without a viable business model, any social impact that a social entrepreneur generates is short-lived (note: my definition of a social enterprise is one that seeks financial and social/environmental returns.) Although understanding the context of the social or environmental issue that an entrepreneur is trying to address, the immediate questions that come to mind all relate to an entrepreneur's business model including:

"Have you identified a market with customers who have some willingness to pay?",

"How do you plan to offer your product or service cost-effectively to eventually generate profits?", and

"What or who stands in your way and how do you plan to address that?"

For social entrepreneurs, the last question is one of the toughest since achieving social impact usually involves changing behavior and these enterprises face the toughest competitor: the status quo with customers who are usually resistant to change regardless of how the product or service could "change their lives". For example, solar lamps and cookstoves provide a safer and cleaner alternative than kerosene as light or fuel for cooking, respectively. Plenty of entrepreneurs sell these but few have managed to convince potential customers to switch, differentiate themselves and achieve scale.

Play well with others: Besides overcoming the status quo, social entrepreneurs occupy a unique space as they usually try to offer something that the government has failed to do (or at least, do well), non-profit organizations provide free or at cost like water or food, incumbents "offer" usually in the form of exploitation, or any combination of the three. Social entrepreneurs need to understand if, when, and how to engage with these players to create a market with fewer distortions thereby leading to sustainable and long-term change. For example, NextDrop has worked with the local water utility from day one because without the utility's buy-in (agreement), NextDrop would not have been able to launch its SMS service.

A market-based approach is not the end all be all for poverty alleviation or any other socio-economic or environmental issue. Humanitarian aid to countries or regions in conflict or post-major natural disaster, for example, is the most feasible solution despite its shortcomings and criticism. At the same time, my experiences with social enterprises and non-profits have convinced me that social enterprises have the potential to address most socio-economic issues. They, however, need to closely collaborate with government and the social sector to adequately address the complex, inter-related nature of these issues. Market-based approaches and especially social enterprises are not the "silver bullet". But they should lead the way to achieve real and sustainable social change.

Do social impact metrics matter?

“Social ventures can use logic models to communicate their effectiveness to investors and funders, and to identify how to improve their impact, all without collecting a single measure.”
-MaRS white paper: Social Entrepreneurship (Social Impact Metrics), 2010

“Arguably the biggest obstacle to the creation of social capital markets is the lack of a common measure of how much good has been done: there is no agreed unit of social impact that mirrors profit in traditional capital markets.”
- The Economist, September 2009

Impact investing and social enterprise are the current darlings of the business world. Differentiated from Darwinian capitalism by their focus on making the world a better place while generating a financial return, these emerging industries have enormous potential to create dramatic change - if they can believably, quantitatively prove themselves.

But social impact metrics aren’t cut and dry like financial metrics. They’re messy. They’re difficult to define: how do you quantify increased quality of life? They’re difficult to collect: who do you talk to, what numbers do you need? And they’re difficult to interpret: do higher test scores really mean better schools? Do better schools lead to increased income, equality, and happiness? Are people telling you the truth, or telling you what they assume you want to hear? Social impact metrics require substantial investment of time, energy, and resources. But without them, how can you be sure you’re making a difference?

Completing summer internships with a social enterprise and an impact investor, Mary Fritz (Erb Institute for Global Sustainable Enterprise, MBA/MS ‘13) and Patrick Huang (Ross School of Business MBA ‘13) have experienced the complexity of this question firsthand. They discuss their thoughts in the conversation below.

Patrick: Could you briefly share what you're doing with Wello in India?

Mary: Wello addresses clean water access problems in rural areas by improving personal transportation methods through our innovative tool, the WaterWheel. We are structured as a hybrid social enterprise, comprised of a for-profit and non-profit arm. Most activities to this point have been conducted under the non-profit umbrella; my overarching goal is preparng Wello for capital investment to engage the for-profit side.This has involved creating a pricing structure, financial modeling and scenario planning, and developing our market entry strategy (including identifying robust, meaningful impact metrics and a means of collecting the necessary data). 

And what are you doing for Village Capital in India?

Patrick: My main mandate is on pipeline generation, i.e. identifying and shortlisting enterprises for two upcoming Village Capital programs in India. In brief, VilCap organizes 12-week business accelerator programs for early-stage social enterprises. VilCap’s main differentiator is our intensive peer-review approach in which the cohort not only provides honest feedback to each other but also decides which two receives pre-committed financing. In the past 3 years, we have organized 14 programs by partnering with organizations such as the Hub, Dasra Social Impact, and the Unreasonable Institute.

To start off, I wanted to quickly draw a contrast between traditional, commercial enterprises and “social enterprises.” Commercial start-ups collect standardized financial measures like revenue and costs to understand their own financial situation and success, to plan for the future, and to share with external users like investors. For-profit social enterprises do the same (by committing the time and resources), but they also grapple with the additional quantifying their social impact. Is that what a social start-up should focus on right away?

Mary: It’s tough for a start-up to devote the resources necessary to collect and interpret meaningful data around impact. You need people on the ground, in the field, to constantly monitor change, and you also need people to respond to those inputs from a strategic level. It’s been my experience that most investors would rather see those resources put toward building and scaling the core business. So it’s a matter of comparing the value of metrics with the value and opportunity costs of spending your resources there. What do you think, Patrick?

Patrick: I agree, especially for early-stage enterprises like the ones that I have spoken with. The main priority for entrepreneurs in the early stages should focus on defining a financially sustainable and viable business model. Without this, any social returns generated will be short-lived.

Since these enterprises are usually started by one or two founders with seed funding from friends and family, entrepreneurs need to allocate any capital and resources to the core business and operations. With this initial capital, entrepreneurs can develop a prototype or proof-of-concept and test this out through a small-scale trial run or pilot. Through this process, entrepreneurs start to define and refine their business model. All of these activities are critical for a business to build a business, social-oriented or otherwise.

Mary: Exactly. At Wello, we’re building our impact data collection into our business model pilot. People “get” our intended outcome, but the type of customers we hope to attract will need us to prove it. So essentially, the business model relies on accurate social impact data.

Patrick: I get that. Any true social entrepreneur (whether he or she self-identifies as one) will always remain cognizant of the enterprise’s social impact and ideally, that impact would be “baked into” the model itself. As another example, I’ve spoken to a couple of entrepreneurs that design and implement renewable-powered micro-grids that provide access to energy to households in remote, off-grid areas in India. These entrepreneurs have a business model that provides a key service (energy) to households and generates revenue for the enterprise while creating social impact through energy access. At the same time, these entrepreneurs track the number of households served as a necessary metric for both their operations and social impact.

Mary: So does tracking the number of households served equate to social impact?

Patrick: Not necessarily, although in the case of access to energy, I would argue that renewable energy has a strong correlation to positive social returns such as better health (by eliminating the use of kerosene) to increased income and better education (by providing light to shop owners to sell their wares and children to continue studying). However, these social returns are much more difficult to define, collect, track, and manage for an early-stage entrepreneur who is still struggling with keeping her business running while staying true to her initial mission for social change. I still maintain that entrepreneurs at the early stages have much higher priorities to focus on.

On the other hand, I would argue that tracking and managing social metrics is not only viable but necessary for growing social enterprises that have the resources and capital to scale, especially those that are financed by impact investors. These enterprises have already received financing from traditional commercial investors or impact investors and both the entrepreneurs and investors should support the allocation of resources to do so. Based on my conversations with people from Grassroots Business Fund and Acumen Fund, both impact investors that focus on supporting social enterprises in the growth stages, they have developed initial approaches to track the social impact of their invested enterprises but neither of them are perfect.

Mary: I worked with Acumen Fund for MAP. We were tasked with researching successful exits in some target sectors and evaluating potential pipeline deals. Trying to expand our limited selection of examples, we stretched our definition of social impact (e.g., does PayPal have a social impact because it gives people access to digital transactions without credit?). Because the social enterprise space is so young and holding times are lengthening, it was tough to find relevant example deals. But they pushed us hard to prove a legitimate social mission and impact. If Acumen Fund can’t collect metrics from its portfolio companies, how can it measure its own impact? Without metrics, how do you evaluate potential investments?

Patrick: I can relate to your and Acumen’s struggle with identifying “social enterprises”. Identifying a social enterprise requires a commitment to a market-based business model and social impact. During my internship, some questions that I may ask entrepreneurs include “Who are your target customers or Who do you serve?,” "What area(s) do you serve - urban, rural, something in between?,” "Who are your major clients to date (large corporations or individual households)?,” “Who do you employ [for enterprises that work in rural areas)?" Based on the answers to these questions, I can better determine whether an enterprise is socially oriented or not. In addition, as a SvF Fellow at Ross during my first year, I tackled these same issues as a member of the Health Investment Circle. There was an assumption that any enterprise in health would be socially-oriented. At a high level, this is probably true but the same type of questioning is still relevant. For example, if an enterprise targets wealthier customers or those with more means than other customers, that enterprise would probably not pass our social impact screen.

Mary: That’s largely what I’ve seen, and I wonder if Acumen Fund and Grassroots Business Fund are exceptions to the rule? Several investors I’ve spoken with this summer have explicitly told me that impact metrics aren’t necessary; they just want to see the financial return. Financial return is necessary to build a sustainable business (and thus maximize impact), but this approach bleeds pretty heavily into traditional VC.

The other problem with that more general approach is that it doesn’t force you to critically evaluate your true impact on the populations you aim to serve. Are you accomplishing your mission? Do your achievements reflect your intentions? Are there negative impacts to your activities? There’s a difference between a socially oriented organization and one that produces a true social return on investment.

From the entrepreneur’s perspective, there are also some pretty compelling reasons to collect metrics early on. As I mentioned, sometimes business depends on it. For example, Wello expects larger orders to come from institutional customers such as government, NGOs, and CSR departments at MNCs. These customers are all impact-focused, and to attract them, Wello will need to demonstrate quantitative proof of concept. We will have a much easier time appealing to a wider range of stakeholders when we can quantify our impact. And we want to ensure that we’re adhering to our mission and actually accomplishing what we’ve set out to do - before scaling.

Patrick, how credible do you think metrics can be? How much insight do investors have into the meaning behind the numbers? How do you ensure your cash is really making an impact?

Patrick: Credibility for social impact metrics is largely determined by how accurately we can quantify the impact at an absolute and relative level. The time when we can quantify social impact metrics at the same level as we do for financial metrics, however, is probably a ways off. For example, on education, how does selling books to children compare to building schools? On health, how does providing telemedicine services to remote, rural communities compare to building low-cost primary health clinics in low-income areas? If one is better than the other, how much better? Now, what if we were talking about a rural community in New York and a low-income area in the war-stricken Congo or vice versa? The answer to these questions are difficult as they tend to define the value on a person’s life. Despite the adage “a person’s life is priceless,” people are already quantifying life. If we don’t quantify a person’s life whether that person is a teenage girl in rural Afghanistan or a wealthy person in upstate New York, then someone else will do it and that number may ultimately be zero.

Mary: There has been some pretty public criticism of impact investing recently - complaints that SVC is ill-defined and has failed to distinguish itself from traditional VC, etc. Do you think social metrics could help legitimize the industry?

Patrick: Definitely. There are many critical next steps for the industry to take such as supporting enterprises to reach scale that would inevitably demonstrate a viable track record for the impact investing industry as a whole. Defining reliable and standardized impact metrics is another important first step to start an open and transparent discussion as to whether a commercial business model that seeks both financial and social returns is even viable in the first place.

Mary: I agree. People naturally want to believe in social enterprise and impact investing, especially as traditional business and hardcore capitalism are increasingly vilified. They're such nice stories - do good and make money. But meaningful metrics are the only way of solidifying that theoretical link between social and financial returns. And those metrics have to be standardized and applicable across social businesses, so collaboration is necessary. It will be really interesting to watch all of this unfold over the next few years.

Patrick: Do the needful, kindly revert.

Mary: Great answer. I think we’re done here.

Building the Entrepreneurial Ecosystem Part 2: Angel Investing

A major piece of the entrepreneurial ecosystem that has yet to be fully developed here in Indonesia is access to early stage funding. There is a gap between the funding provided by friends and family and the much larger investments most venture capitalists are looking for that causes issues for a number of entrepreneurs. Some VCs have been moving to earlier stage investments, but this comes with its own set of issues. Accordingly, one of GEPI’s biggest initiatives during my time here has been launching Indonesia’s first open angel investor network and two angel funds.

We had a big launch event in mid-July with 30-40 affluent prospective angels to teach them about angel investing, valuation, and structuring/negotiating a deal. Partially supported by the US State Department, we brought in two prominent angel investors from the US to hold a full-day workshop. It was an amazing learning experience and a great opportunity to see business tycoons go through a negotiation simulation similar to the ones in our MO class – I definitely still have a ways to go.

Panelists at the workshop

Pak Ciputra, the godfather of
entrepreneurship in Indonesia

I’ve also had the unique opportunity to structure two angel funds – one focused specifically on female entrepreneurs, and another more general one. Having no background in investing, it was really interesting to understand how an investment fund works, and then adapt that knowledge to an Indonesian context.

These angel investors are interested in all businesses, not just social enterprises. That being said, a number of the businesses in our pipeline that we’re preparing to pitch to our investors are social enterprises that have positive impact, but also compelling business propositions. I’ve prepared a workshop on presenting to investors,

Presenting to a group of entrepreneurs

 and spent my last day at GEPI working with 14 entrepreneurs on their investment pitches. The remaining challenge though for both investors and entrepreneurs is a lack of exit options. In the US, there is a robust IPO market and a lot of acquisition activity that lets investors earn multiples of what they invested to cover other startups that fail. However, here in Indonesia, an IPO is not a viable exit option and the lack of data on acquisition terms makes it difficult to determine whether it’s actually profitable to do angel investment. As such, entrepreneurs crutch together alternative investment terms that likely aren’t in the best interest of the business or investor (i.e. a 3-year profit sharing period with the full investment paid back at the end, almost like an income-based loan). I believe once this hurdle is overcome, the entrepreneurship scene here will grow even faster than it already is.

Entrepreneur Profile: NextDrop

In the past two months, I have spoken to countless entrepreneurs in almost every sector and at different stages from ideation to growth. I have been impressed by many but one has kept my attention: NextDrop. Before I share why, I want to briefly introduce NextDrop.

What is NextDrop? NextDrop distributes information on water delivery to urban residents via SMS. Anu Sridharan, a graduate student from Berkeley,  and her team have worked to achieve 25,000 subscriptions in less than a year.

How does NextDrop work? Customers pay a monthly subscription fee for NextDrop's service and receive a text message whenever water is available. To ensure that customers receive timely and accurate messages, NextDrop partners with the local water utility and the valvemen who quite literally turn on and off valves that provide water to certain areas. After he turns on or off the value, the valveman calls into NextDrop's automated phone system.

Why is this important? Currently, urban residents in Hubli receive water once every 5 days or so. In addition, information on water delivery is usually disseminated to households through the local newspaper and as you guessed, that information is likely untimely and inaccurate. Less well-off households deal with this uncertainty by having the wife or children stay at home to collect and store water.

Access to clean water, much like power, is likely an afterthought, if that, for most people in the developed world. In India, no municipal water utility provides 24/7 access to water for all households. If you have never experienced the uncertainty of water access, Mary Fritz, a WDI Fellow who interned with Wello, shares a very real and first-hand encounter with this uncertainty when the water purifier at her apartment broke in the relatively developed urban area of Bandra West in Mumbai.

What is the impact on society? In my previous post about social impact metrics, I explored some of the challenges faced by for-profit enterprises seeking social impact and the need to proactively seeking to define, measure, and track social impact rather than assume that their service automatically leads to social impact. By acknowledging that the Customer is King, NextDrop is proactively gathering data to both understand its customers and incorporate social impact into its core operations.

  

Why is NextDrop my favorite social enterprise? Throughout my many conversations with entrepreneurs, I have noticed a few recurring themes that distinguish some enterprises compared to others. My conversation with Anu has now inspired me to write my final blog post on these themes. You will have to wait for my final post but in the meantime, I want to share one theme: transparency. To be frank, NextDrop is not perfect and has been unabashingly open about its mistakes and missteps since its inception. With each misstep, however, NextDrop has also shared its proposed solutions and lessons learned. This transparency is why NextDrop is my favorite social enterprise. Oh, and my personal interests in women-run enterprises and any entrepreneur using technology for social impact (rather than for technology's sake) may also play some role in this.

Obstacles are faced by all start-ups, social or otherwise. NextDrop's willingness to share its trials and tribulations with the world is rare for entrepreneurs, social or otherwise. Returning to my first blog post, I spoke about my experience at the Impact Investing in Action conference co-hosted by Village Capital. During one of the panel discussions , one speaker rightly mentioned that the players in this space need to share both its successes and failures to move the impact investing industry forward. In my own experience, I have seen little in the way of sharing failures. My hope is that other entrepreneurs will embrace NextDrop's transparency while investors will view this as a sign of maturity, humility, and most importantly, its potential for growth.

Building the Entrepreneurial Ecosystem Part 1: Business Incubator

One of the challenges GEPI (Global Entrepreneurship Program Indonesia) faces in having workshops, events, networking nights, etc is the effort and cost involved in renting a space. Entrepreneurs also don’t have a central place to gather in Jakarta and many entrepreneurs work out of cafes to avoid high office costs.

GEPI is aiming to address this by launching a business incubator/ co-working space a la The Hub where entrepreneurs can rent a desk, network with other entrepreneurs, and get access to mentorship and lower cost services (legal, accounting, etc). We’re partnering with Founders’ Institute Jakarta and Mandiri, the largest state-owned bank, and hope to have it launched in the next few months.

There are some similar spaces already, but most of them take an equity investment in the businesses and as a result are smaller. We’re aiming to house 50-100 entrepreneurs selected through an application process, hold regular workshops and events, and have a structured mentorship program to help them develop their businesses.

The goal of all this is to help bridge some of the major challenges of entrepreneurship here, specifically the lack of management knowledge and strong/ effective networks. In the past, entrepreneurship was the bastion of well-off individuals who could afford to take such a large risk and had access to knowledge and networks, but startups are being pursued by a much wider group now who need this type of support.

Social entrepreneur profile: Aneesh Khanna, MyLabYogi

What is MyLabYogi? MyLabYogi is an online platform that enables patients the freedom to book and complete a diagnostic test at their convenience. Aneesh, a MBA with years of diagnostics industry experience, founded MyLabYogi earlier this year and the start-up has already completed hundreds of transactions.

How does MyLabYogi work? Patients schedule a diagnostic test, with or without a doctor's prescription, online. After choosing a lab for the results to be processed, the patient pays online or chooses to pay cash on delivery. Similar to Chachii, MyLabYogi is ahead of the curve on e-commerce / online payments as cash transactions is still common. After the patient chooses to complete the test at home or at the workplace, a trained staff member collects and transports the sample to the designated lab. After the lab has processed the sample, the patient receives the results online.

Why is this important? Currently, doctors prescribe diagnostic tests for patients and refer them to specific laboratories to complete the test. Unfortunately, these laboratories are open during normal working hours and are usually busy. Patients could spend hours waiting to complete a diagnostic test. In addition, doctors usually receive kickbacks from these laboratories thereby further inconveniencing patients. MyLabYogi shifts the power dynamic to the patient, empowering them to choose when and where they would like to complete their diagnostic tests at a comparable cost with exceptional quality. In addition, MyLabYogi has invested in creating a positive customer experience (a rarity in India) to drive repeat business. Despite entrenched interests from doctors, MyLabYogi has successfully partnered with top laboratories who stand to gain additional revenue by reaching additional customers.

What is the impact on society? A decent percentage of MyLabYogi's customers are chronic patients or those who are immobile and have difficulty traveling to laboratories. For these customers, MyLabYogi offers convenience without sacrificing quality. Other customers are professionals who work long hours (the normal working hours here is around 10am - 8pm or later) and usually can't take a half or full day off work to go to a lab.

What is MyLabYogi's vision? MyLabYogi plans to expand into other healthcare and diagnostic services as well as the major metropolitan cities in India. With more than 15000 people per day conducting diagnostic tests in Mumbai alone, MyLabYogi wants to capture more of the market before expanding to other major cities.

The next time that you need to get a lab test (and you happen to be in Mumbai), check out MyLabYogi! 

Social Entrepreneur Profile: Tanvi Surti, Chachii

How time flies! I'm more than half-way done with my VilCap internship in Mumbai and I'm excited to report that I've made considerable progress. My main mandate for the summer was to generate a pipeline of interested social enterprises that fit our upcoming VilCap business accelerator programs. Despite this extremely broad and challenging goal, I have fully embraced my entrepreneurial spirit by speaking with more than 100 people, 75% of those are entrepreneurs while the others are associated with institutions  supporting entrepreneurs like incubators.

The sector focus for the entrepreneurs I've spoken to range from energy access and education to health and handicrafts. Each one of them has no shortage of passion and dedication to advance their enterprise while positively impacting millions. Supporting these entrepreneurs is why I am pursuing a career in impact investing in emerging markets.

Every entrepreneur is amazing in his or her own right so I have decided to showcase a few social entrepreneurs for my remaining blog posts. The first entrepreneur is Tanvi Surti with Chachii.

What is Chachii? Chachii is a SMS and online-based platform that connects laborers such as maids and drivers to people who need short-term, temporary help. Tanvi Surti, a recent graduate at Bryn Mawr College, is one of the co-founders of Chachii. After completing college, she decided to move back to India to start Chachii in Mumbai, India.

How does Chachii work? Individuals post tasks online or by phone and Chachii selects a laborer that can complete the task. After receiving information about the laborer, the individual sits back while his or her task is completed. After the task is completed, the laborer pays the pre-determined amount (no haggling!) to the individual while Chachii takes a small cut of the payment. Although e-commerce is still fairly new in India, Chachii is paving the way by encouraging online transactions and payments with online pre-paid credits.

Why is Chachii important? In Mumbai and across India, hiring help like a driver for your car and a maid for your flat is extremely common especially for people in the middle class and higher. Given that Mumbaikars are more liberal and progressive, more bachelor(ette)s in Mumbai live on their own compared to those in other more traditional cities. Although hiring a driver or maid is still common for these customers, they usually cannot afford a full-time driver or live-in maid. Hiring short-term, temporary help is much more appealing. Finding good-quality, reliable, and trustworthy help is difficult though as most people use personal networks and references. Much like Angie's List and Task Rabbit based in the states, Chachii fills this gap by connecting laborers while encouraging customer feedback to increase transparency and drive repeat users.

What is Chachii's impact on society? In India, most laborers come from lower-income groups usually those at the upper edge of the Base of the Pyramid. Chachii connects people from these groups as well as college students looking for extra income. By joining the Chachii network, laborers have the potential to make a sizable monthly income in addition to their full-time work.

What is Chachii's vision? Besides expanding the range of services offered, Chachii hopes to expand to all major metropolitan cities in India and reach an estimated 60 million laborers in the unskilled and informal labor market across India. With its current focus on Mumbai, the most populous city in India, Chachii has its work cut out for them!

To learn more about Chachii, you can view an interview with Tanvi and check out the site.

Selamat datang di Indonesia!

It was approximately two months ago when I landed in Jakarta, the capital of Indonesia, also the city where I grew up and spent most of my teenage life. I am back in Jakarta for my 12-week WDI Internship with Endeavor, a non-profit organization that works with high-impact entrepreneurs in emerging markets and helps accelerate their businesses.

To give you a background of organization, below is a great story on Endeavor from the website:

“The story of Endeavor began fifteen years ago from a conversation between Linda Rottenberg and Peter Kellner who then wrote their vision in a tissue paper: Endeavor would be a new kind of non-profit organization dedicated to selecting and accelerating the growth of entrepreneurs in emerging countries that will create new job opportunities and improve societal welfare. People initially thought the concept of High-Impact Entrepreneurship in emerging markets was unrealistic. No one believed there were entrepreneurs in developing economies let alone mentors who would support them. However, Linda and Peter along with their small but passionate team ultimately convinced business leaders in Latin America to dedicate not only their money, but also their time and networks to Endeavor and its entrepreneurs. Endeavor then began its expansion to South Africa, followed by Turkey and a succession of countries in the Middle East. Currently, Endeavor operates in 15 countries, and has become an organization of, by, and for entrepreneurs. More than 80% of our entrepreneurs give back to their local affiliates by serving as mentors and members of worldwide boards. Over 100,000 jobs have been created with billions of dollars contributed back into local economies and hundreds of role models now exist for young people in rapidly developing economies The Endeavor Entrepreneurs continue to remind us that with the right resources, big ideas can happen and generate transformative change in economies around the world.”

When Jennifer Hsieh, my section 5 classmate at Ross and a former intern at the Endeavor office in NY, told me that Endeavor just opened its Indonesian office on February 1, 2012, I was really excited and applied immediately for a summer internship position. I talked with Sati Rasuanto, the Managing Director in Indonesia, through Skype several times to learn more about the opportunities in the Jakarta office. Our conversations confirmed my interest with Endeavor and here I am now back in my home country working with an exciting organization and great group of people!

More stories on my first several weeks at Endeavor next!

Facebook: http://www.facebook.com/EndeavorIndonesia

Twitter: @Endeavor_Indo

Bombay/Mumbai | Mumbai/Bombay

I found a great quote today: “A businessman might go to Mumbai to hold a meeting, but he would go to Bombay to hold a lover.” That’s the best explanation I’ve found for the difference in the semantic choices of overly conscientious foreigners and comfortable locals.

Bombay is a city of stepped levels: intermittent skyscrapers; endless highrises atop rolling hills; groves of flowering trees block the street view. Seas of slums like boxes stacked on boxes; a haphazard adobe of blue tarps, brick, and corrugated metals held together through sheer will. Minute shops line the streets, hawking cell minutes and soda, cloth, furniture, samosas, haircuts. Chaiwallas and bananawallas and pantswallas and all the other wallas cart their wares. Below it all, the fish women and flower women squat with their baskets. The ocean is brown with refuse and feces; the mangroves impossibly tangled with colorful garbage. The roads are filthy and the thought of monsoon flooding terrifies me. Everywhere hoards of people toil, eat, honk, laugh, chat, sleep, shit, buy, and sell. It’s a lot like New York. But the magnitude of the income and education gap is constantly palpable, caste system remnants visible always, a potential deadweight to India’s rapid ascent.

water source for street food vendors

Until August, I am lucky enough to be a guest member of a powerhouse social enterprise team bent on improving the lives of India’s rural and peri-urban poor through access to clean water. Wello’s innovative tool, the WaterWheel, is in its third cocreated design iteration and ready for production. My project involves evaluating end user impact to fully develop Wello’s value proposition, as well as financial scenario planning to define the business model. Our office space is entirely covered in Post-Its. 

We will spend June here in Mumbai, engaging with partners, coordinating logistics, and studying urban water use habits. The entrepreneurial atmosphere ensures fresh questions and challenges on a daily basis, something I missed during my brief foray into corporate life last summer. Risk is allowed, creativity is encouraged, MBA lessons are put to good use. And my daily breakfast consists of papaya, pineapple, mango, watermelon, pomegranate, banana, and yogurt, keeping a smile on my face. Lunch is panipuri, paneer, strangely addictive jeera crackers, and all the fresh juice I could ask for.


In July we head to Rajasthan to work in the field, connecting with our target market and gathering baseline data. While I look forward to lake palaces, camels, and riotously dyed saris, I am not entirely ready to abandon my cityscape. Three weeks ago, I came to Mumbai. I’m still discovering Bombay.

Impact Investing: Crazy or Not?

My name is Patrick Huang and I am a WDI Fellow interning for Village Capital in Mumbai, India for the summer. A relatively young organization in the impact investing industry, Village Capital supports growing social entrepreneurs around the world. Before I get into the amazing work that Village Capital does, I wanted to share what I learned about the industry after attending the Impact Investing in Action conference in Atlanta and the Frontier Market Scouts training program in California.

For those unfamiliar with social enterprises and impact investing, I am defining a "social enterprise" as a for-profit enterprise seeking to achieve returns beyond financial such as positive social and environmental impact while "impact investing" as an industry seeking to finance these social enterprise through debt (loans), equity (ownership), and anything in between. Traditionally, non-profits have pursued social and environmental impact while corporations have focused on financial returns. With social entrepreneurship officially recognized by Bill Drayton from Ashoka, more market-based (see: revenue generation) approaches have flourished partly in response to the unsustainable, grant-funded programs that address poverty. Although this shift may sound appealing, the challenges for social entrepreneurs are staggering.

First, most Base ofthe Pyramid business models generate lower margins and take longer to reach scale, i.e. impact thousands - much less millions - of people. Simply stripping down a product offered in the developed world and selling this in developing countries has proven to be ineffective.  Just like those in developed markets, BoP business models require multiple iterations to refine the product or service for customers' needs.

For entrepreneurs, the nascent impact investing ecosystem offers little support for the more than 85% of start-ups that fail. First off, social entrepreneurs - whether they identify themselves as such - have difficulty finding financing. On one end of the spectrum, traditional investors typically expect a much higher return while non-profit foundations (with a few exceptions like Calvert Foundation) are usually wary of giving grants to for-profit entities. For example, a speaker during the conference mentioned the disconnect between a philanthropic heart and an investor mind: when considering funding to a social enterprise, his board was more willing to give $50K in grants with no opportunity for return rather than a $50K convertible note (essentially debt with the option to convert to part ownership of a start-up) with 2% interest. In addition, social entrepreneurs oftentimes don't even know what a "social enterprise" is or wouldn't naturally associate themselves as such leading to a sense of isolation with little support.

The challenges continue to the investor side. Investors in the US typically invest in multiple start-ups with the hope that one of them generates huge returns by going public or getting acquired by a larger company thereby returning around 100 times the initial investment. For impact investors, however, the return is usually closer to 1X the initial investment leading to a higher risk per investment. In addition, financing options are usually limited as debt is not as viable since the revenue generated by these enterprises is too low to pay for monthly interest payments. Furthermore, the economics of financing these deals are not as compelling as the transaction costs, e.g. due diligence , are just as high for a $300K deal compared to a $1-3M deal.

Despite these challenges, hope prevails; the impact investing industry has taken steps to address them such as GIIRS and IRIS's effort to standardize social metrics and B Corp's certification that allows for-profit enterprises to legally pursue returns beyond financial. In addition, the conference is a good example of industry leaders coming together to discuss these issues and how to overcome them. This conference also demonstrates one of the distinguishing factors for the impact investing industry: collaboration. Impact investors understand that addressing poverty alleviation is multi-faceted and complex; co-investment in enterprises has become common to share risk while validating deals.

Additional support, such as incubators (Hub Ventures) and accelerators, is also increasing especially for earlier-stage enterprises. Village Capital's unique accelerator programs brings cohorts of entrepreneurs together around the world. Besides providing training such as improving business models and learning how to think like investors, entrepreneurs conduct peer reviews to make themselves better. At the end, each entrepreneur ranks everyone (minus themselves, of course) and the top ranked receive funding. With pre-committed capital from investors, Village Capital changes the power dynamic altogether. With 14 programs worldwide, Village Capital continues to accelerate both the industry and entrepreneurs seeking to make a positive impact in the world.

To be fair, critics around impact investing present valid points. Despite these criticisms, impact investing is growing with large institutional support such as JP Morgan and Citibank and will continue to evolve. In my mind, the only question for me is whether I want to stay on the sidelines and wait to see what happens or join and contribute to the exciting and innovative approaches to address poverty. As a speaker during the conference aptly noted: "There are things that are crazy to do. There are things that you would be crazy not to do." Impact investing is one of those things that I would be crazy not to do.