On August 23th, in Santa Clara, California, I attended business plan presentations of 19 competitively selected social entrepreneurs, who delivered their pitches to a panel of experienced professionals plus a general audience. These presentations marked the culmination of the 10th annual Global Social Benefit Incubator (GSBI™) program organized by Santa Clara University. The Development Marketplace has been one of its partners since its beginning. The program includes intensive work by each entrepreneur with two to three designated mentors, and a series of on-campus classes. Its main objective is to strengthen material that each entrepreneur already has available, refine their business models and develop professional organizational documentation that can be presented to attract investors.
The current cohort of social entrepreneurs are scattered all over the world and hail from countries such as Haiti, Mexico, Pakistan, India, Rwanda, and Ethiopia. Each organization is testing concrete solutions to address critical needs such as access to clean water, increase literacy, access to the financial system, and access to affordable health care. Other projects are focused on developing innovative approaches in fields such as solar lightning, efficient cookstoves, and mobile technology to collect data.
Backpack Farm (GSBI ’12). Problem: poor nutrition in Africa. Solution: all-in-one backpack comprising green agri-tech inputs needed by smallholder farmers to standardize both the quality and quantity of agriculture production and generate income for their family.
Why is a program such as this relevant? First and foremost, these projects are implementing solutions that reach a considerable number of beneficiaries at the bottom of the pyramid (BoP). Furthermore, they are positioned to absorb additional capital to scale their projects or replicate them in different locations to reach a much larger number of beneficiaries. But ultimately the GSBI addresses an important aspect of the solution to an easy to enunciate but hard to solve problem: the lack of adequate flow of capital (both commercial and philanthropic) from funders to social entrepreneurs. This is effectively a key barrier for social enterprises, but targeted technical assistance and education can play a role in reducing this barrier.
Through our own work with social entrepreneurs as part of Development Marketplace, we have consistently observed that in most cases there is a very big difference between a good idea and solid execution. An overwhelming majority of the social entrepreneurs lack the necessary preparation to successfully engage potential investors in funding conversations. As Aleem Walji, the Director of the World Bank’s Innovation Labs Department (who oversees the management of the DM) said in a previous post titled It’s a Capital (plus Advisory) Problem not a Pipeline Problem:
“limited access to capital and targeted technical assistance (in areas like financial management, human resources, and governance) constrains these enterprises from growing, realizing their full potential, and moving from ‘small to significant’. Many of these enterprises require small amounts of money and large amounts of hand-holding.”
The influence that targeted technical assistance and education can thus have to help unlock further capital cannot be dismissed and it is a hypothesis that we at the DM are testing and documenting. This is the critical gap that the GSBI Program attempts to address, and it is providing initial evidence of its success.
Customer Keeper (GSBI ’12). Problem: poor information management. Solution: helps sellers of household energy products to collect detailed customer information using standard mobile phones and generates frequently used aggregate statistics.
The impact investing space is currently quite active in facilitating conversations around these topics, but there have not been enough result-oriented initiatives to position social enterprises to achieve both development impact and financial sustainability. In this context it is refreshing to see the concrete results achieved by the social enterprises that participated on the GSBI program. For the 2012 cohort’s entrepreneurs these results include being now armed with a vetted business plan and operational plan fully analyzed and ready to be shared and implemented; a presentation pitch already tested in front of a relevant audience; and invaluable connections to a network of practitioners, collaborators, and funders. But the final results are even more ambitious: the new skills acquired by the entrepreneurs will likely be shared with other colleagues thus expanding the reach of this newly acquired knowledge and its implementation benefits. Moreover, if the entrepreneurs are successful in scaling up their business models and attracting growth capital, substantial funds will flow to socially valuable projects in developing countries, and this capital will be working towards providing its BoP beneficiaries increasing access to goods and services to meet their basic needs.
For more information about GSBI, click here.