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SF Chronicle: "Global Social Benefit Incubator still strong"
Monday, Sep. 10, 2012
This article was originally published by the San Francisco Chronicle. The original source can be found here.
Shivani Siroya is a petite woman hammering away at a tall task - building a model of credit scores for the poor in India.
On a recent weekday in Santa Clara, she took her audacious enterprise before a group of investors, professors and entrepreneurs from Silicon Valley - many of whom have never worked or lived in India.
But they're keen on helping, by transferring their knowledge from the Bay Area to markets in the developing world that seek sustainable business strategies.
Siroya was one of 19 entrepreneurs at this year's Global Social Benefit Incubator who have been undergoing a critical evaluation from this group, whose members also include venture capitalists and experts in social enterprise. Beyond building successful enterprises, the incubator wants ones that alleviate social needs.
"People are not going to give money to you indefinitely, even if you're doing some good in the world. So we have to help these entrepreneurs develop sound business models that will flourish and last," said Eric Carlson, director of the incubator and dean's executive professor in the Leavey School of Business at Santa Clara University.
Not a typical program
Started in 2004 at the university's Center for Science, Technology and Society, the incubator hoped to combine the talents of the valley with the activism of emerging social entrepreneurs to see if social impact and profit-making could be combined. Among its first successes: Husk Power Systems, an alternative energy business that recycled rice husks into an energy supply. Today, Husk supplies energy to more than 200,000 people in 300 villages in northeastern India.
An incubator participant from a year ago, Katherine Lucey, CEO and founder of Solar Sister, also works in alternative energy for the poor. Her model mimics that of Avon. Instead of lipsticks and perfumes, the local female entrepreneurs she relies on in Uganda and Rwanda sell solar lamps.
Compared with other social incubators of the past decade, Lucey says, the Santa Clara one stands out. "I think their Silicon Valley location gives them an intensity and a drive that ramps up the typical incubator program," she said.
As Solar Sister went from simply being a pilot project to developing a full-blown business plan, Lucey attended a two-week, in-residence program last summer. That resulted in a more nuanced business model and partnerships with past incubator participants such as San Francisco's Kiva.org, the crowdfunding microfinance platform. Now donors can help fund a Solar Sister entrepreneur's business by lending to her via the Kiva website, Lucey said.
Growing a business
For mentors at the workshop, getting these entrepreneurs to scale is a primary goal. But as Anuj Sharma, COO of Sarvajal, a water-based social enterprise in South Asia, learned at this year's event, it's not just about sporadic growth. His mentors advised him to go deeper, not wider.
"The constructive feedback has been around not getting excited about numerous small opportunities, such as taking the initiative to other countries ... but making sure that we have greater depth in demonstrating our work in India itself," he said.
"The emphasis of this program is on how to really scale your organization and get the kinks out so you can get home and get back to work and hit the ground running. It's about really coming out of here with a solid operating plan. It's literally like MBA boot camp," she said.
Entrepreneurs attend classes on unit economics, scaling business, value chains, operating plans, budgets and fundraising from 8 a.m. to 6 p.m. daily. Those sessions are followed by late-night get-togethers with their mentors, where they get more personalized advice.
This year's gathering brought together more than 150 mentors, who will continue to work with these enterprises into the fall. One is Jeff Miller, former director of Santa Clara's Center for Science, Technology and Society. He built a career in technology at Intel before transitioning to supporting social businesses. He's been an adviser since the program's inception and sees one common thread in many of the young people.
"They have such huge, wonderful, passionate visions of how to change the world in energy, water, education and more. But they lack focus. So we encourage them to look at an area that they can focus on and make an impact. This can be a particular demographic or region, which makes for a more concentrated effort."
Aside from making visions more concrete, entrepreneurs are taught to balance social impact with profit, he explains. Presenting a purely socially driven plan to a venture capitalist rarely gets funding.
"They're not bad people," Miller jokes, "but they have to make a return as well. So you have to tailor it to their needs as well when making a pitch."
Investing for impact
Impact investing, an emerging field for social effect as well as monetary return, has been gaining prominence. But Miller and Carlson are cautious, noting that the area needs to mature and develop an infrastructure. Yet it's quickly become a topic of discussion at the incubator.
"Impact investing has not been terribly successful so far. There's money around in the valley, yes. But it's largely risk-averse. Plus, we have to make sure that investors don't drift from the intentions of the social business, which is very much to create a product for the bottom of the pyramid, not the top," Carlson said.
Carlson hopes that in the near future, they can team entrepreneurs not just with Silicon Valley mentors, who understand the bottom line, but with mentors in their countries of operation, who know the bottom of the pyramid intimately.
"That would be ideal," he said.