My posts are triggered by events that grab my attention. I recently attended one of those events. On August 18, 2011, I participated in a day-long session at Santa Clara University, where 18 young entrepreneurs summarized their business plans. What made this event unusual is that all were from abroad and had, as their underlying missions, plans to create value for their communities. They are part of a growing Social Entrepreneurship movement that serves the “Base of the Pyramid.”
If you had mentioned the terms “Social Entrepreneurship” or “Base of the Pyramid (BoP)” a few years ago, I would have had no idea what you were talking about. Today I find myself increasingly intrigued by what they represent, and increasingly enthusiastic about applying my business background to something that could be world transforming. Do I have your attention?
My good friend Allen Hammond put this whole topic in perspective in his 2007 study, “The Next 4 Billion: Market Size and Business Strategy at the Base Of The Pyramid.” From his introduction:
“Four billion low-income people, a majority of the world’s population, constitute the base of the economic pyramid. New empirical measures of their behavior as consumers and their aggregate purchasing power suggest significant opportunities for market-based approaches to better meet their needs, increase their productivity and incomes, and empower their entry into the formal economy. The 4 billion people at the base of the economic pyramid (BOP) — all those with annual incomes below $3,000 in local purchasing power — live in relative poverty. Their incomes in current U.S. dollars are less than $3.35 a day in Brazil, $2.11 in China, $1.89 in Ghana, and $1.56 in India. Yet together they have substantial purchasing power: the BOP constitutes a $5 trillion global consumer market.”
The essence of the social entrepreneurship concept is that while the fundamental mission is to help the BoP, many accomplish this by creating for-profit, sustainable and scalable businesses. This gives them the opportunity for growth and the potential to access capital markets. Perhaps the best example is Al’s own initiative, eHealthPoint, a for-profit social enterprise aimed at transforming healthcare in rural parts of the world by building community-scale water treatment facilities and rural clinics electronically linked to urban doctors. It is a concept that Al had considered for many years, going back to 2006. Then in 2008, while attending a meeting at Santa Clara similar to the one I recently attended, he met an Indian entrepreneur and together they refined the idea and launched the pilot phase. It soon blossomed into an intense initiative that has been very successful at raising financing and proving the concept. The numbers speak for themselves: in one Indian state alone, their clinics have performed over 13,000 diagnostic tests, conducted more than 25,000 medical consultations, filled in excess of 32,000 prescriptions, and the organization has also provided 22 million gallons of safe drinking water. Remember, this is NOT a philanthropic effort, this is a for-profit social venture that is serving the Base of the Pyramid!
A number of organizations are helping these social entrepreneurs. The foremost are Ashoka, a support and networking organization where Al Hammond serves as Senior Leader, and the Santa Clara University Center for Science, Technology and Society in Silicon Valley, focused on mentoring and incubating social entrepreneurs. I joined the latter’s Advisory Board earlier this year.
On August 18, I had the pleasure of serving on one of the Review Panels of the most recent group of entrepreneurs being mentored by Santa Clara. They presented their business plans at the 9th Annual Meeting of the Global Benefit Social Incubator. The 18 participants span more than eight countries on five continents and serve eight industrial sectors. To excite your interest, examples include:
➢ Thermogenn, Coolers for off-grid rural Uganda to permit small dairy farmers improve the marketing for their milk.
➢ Angaza Design, solar powered LED lights to replace kerosene lamps in East Africa. Very interesting cellular billing model.
➢ Kopo Kopo Inc. Expands mobile financing services to the “last mile” in Sub-Sahara Africa.
In a previous post (April 14: Entrepreneurship Abroad Is Alive And Well – With A Strong Social Context) I shared my experience judging a competition of business concepts at the 12th Annual Global Social Venture Competition (GSVC) at the Lester Center for Entrepreneurship of the University of California at Berkeley. That was my first face-to-face experience with an equally impressive cohort. In the Santa Clara case, rather than a competition, the effort is focused on mentoring and nurturing these budding social entrepreneurs through interaction with faculty, students and Silicon Valley mentors. More than 150 applicants from around the world submitted their companies for consideration. All of them were then coached by a group of Santa Clara Business School students under the direction of their entrepreneurship professor, Eric Carlson. They received help in sharpening their value propositions, target market segmentation, and business models. Subsequently, through a series of interviews by several Santa Clara Business School faculty, 18 were chosen to participate in the Incubator program. Each invitee was matched with 2 Silicon Valley mentors and attended a two-week residence program at the university. The August 18 event was the culmination of the process. Summaries of their businesses can be found in the following link: GSBI 2011 Cohort. I encourage you to read them, although words cannot adequately describe the energy, creativity and enthusiasm conveyed in person by these young entrepreneurs.
The expectation is that the process not only allows the entrepreneurs to enhance their plans, but also guides them to ideas that would improve both the sustainability and scalability of their ventures. Also, through exposure to Silicon Valley mentors and Santa Clara faculty, they are introduced to financing alternatives consistent with both their for-profit and social objectives. This is a very important and evolving part of the process. If you are interested, I direct you to an excellent study released a few weeks ago by Santa Clara in conjunction with the Aspen Network of Development Entrepreneurs: Coordinating Impact Capital, and a recent article by the Santa Clara Center’s CEO, Thane Kreiner, in XConomy.com where he highlight the challenges and the opportunities in creating capital formation structures for this important and transformational business opportunity.