Sit Back and Relax: Time for Investors to Pitch the Entrepreneurs

On day two of the Ashoka India Future Forum, Fellows had the chance to sit back and relax, while for once the pressure was off of them. It was time for the Reverse Pitch where investors pitched social entrepreneurs. A panel of fund investors and philanthropists each had three minutes to pitch their investment strategies, why they would be a great partner, and why to take their money amongst others.

Karuna Jain from Acumen pitched first. Acumen was a pioneer of impact investing in 2001 when they set out to treat the poor as consumers of goods and services instead of receivers of charity, giving them the dignity of choice. Karuna pitched that even though Acumen’s investments are for-profit, they are more patient, risky, and socially-focused than traditional equity investors, because their funding comes from philanthropic donors. Apart from financial capital, Acumen also serves on boards, provides advisory support with growth strategies and fundraising, offers a global fellow program, and guarantees debt support from US AID. They are currently invested in Ashoka Fellows Umesh from Hippocampus, Vijay Mahajan BASIX, and Sam Goldman from d.Light Solar.

As the most traditional investor on the panel, Kushal Agrawal from Aspada Investment Advisors pitched second. Aspada manages a $17M fund supported by Soros, Omidyar Network, and Google with four portfolio companies, and they launched a second $10M fund six months ago, which recently made its first investment into an agricultural supply chain company. Aspada invests in essential services with an aim to improve livelihoods, and they measure their impact by looking at how many people benefit from their investments. To date they have found the average income of their beneficiaries is 10,000 to 12,000 rupees per month. “It may not serve the poorest of the poor, but it creates infrastructure where there is none before,” said Kushal.

Representing the Omidyar Network, C.V. Madhukar brought a unique pitching perspective. Before wearing an investor hat, he was an Ashoka Fellow for his work on increasing public engagement in lawmaking. Omidyar makes both equity and grant investments in initiatives creating social impact in financial inclusion, education and governance, and they believe technology is a huge lever for change. Their approach is not just of investing, but of engaging and supporting the entrepreneur in ways that meaningful add value. Omidyar has worked with Ashoka Fellow Shaheen Mistra from Teach for India.

Pranav Nahar from Grassroots Business Fund turned the tables again, giving a reverse-reverse pitch of why you should not take his money or investments from any other impact investor. He shared “the heartbreaking story” that even though GBF is mission-aligned with social entrepreneurs, their capital is expensive, they only invest in for-profit businesses that can scale up commercially, and their process can be bureaucratic and slow. He pitched that for any social entrepreneur the most important factor to consider when taking investment is whether your values align. “If you get the wrong money, it will be a thorn in your foot for a long time,” he said.

The final two panelists represented philanthropic investors. Vidya Shah pitched from EdelGive, a CSR initiative of Edelweiss founded to bring skills and expertise from the for-profit to non-profit sector. EdelGive hopes to help organizations become stronger and effective, while also embedding a culture of philanthropy and employee engagement within Edelweiss. Vidya pitched that EdelGive is a partner, not just a donor. “We remain involved in organizations, not just in monitoring and reporting, but in building capacity in the organizations we fund,” she said. Edelweiss employees also give long-term support on a pro-bono basis.

Lastly, Ajit Kanitkar from Ford Foundation gave his staircase pitch, joking that he grew up at a time without elevators. Ford Foundation prides itself on the legacy of innovation. “We need to break new ground,” he said. “We feel fortunate to support individuals and ideas, which may fail.” They make risky investments that push the envelope forward and exit once a sector or field has enough resources and mainstream investor interest. They used to invest in microfinance, but exited once there was sufficient outside interest, now they are looking at livelihoods.

The Q&A was lively with an interesting combination of questions about return on investment, the burden of impact measurement, openness about failure, geographic focus area, and the role of creative arts as a social impact tool.

“The old age of capitalism where funders are hiding a bag of money is over,” said Vishnu from Ashoka to wrap up the session. “There is a much more collective effort underway.” Investors are now looking to foster a spirit of transparency, feedback, and inclusiveness.

I originally wrote this article for the Ashoka India blog for the India Future Forum.

Advertisements

Sit Back and Relax: Time for Investors to Pitch the Entrepreneurs

On day two of the Ashoka India Future Forum, Fellows had the chance to sit back and relax, while for once the pressure was off of them. It was time for the Reverse Pitch where investors pitched social entrepreneurs. A panel of fund investors and philanthropists each had three minutes to pitch their investment strategies, why they would be a great partner, and why to take their money amongst others.

Karuna Jain from Acumen pitched first. Acumen was a pioneer of impact investing in 2001 when they set out to treat the poor as consumers of goods and services instead of receivers of charity, giving them the dignity of choice. Karuna pitched that even though Acumen’s investments are for-profit, they are more patient, risky, and socially-focused than traditional equity investors, because their funding comes from philanthropic donors. Apart from financial capital, Acumen also serves on boards, provides advisory support with growth strategies and fundraising, offers a global fellow program, and guarantees debt support from US AID. They are currently invested in Ashoka Fellows Umesh from Hippocampus, Vijay Mahajan BASIX, and Sam Goldman from d.Light Solar.

As the most traditional investor on the panel, Kushal Agrawal from Aspada Investment Advisors pitched second. Aspada manages a $17M fund supported by Soros, Omidyar Network, and Google with four portfolio companies, and they launched a second $10M fund six months ago, which recently made its first investment into an agricultural supply chain company. Aspada invests in essential services with an aim to improve livelihoods, and they measure their impact by looking at how many people benefit from their investments. To date they have found the average income of their beneficiaries is 10,000 to 12,000 rupees per month. “It may not serve the poorest of the poor, but it creates infrastructure where there is none before,” said Kushal.

Representing the Omidyar Network, C.V. Madhukar brought a unique pitching perspective. Before wearing an investor hat, he was an Ashoka Fellow for his work on increasing public engagement in lawmaking. Omidyar makes both equity and grant investments in initiatives creating social impact in financial inclusion, education and governance, and they believe technology is a huge lever for change. Their approach is not just of investing, but of engaging and supporting the entrepreneur in ways that meaningful add value. Omidyar has worked with Ashoka Fellow Shaheen Mistra from Teach for India.

Pranav Nahar from Grassroots Business Fund turned the tables again, giving a reverse-reverse pitch of why you should not take his money or investments from any other impact investor. He shared “the heartbreaking story” that even though GBF is mission-aligned with social entrepreneurs, their capital is expensive, they only invest in for-profit businesses that can scale up commercially, and their process can be bureaucratic and slow. He pitched that for any social entrepreneur the most important factor to consider when taking investment is whether your values align. “If you get the wrong money, it will be a thorn in your foot for a long time,” he said.

The final two panelists represented philanthropic investors. Vidya Shah pitched from EdelGive, a CSR initiative of Edelweiss founded to bring skills and expertise from the for-profit to non-profit sector. EdelGive hopes to help organizations become stronger and effective, while also embedding a culture of philanthropy and employee engagement within Edelweiss. Vidya pitched that EdelGive is a partner, not just a donor. “We remain involved in organizations, not just in monitoring and reporting, but in building capacity in the organizations we fund,” she said. Edelweiss employees also give long-term support on a pro-bono basis.

Lastly, Ajit Kanitkar from Ford Foundation gave his staircase pitch, joking that he grew up at a time without elevators. Ford Foundation prides itself on the legacy of innovation. “We need to break new ground,” he said. “We feel fortunate to support individuals and ideas, which may fail.” They make risky investments that push the envelope forward and exit once a sector or field has enough resources and mainstream investor interest. They used to invest in microfinance, but exited once there was sufficient outside interest, now they are looking at livelihoods.

The Q&A was lively with an interesting combination of questions about return on investment, the burden of impact measurement, openness about failure, geographic focus area, and the role of creative arts as a social impact tool.

“The old age of capitalism where funders are hiding a bag of money is over,” said Vishnu from Ashoka to wrap up the session. “There is a much more collective effort underway.” Investors are now looking to foster a spirit of transparency, feedback, and inclusiveness.

Building Blocks: How can organisations build a strong framework?

Buzzwords at social entrepreneurship conferences can be predictable: collaboration, impact measurement, leadership, changemakers. Let me try one that might not have been on the tip of your tongue: corporate governance structures?

During the first peer learning session of the Ashoka India Future Forum, this was exactly the topic debated during a lively panel moderated by Aarti Madhusudan, Founder of Governance Counts, about how to structure ethical and effective boards of directors, what makes a board “good”, and the relevance of corporate governance. 

In general, non-profits must set up a board when they are founded, but there is flexibility in the composition and role of a board. Do you invite friends and family, or do you look for outside expertise and high profile names? Do you involve the board with all decisions, or do you lean on them only for occasional guidance? The three panelists shared their advice. 

Shaheen Mistri, Founder of Akanksha and CEO of Teach for India, two organizations that aim to provide excellent education for India’s youth, has deep experience both in working with, creating, and serving on boards. In her words, the role of a board is to help do three things: 1) envision, 2) engage and 3) ensure. “A good board asks tough questions, is engaged with the mission, pushes you to new limits, and holds you accountable,” she said. “They make sure that what you say is what you do.”

Piyush Tewari, Founder & President of the Save Life Foundation, discussed how his board strengthens his team by bringing domain expertise and operational knowledge. His foundation enables bystander care for victims of road accidents and requires police and government interactions, so inviting police officers and doctors to his governing and advisory boards added credibility and value. One certainty, he felt, was that you cannot have family on your board, especially if your objective is to have a global impact. A strong board needs an ethical framework of transparency and accountability, and it will evolve over time. 

Anshu Gupta, Founder of GOONJ, which turns secondhand clothing and materials into a valuable resource, reminded the group that although a board can help make key decisions and guide vision, it cannot be too controlling. Ultimately, your team implements the vision on the ground. If your team does not believe in the board’s vision or feel empowered to make decisions, your organization will be impacted. A mark of GOONJ’s success is that Anshu can be at the Ashoka conference, while his team provides disaster relief in Uttarakhand. He also added that although it is tempting to build a board of high profile names, the more famous, the more distant they are from the team.   

The key to building a good board is striking a balance between mission alignment and valuable skills or assets that can aid the organization. “The common values on the board are very important,” said Shaheen. “Being positive about a sense of possibility is very important. We would never take someone who was very cynical or didn’t believe in scale, no matter what their domain expertise.” Similar to Bill Drayton’s message in the opening plenary that a good organization is made up of a team of teams, so is a board.

Few organizations have time to look internally and prioritize capacity building, but investing in good governance can help guarantee that each Ashoka Fellows legacy will last. 

This article was originally written and posted to the Ashoka India blog for the India Future Forum.

Collaboration at Ashoka India’s Future Forum

Later this week I will be attending & blogging about Ashoka India’s Future Forum in Pune. This is a piece I wrote in preparation for the conference to get fellows and attendees thinking about the role of investors in social entrepreneurship: 

A new crop of impact investors is emerging in India, adding to the ecosystem of social entrepreneurs and changemakers focused on solving the world’s toughest problems.

Impact investing, an investment strategy that combines bottom line returns with creating positive social and environmental impact, has risen in popularity in the past five years. Just this month The Times of India reported that India is taking center stage in impact investing. One caveat is that the sector is still at an early stage. Investors leading the movement are still figuring out how to balance profitability and impact, and entrepreneurs are testing out how to scale their business and get funding without compromising their mission.

Potential for Collaboration:

As both investors and entrepreneurs validate their business models and approaches for combining profits and values, there is a huge opportunity for collaboration among the various types of capital and stages of investors. According Sachindra Rudra, India director of Acumen, in the Times of India, “In order for the sector to grow and have sustainable social impact, we need a full spectrum of capital from grants to returns-based capital.”

Unlike IT and ecommerce sectors, where there is a clearer growth path and a history of many successful IPOs, social entrepreneurs are still searching for the “traditional” success trajectory – and so are investors. This early-stage uncertainty heightens the need for collaboration to help investors share challenges in helping enterprises maximize their impact.

Incubate & Validate:

At a concept and pre-pilot stage, the most active impact investors tend to be philanthropic. Monitor Inclusive Group’s From Blueprint to Scale report addresses how philanthropic money can bridge the pioneer gap in moving early-stage social entrepreneurs to a stage where angel and institutional investors are more active. Collaboration at the incubation stage is not only critical for entrepreneurs, but also for later-stage investors to scout new ventures.

Seed & Grow:

India has recently seen a rise in seed funders or micro-VCs that are looking to help companies move beyond the pilot stage and prepare to scale. At Unitus Seed Fund, where I am currently working as a Frontier Market Scout, one of our goals as a seed investor is to help our portfolio companies reach the Series A funding round. This means we often think with the mindset of: what will a Series A investor want to see in a company 12-18 months after we have seed-funded them?

Specialize & Scale:

Some funds like Omnivore Partners and First Light Accelerator are taking more sector-, instead of stage-, specific approaches and can add to the collaborative approach by sharing sector-specific expertise. Later stage investors like Elevar Equity and Leapfrog Investments want to ensure that earlier stage investors are filling the pipeline with quality deals for them.

Why Collaboration Works:

Just as entrepreneurs and innovators benefit from collaboration at Ashoka India Future Forum, India’s impact investors can benefit from collaboration by having a coherent and vibrant ecosystem of well-advised and capitalized entrepreneurs.

Indian impact investors have demonstrated their will to collaborate with the launch of the Indian Impact Investors Council in April. The group’s mission will include: setting standards for which sectors qualify ‘impact,’ how to measure returns, and more. Impact investing is poised to become a more established asset class; the collaboration amongst the industry will determine how quickly that happens.

Our best hope for the future is not to get people to think of all humanity as family—that’s impossible. It lies, instead, in an appreciation of the fact that, even if we don’t empathize with distant strangers, their lives have the same value as the lives of those we love. – Paul Bloom, The Case Against Empathy, nyr.kr/13gZvAe

Three Month Check In

Now that I’ve reached the halfway point of my FMS placement, I thought it would be a good chance to list out some of the highlights of what I have been up to at Unitus Seed Fund since starting here:Unitus Seed Fund's Villgro Investor Award

  • USF announced two new investments into iStar and Jack on Block
  • USF won Villgro’s “Best Indian Investor” Award at the Sankalp Conference
  • USF announced the launch of a domestic impact equity seed fund in India, which received front page coverage in the Economic Times (India’s WSJ equivalent)
  • I’ve mentored and judged two entrepreneurship competitions: Dream:In‘s Next Dream Camp and TERI & The Acara Institute‘s Design for Sustainability Challenge
  • I am a founding member of TiE Bangalore‘s Social Enterprise group and Acumen Fund’s Bangalore chapter
  • I helped vet and recruit companies for Village Capital’s Technology for Impact Accelerator which is currently running in Ahmedabad
  • I attended TEDxBangaloreChange, one of Social Venture Partners‘ Bangalore partner meetings, the Sankalp Unconvention Summit, and a Pecha Kucha event on Trash
  • I’ve scouted over 300 Indian social enterprises and discovered an active social entrepreneurship and impact investing community in Bangalore

Notes from Sankalp: Identifying the Value of Social Enterprise Incubators

Last month, I had a chance to attend India’s largest and leading impact investing and social enterprise conference, the Sankalp Unconvention Summit, in Mumbai. The conference, which attracted 1,000 attendees, plays host to several social impact awards, serves as a venue for entrepreneurs to meet investors, is a massive networking opportunity, and offers a quasi-think tank environment through panel sessions that bring together thought leaders from all ends of the world.

One of the buzzed about panels that I attended addressed the topic of “Incubating the Incubators” – a title aimed to stir up debate about the value proposition of social enterprise incubators in India and the efforts needed to scale them up. Speaking on the panel were Dave Richards, Founder and Managing Partner of Unitus Seed Fund, Ross Baird, Executive Director of Village Capital, Manfred Haebig, Head of Private Sector Development for GIZ, and Umesh Sachdev, Co-Founder of Uniphore. The panel was moderated by Villgro Innovations Foundation COO “Guns” Ganapathy Pr.

The general feeling was that a successful incubator will take you on a journey of growth, exploration, and un-learning. A valuable incubator will help you fill in specific business gaps and expand your professional network into a strong peer-to-peer support system.

Here are some of the highlights from each panelist:

  1. Representing the voice of the entrepreneur and a former incubator participant, Umesh Sachdev provided the advice that incubators can guide, help and mentor, but at the end of the day the success or failure is the responsibility of the entrepreneur.
  2. According to USF’s Dave Richards, India is on the cusp of an incubator bubble. Many incubators will be launching and expanding in India in the coming years, which is both a blessing and a curse. Over time, incubators will differentiate and leaders will emerge, but in the near term, entrepreneurs need to enter incubators with defined goals in order to maximize the value of their experience.
  3. Manfred Haebig from Germany’s international development arm emphasized that the key to successful incubators are good filters. Realistically, he said, not all aspiring entrepreneurs are destined to succeed, and not all of them should be incubated. The weakness of new incubators is that they are still incubating themselves. As a result, many struggle to get enough applicants to be selective and don’t restrict their programs to the strongest and most promising entrepreneurs.
  4. Through the experience of running 18 Village Capital incubator programs across six continents, Ross Baird and his team found that residential incubators focused on a “sage on stage” were often too inspiration-heavy, leaving participants moved, but not changed. Instead Village Capital aims to be a “guide on the side” providing constant feedback to constructively improve the business plans of the participants at all times.

Overall the feeling was that incubators are neither one size fits all, nor a passport to success. Entrepreneurs need to be smart in selecting which incubators to participate in, and cannot just assume that having a badge of “being incubated” will guarantee either investment or revenues.

A quick summary of this year’s conference highlights: [youtube http://youtu.be/VNSOu6a9a34]

Acumen+Bangalore Launch Event

What would you do with $2,300,000,000?

Image  High Impact Things

You could buy 4500 Maybachs, a stay at Burj Al Arab for 600 years, 45 luxury yachts or 100 private jets — OR — You could improve education in 10,000 schools, give healthcare to thousands, provide power to 1,000 villages, or invest in agriculture that will impact 10,000 farmers and you. Which would you choose?

This was the question Akash Nahar posed last Friday at the launch of a new chapter of Acumen Fund’s global community: Acumen+Bangalore.

For those of you who are not familiar, Acumen Fund is one of the most well-known leaders of patient capital / impact investing. They are structured as a non-profit, but operate as a fund, putting philanthropic capital to work as direct investments into for-profit social enterprises targeting the poor. Any profits they make are reinvested into new companies, so that the cycle can continue. In 12 years, they have looked at over 5,000 companies and made 73 investments in the sectors of healthcare, energy, water, sanitation, agriculture, housing, and recently for the first time in India, education. (If you want to learn more about Acumen Fund here is a great interview or you should really just read Jacqueline Novogratz’s book The Blue Sweater).

Acumen has launched volunteer-led chapters throughout the world to create an “interconnected community of global citizens” with the purpose of “learning and sharing Acumen Fund’s principles and approach to help create a world beyond poverty”. I attended an Acumen+NYC meeting earlier this year, so I was excited to learn that I had arrived in Bangalore just in time for the launch of this new chapter.

The meeting started with an introduction from Keya Madhvani from Acumen’s Mumbai office and Shahd AlShehail an Acumen Global Fellow working with Hippocampus Learning Centre, which is coincidently also a Unitus Seed Fund portfolio company that Acumen Fund invested Series A follow-on capital into.

Yes We Can

Next up, members of The Yes We Can Foundation, the sponsoring organization and a Nahar Family Foundation, explained why they wanted to bring a new impact investing group to Bangalore. The Foundation is focused on the power of sports and play, and their name is inspired not by will.i.am or Barack Obama, but from a lesser known but equally American celebrity, Bob the Builder, whose relentless helping hand makes him a fitting role model for support and charity. It was interesting to hear how a family deeply rooted in the two separate worlds of finance and traditional philanthropy was willing embrace the hybrid approach to impact investing whereby investments are measured by both social and financial returns. Akash Nahar explained that to him it meant moving from Return on Investment (ROI) to Happiness on Investment (HOI).

But back to the original question: The number $2.3 Billion is on local minds here, because it is the amount that Azim Premji, Chairman of Wipro and local Bangalore Billionare, recently donated to charity. It was an interesting exercise to think about how to spend this imaginary money, especially here in India where the difference between wealth and poverty is so extreme, and some people might be more likely to, say, build a billion dollar home than support the slums beside it. To those in the room the question between buying yachts or finding innovative solutions to poverty was obvious, but it reminded me that the answer is still complex in an aspirational country where it can be just as important to prove that you have escaped poverty, as it is to stand by and support those who are still trapped in it.

The mantra of Acumen Fund and its Global Fellows:

“Have the humility to see the world as it is, and the audacity to imagine it as it could be.”