So you want to be a social entrepreneur? Start here…

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Picture courtesy: www.socialearth.org

Picture courtesy: www.socialearth.org

What is social entrepreneurship? This is a difficult question to answer.

For different social enterprise practitioners this may mean different things. Here’s our definition: a social enterprise is any company that targets social and environmental impact using methods and practices employed by mainstream profit-making companies. This means having a social heart for empathizing with the needs of the poor and an enterprise head for execution. But who are they? Are all social enterprises profit making entities, simultaneously pursuing a triple bottom-line, of people, profits and the planet. Perhaps not. There are non-profits who fit this bill, like Digital Green and Akshaya Patra. Then there are not-for-profits, who plow back all profits back into the business, and are sometimes referred to as a social business, a term coined by the Nobel Prize winner and micro-finance pioneer Muhammad Yunus.

Here’s our suggestion, don’t worry too much about the definition, sweat instead on whether you are solving a problem that has a social or environmental relevance. The key factor here is that of growth or scale (though, not always), this is where the enterprise part of the social enterprise comes in, otherwise there wouldn’t be any difference between old-school non-profits and fresh new thinking that social entrepreneurship brings. And ideally, a monetization model, that lessens or completely eliminates the reliance on grants.

Now that we have got the definition out of the way, we assume you are sufficiently acquainted with the world of social entrepreneurship, lets take a look at what’s happening in the Indian social entrepreneurship scene.

India: social enterprise laboratory and incubator for the world

India provides social entrepreneurs with a vast array of social and environmental problems that are in urgent need of solving. These are in sectors like healthcare, agriculture, education, financial inclusion or water and sanitation. It comes as no surprise then, that the world has descended upon the country to use it as a test-bed for various pilots and explorations. The lessons learnt here are then applied to various other developing countries. For example: LV Prasad Eye Institute’s low-cost eye-model is now being replicated in Mexico.

According to Intellecap’s study on the Indian social enterprise landscape, the country has a thriving startup social enterprise scene, but it is fairly new, with most of them being less than five years in existence.

So whether you think of universities (Stanford and MIT have social innovation initiatives), foundations of repute (Bill and Melinda Gates Foundation, Rockefeller Foundation or Susan and Michael Dell Foundation), or the biggest social venture funds (Omidyar Network and Acumen Fund), all of them have a presence in India. Social enterprise incubators like Villgro, UnLtd, Deshpande Foundation (Hubli Sandbox) and Dasra are quite active as well, giving a helping hand to professionals intending on starting off on their own. For students, there are variety of social business competitions conducted by various academic institutions like Indian School of Business (ISB) and Xavier School of Management (XLRI), which provides them with a platform to pitch their ideas and get funding.

In terms of funding, there’s also close to a billion dollars sloshing around VC bank accounts waiting to be deployed in the growth stages. Challenges are mainly in funding at the seed stage, issues with scaling and attracting talent.

The India opportunity:

Social enterprises target low-income communities at the bottom of the pyramid (BoP) who typically do not have access to products and services, that the middle class and the rich have access to, and can afford. They make do with little or nothing most of the time. Social enterprises use innovation to develop products and services at a price point that those at the BoP can afford. India, where the majority are poor, is a big BoP market. According to a study by McKinsey, the total number of individuals who fall under the BoP umbrella will touch 997 million by 2015. These are households who earn approximately Rs. 16, 667 per month.

Clearly the opportunity is huge, but the challenges in starting a social enterprise, and then growing it, poses a plethora of challenges. But what is evident is that there is big market to be served, and cracking the Indian market means that the innovation can easily be deployed in most other developing countries. Since we are referring to underserved markets, tapping the market with the right product or service will require tremendous patience to stay motivated during extended periods of gestation. But the ones who stay the distance, are sure to reap social and financial rewards.

Note: This is the first article in a social enterprise toolkit series that SocialStory is doing. It is designed to be useful for the  first-time social entrepreneur, or for anybody interested in this space.

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