INDEV 308: Introduction to Social

Entrepreneurship

Class 9: Social Entrepreneurship in the

International Development Context

Monday, July 4, 2011

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Instructors:

Norm Tasevski (norm@socialentrepreneurship.ca)

Karim Harji (karim@socialentrepreneurship.ca)

© Norm Tasevski & Karim Harji

© Norm Tasevski & Karim Harji

Agenda

• Ashoka

• Social enterprises in the developing world

• Impact investing

• Reviewing the Video Assignment

• Next Week

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© Norm Tasevski & Karim Harji

There are MANY issues in the

developing world…

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© Norm Tasevski & Karim Harji

Traditional approaches have

had relatively limited impact…

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© Norm Tasevski & Karim Harji

The principles of social

entrepreneurship have a role to play…

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Motivation

Innovation

Resourcefulness

Risk Taking

© Norm Tasevski & Karim Harji

… in education

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Source: http://www.enterprisingschools.com/markets/global

© Norm Tasevski & Karim Harji

Crowdsourcing educational innovation:

OpenIdeo + Grey Matters Capital

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http://www.openideo.com/open/how-might-we-increase-the-availability-of-

affordable-learning-tools-educational-for-children-in-the-developing-world/

© Norm Tasevski & Karim Harji

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© Norm Tasevski & Karim Harji

… in health

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Source: http://www.visionspring.org/what-we-do/why-eyeglasses.php

© Norm Tasevski & Karim Harji

Video: Aravind

http://www.youtube.com/watch?v=3cjnNPua7Ag

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© Norm Tasevski & Karim Harji

… in agriculture

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© Norm Tasevski & Karim Harji

… in communication

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© Norm Tasevski & Karim Harji

Video: Ushahidi

http://vimeo.com/7838030

http://www.ted.com/talks/erik_hersman_on_reporting_crisis_via_texting.html

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© Norm Tasevski & Karim Harji

An untapped (local) market

Images: http://bottom-of-pyramid.blogspot.com/2008/10/fortune-at-bottom-of-pyramid-2.htmlhttp://www.thehindubusinessline.in/life/2004/11/26/stories/2004112600140300.htm

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© Norm Tasevski & Karim Harji

Capital is often (perceived as) the key constraint to

growth… but… perhaps misalignment is the issue

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Source: Alex Nicholls and Cathy Pharoah (2008) The Landscape of Social Investment,

http://www.sbs.ox.ac.uk/centres/skoll/research/Pages/landscapeofsocialinvestment.aspx

© Norm Tasevski & Karim Harji

The potential of impact investing

“ Impact investing could expand to a $500 billion industry in the next decade.”

-- Monitor Institute

“… a potential investment opportunity “… a potential investment opportunity between $400 billion and $1 trillion with potential profits between $183 billion and $667 billion in the next decade…”

-- JP Morgan

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© Norm Tasevski & Karim Harji

There is an emerging class of

impact/social investors…

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© Norm Tasevski & Karim Harji

… that is providing flexible capital

(+ more) to these social enterprises

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© Norm Tasevski & Karim Harji

Acumen Fund

• http://www.youtube.com/watch?v=g-uhz0J3JTE

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© Norm Tasevski & Karim Harji

Patient Capital(ism)

Jacqueline Novogratz (founder of Acumen Fund) –TED talk on “a third way to think about aid”

http://www.ted.com/talks/jacqueline_novogratz_a_third_way_to_think_about_aid.html

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© Norm Tasevski & Karim Harji

Market-Minded Development

• What did you find most interesting about the Acumen Fund’s approach?

• What challenges or opportunities mentioned in the article do you think will be most critical?

• What do you think success looks like for the Acumen Fund? How would you measure it?

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© Norm Tasevski & Karim Harji

Acumen Fund: Student Leaders Workshop

• http://www.acumenfund.org/investment-story/acumen-fund-student-leaders-workshop.html

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© Norm Tasevski & Karim Harji

The Impact Investing Marketplace

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Source: Monitor Institute (2008) “Investing for Social & Environmental Impact, A Design for Catalyzing an

Emerging Industry”, http://www.monitorinstitute.com/impactinvesting/

Break

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© Norm Tasevski & Karim Harji

Microfinance

Microfinance as a subset of impact investing…with a 40 year track record

Images:

http://southeastasia.foreignpolicyblogs.com/2011/05/27/the-poverty-of-microfinance/

http://simran.crownpac.net/blog/2007/05/04/microfinance-%E2%80%93-a-zero-sum-game/

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© Norm Tasevski & Karim Harji

“The promise of microfinance”

The (previously) unbankable now have…

• Access to credit

• Understand how to use credit

And have demonstrated…

• An ability to repay in full, and on time• An ability to repay in full, and on time

• Through peer pressure, no collateral required

So that…

• Money can be recycled for further lending

• Create businesses and economic growth

• Empower people and improve social conditions

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© Norm Tasevski & Karim Harji

The growth of the microfinance industry

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Source: http://blogs.cgdev.org/open_book/2010/02/charting-growth.php

© Norm Tasevski & Karim Harji

An industry in crisis?

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© Norm Tasevski & Karim Harji

Let’s revisit these assumptions…

The (previously) unbankable now have…

• Access to credit

• Understand how to use credit

And have demonstrated…

• An ability to repay in full, and on time• An ability to repay in full, and on time

• Through peer pressure, no collateral required

So that…

• Money can be recycled for further lending

• Create businesses and economic growth

• Empower people and improve social conditions

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© Norm Tasevski & Karim Harji

State of the industry

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Source: “Microfinance Banana Skins 2011: Losing Its Fairy Dust”, http://www.cmef.com

© Norm Tasevski & Karim Harji

Assessing the impact of microfinance

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Source: http://blogs.cgdev.org/open_book/2009/06/roodman-morduch-2009.php

© Norm Tasevski & Karim Harji

Investing in microenterprises vs SMEs

• Which is “better”? Why?

• Under what conditions?

• How do (or would) we know?

** Draw on the reading by Aneel Karnani, and Serge’s talk earlier in the semester

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© Norm Tasevski & Karim Harji

So what does this add up to?

• Market-based approaches can (and must) have a role to play alongside traditional approaches to aid. But there will sometimes be tensions between them…

• There will always be a need for traditional grant-making because you can simply not expect a financial return for all situations e.g. humanitarian disasters

• Impact investing and microfinance are approaches that • Impact investing and microfinance are approaches that are challenge traditional notions of risk and return by adding a 3rd dimension: (social) impact

• The principles of social entrepreneurship can be applied to traditional approaches in order to help them scale even more successfully. This depends on balancing the financial and social tensions, and taking into account the local context…

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© Norm Tasevski & Karim Harji

Smart or Right? Thinking like a Philanthropist

and Investing in Social Impact

• http://nextgencharity.com/talks/sasha_dichter_smart_or_right

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© Norm Tasevski & Karim Harji

The 2nd Online Video Assignment

Expectations

– 2-5 minutes

– Explain your business model:

• How the customer “experiences” your product/service (“here’s how it works…”)

• Why the customer will be willing to pay for your product/service (instead of the alternative – e.g. a product/service (instead of the alternative – e.g. a competitor’s product or some other substitute product)

• How you make money

• How your model achieves social/environmental goals

– Think of this video as a “practice run” for your final pitch

– Use of visual aides is a bonus, but not necessary

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© Norm Tasevski & Karim Harji

Next week

• Lecture on the Enabling Environment for Social Entrepreneurship

• Guest lecture by Jennifer King, Executive Director of Social Venture Partners Waterloo Region

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