INDEV308 Class 9 - Social Entrepreneurship in the International Development Context

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 ([email protected])

Karim Harji ([email protected])


Agenda

• Ashoka

• Social enterprises in the developing world

• Impact investing

• Reviewing the Video Assignment

• Next Week

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There are MANY issues in the

developing world…

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Traditional approaches have

had relatively limited impact…

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The principles of social

entrepreneurship have a role to play…

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Motivation

Innovation

Resourcefulness

Risk Taking


… in education

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


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/


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… in health

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


Video: Aravind

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

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… in agriculture

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… in communication

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Video: Ushahidi

http://vimeo.com/7838030

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

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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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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


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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There is an emerging class of

impact/social investors…

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… that is providing flexible capital

(+ more) to these social enterprises

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Acumen Fund

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

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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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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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Acumen Fund: Student Leaders Workshop

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

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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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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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“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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The growth of the microfinance industry

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


An industry in crisis?

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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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State of the industry

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


Assessing the impact of microfinance

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


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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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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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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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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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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INDEV308 Class 9 - Social Entrepreneurship in the International Development Context

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Transcript of INDEV308 Class 9 - Social Entrepreneurship in the International Development Context