On a mission to make money and CHANGE THE WORLD
Giving is the new receiving
for a generation of entrepreneurs setting up businesses with social goals.
Unlike a charity, they aim to grow, scale and be profitable while having a
positive impact on the community or the environment
When Mainak Chakraborty and
Sreekrishna Sankar graduated from IIM-Bangalore in 2010, they wanted to set up
their own company .Venture capital firms were pouring money into ideas in the
e-commerce space, but they decided not to follow the crowd. “We made a choice
to become social entrepreneurs and do something that had a direct impact on
people's lives,“ says Chakraborty , co-founder of Green Power Systems
Renewables, a waste-to-energy technology company based in Bengaluru.
Like Chakraborty and
Sankar, a new generation of entrepreneurs is setting up businesses with the
core mission to benefit society and fulfil social goals. While many social
startups in India are in the waste management space, a number are also looking
at ways to improve blood donation networks and build crowdsourcing platforms.
Unlike a charity , they're looking to grow independently , scale and be
profitable while having a positive impact on the community or the environment.
Delhi-based SocialCops,
founded by Prukalpa Sankar and Varun Banka, for instance, is a data analytics
firm that has tied up with the government and NGOs to analyze data to improve
infrastructure and policy. Its app Collect, which works without an internet
connection, proved useful during the Chennai floods.“People were donating but
no one knew which areas needed what. That's where data came in,“ says Sankar.
It helped NGOs as sess damage and find out which areas were the worst affected.
REACHING OUT
It's this desire to reach
out that drives social entrepreneurs. Chakraborty started GPS Renewables
because he wanted to address the big gap, not just in policy but also in
technology, in waste management in India. Its flagship product BioUrja is a
compact biowaste-to-energy solution for urban establishments. Five years on,
GPS Renewables is a profitable company with 25 plants across India and
Bangladesh.
Most of the startups
identify a specific problem and look for solutions. Socialblood leverages
Facebook to create a space for blood donors and recipients to interact.Started
in 2012 by Karthik Naralasetty , the company has more than 150,000 users in
India, Brazil, Bangladesh and US.
There are two types of
social enter prises, explains Naman Pugalia, who runs Fourth Lion Technologies,
a consultancy for political parties. “One where you have a business idea in a
sector that will have a social impact. Second where you are trying to convert a
social idea into business,“ he says, adding that he believes in the first.
PROFIT FOR ALL
Magsaysay award winner
Harish Hande, who founded solar lighting company Selco two decades ago, says
social enterprises should focus on equal value creation to shareholders,
employees and consumers.“A social enterprise should be inclusive in all
respects,“ he says. Selco has installed solar lighting devices in two lakh
households and has been operating at a 2-3% profit margin for nine years.
Generating revenue and
profits remain challenges. SocialCops earns revenue from government bodies and
large philanthropic corporations, but doesn't charge smaller NGOs. “We only
charge companies that have big budgets,“ says Sankar.
Socialblood, on the other
hand, does not see any revenue potential in India as requests for blood are
from individuals. In the West, in contrast, blood banks have an advertising
budget to solicit blood.
This could change,
Naralasetty believes, if more Indians enter the social space. “Despite the many
serious problems the country faces, educated Indians prefer building billion
dollar consumer companies rather than aiming for social impact. Success has to
be measured in the number of people you are impacting rather than the revenue
you are generating year after year,“ he says.
Hande's explanation is the
high cost of capital in India. “Plus, a for-profit social enterprise cannot
receive grants or loans from foreign countries,“ he explains.
INVESTORS PROVE HARD TO GET
Many say investors are not
as interested in social startups as they should be.“There are several
impact-focused funds, but regular VCs would not want to invest, and raising
money is always going to be tough,“ says Naralasetty, whose Socialblood is
backed by Google India managing director Rajan Anandan.
Chakraborty explains that
GPS, which received an initial grant of `50 lakh from the government, did not
try to raise VC funds as he knew it would be a struggle.“We survived on the
research grant before growing the firm organically ,“ he says.
Although seed funding came
easy, Aakar Innovations, which provides rural women with raw materials to make
compostable sanitary napkins, ran into trouble later. “I raised initial money
from IIM-A's incubation centre but afterwards, I had to look outside India,“
says founder Jaideep Mandal, who raised $50,000 from Rianta Capital Zurich. “In
India, many who claim to be social investors are not. They talk like commercial
VCs. This is not a good time to raise money in the social space,“ he says.
Hande says there should be
a government-backed innovation fund focused on rural areas. “That will have
more social impact than the English-speaking, urban entrepreneurs. Real social
enterprises will help the poor become asset creators and should open doors for
them to be employers rather than employees,“ he says.
Rohini Nilekani, a
philanthropist who has funded around 40 NGOs, says social enterprises struggle
to raise a second round of funding because people fail to understand the sector
in India. “For a country of our size, a lot more can happen,“ she says. “We
have to be patient.“
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Shalina Pillai & Anand
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TOI10JAN16
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