by Pallavi Jayannavar
It’s 8 PM and in a small village in Ananthapur, India, Dastagiri has a new customer in his shop. The customer is not there for groceries or shampoo sachets though; he’s there to make a withdrawal from his bank account. We watch as Dastagiri feeds an account number into his mobile, activates a voice biometric system to authenticate the transaction, and prints a receipt with a Bluetooth-powered point-of-sales machine. Voilà – the transaction is successful!
Dastagiri is a Business Convenience Outlet agent for Sub-K Transactions Ltd., a company that provides financial services for the rural poor and facility for transactions under $20. Sub-K uses technology developed by Uniphore Software Systems, which helps enhance business capabilities for enterprises through speech-based mobile solutions in both urban and rural areas. Through its low-cost, low maintenance biometric technology, Uniphore makes adoption easy, in turn creating job opportunities for people like Dastagiri.
Seventy percent of the Indian population lives in villages, and social enterprises like Uniphore are bringing financial services, affordable healthcare, sustainable energy solutions and jobs to the rural poor. So, how can we accelerate this process and streamline funding, talent and effort to develop sustainable, market-based solutions for the bottom of the pyramid? To what extent can external support help improve the performance of a social enterprise?
Dalberg was asked to look into these questions through a recent evaluation of Villgro Innovations Foundation’s incubator model. Established in 2001, Villgro is one of India’s pioneering social incubators. Villgro initially helped Uniphore with funding support and advisory services and continues to partner with them now through a fellowship program that enables talent placement in social enterprises.
Incubators are a crucial link in the social impact investment space, helping build an ecosystem around social entrepreneurs, investors and capacity builders. A number of incubators in India that emerged after Villgro are based out of universities and educational institutions, providing infrastructure, R&D support and networking capabilities for early stage start-ups. Villgro differentiates itself from its peers by focusing on the rural population and by its comprehensive service offering including seed funding, mentorship, training, talent sourcing and networking.
At the portfolio level, Dalberg assessed the relevance, efficiency, and effectiveness of Villgro’s work, as well as its additionality to incubatees by looking at the ex-post outcomes and end-beneficiary impact of incubatee businesses. The assessment of risk and return for social incubators is different compared to traditional “Silicon Valley” incubators because it combines both financial revenue and social benefits. Social benefits include tangible impact – such as increase in incomes, increase in agricultural produce, increase in savings – as well as the physical and mental well-being of end-beneficiaries. Increased sales of clean cookstoves can reduce the risk of respiratory diseases, using a more efficient de-husking machine can relieve farmers from the pressure of dealing with labor shortages, and greater savings can help educate children. Villgro’s investee organizations have widely different objectives from one another, and all use different data collection and impact measurement methods.
In order to effectively capture qualitative data and bring out more nuanced but important insights around impact, our team conducted interviews, surveys and focus group sessions with Villgro management, incubatee management and end-beneficiaries at 10 different incubatee sites across India. The site visits showed strong evidence of successful business models in energy, telecom, agriculture, livelihoods and other sectors in rural India. For example, through interviews with employees at Villgro incubatee Desicrew, a rural BPO (Business Process Outsourcing company) that helps set up IT-enabled service centers in rural areas, Dalberg found a 30 percent increase in end-beneficiary income. The local centers also shortened commutes for employees, who were very enthusiastic about the opportunity to develop a new skill set and greatly valued the training support they received.
The data we gathered showed the huge potential for impact of Villgro’s different service offerings. While most incubators in India focus more on R&D and advisory services, Villgro’s networking capabilities, strong senior management support, and personalized mentorship offer additional advantages for social enterprises transitioning from ideation to execution. There are signs today of an increased appetite for risk in terms of funding early-stage innovations and creating a supportive environment to promote innovation and entrepreneurship. Incubators like Villgro will prove to be particularly effective in directing these towards sustainable social good.
Pallavi Jayannavar is an analyst in Dalberg’s Mumbai office.