“One idea lights a thousand candles.” – Ralph Waldo Emerson
Imagination and light go hand in hand. A bright idea is commonly depicted with a light bulb, or more specifically, a traditional incandescent bulb – the very same kind that was invented more than 100 years. Our ideas have evolved greatly over the past 100 years, so why has the object used to depict them remained static?
Try to imagine a solar lamp of versatile and sustainable design, a base from which to explore your creativity, adaptable over time to fit the needs of the future. This is a much more accurate representation of the ideas emerging from society today.
The Agora Accelerator is designed for entrepreneurs with real potential to make a significant positive contribution to the world. When we select our classes, we look at a number of factors including business model innovation, scalability, and social impact. But the most important factor by far is the quality of the entrepreneur. Figuring out who are the most promising entrepreneurs for the accelerator is one of our hardest jobs, especially given the tremendous energy and innovation we are seeing among entrepreneurs working throughout Latin America. We don’t pretend to have all the answers, but we have found that using core values as a framework can be incredibly helpful in understanding the power an entrepreneur will eventually wield to propel his/her company to success.
In Mexico, more than 3 million neonates die in their first month of life, almost 300,000 women from complications at birth, and more than 750,000 children die of diarrheal illness each year. And this is just the beginning. Haywood Hall, founder of PACE MD, discovered that a significant amount of these deaths can be averted with proper training. Mexico suffers from a “Medical Knowledge Gap” in which health care providers lack fundamental training and/or continuing medical education opportunities to provide consistent high quality care.
(GUATEMALA CITY, GUATEMALA) Today, Juanish Rodriguez, founder of the Guatemalan solar company Quetsol, will be turning his lights off until he can turn lights on for millions in his home country.
Via the crowdfunding platform Indiegogo, Quetsol is seeking the $50,000 it needs to launch a Pay-As-You-Go (PAYG) solar power kit. The new model bridges the gap between the high price of solar technology and the severe energy needs of Guatemala’s poorest rural communities without access to electricity.
To get a sense of this technology’s potential, do the following: Imagine a woman—let’s call her Juanita—lives in an indigenous community three hours by foot from an electrical grid. She wants power in her home so that her children can read and she can spend time with her family at night without inhaling kerosene fumes. She has heard that solar power can reach anywhere—she cannot access electrical lines, but the sun is within everyone’s access—but cannot see how she can scrape together the upfront cost to purchase solar technology when her family can barely afford candles.
Now imagine a scenario in which Juanita gets solar power into her home right away without needing to pool together her next six month’s savings. From each month’s earnings, she decides how much to contribute to her electricity and buys it only as she needs it. Imagine a solar company that allows Juanita to invest in a permanent energy solution at the speed that she can afford because they believe income grows after a home has electricity.
This last scenario is the one that Mr. Rodriguez will be unplugging his own lights to make a reality. The PAYG model is the innovation that the solar industry has been lacking when it comes to reaching the world’s poorest communities. It makes solar a realistic energy source for the 2.6 million Juanitas in Guatemala, and 1.6 billion throughout the world, who rely on candles and kerosene to light their homes. By eliminating the high upfront cost that prevents millions of people from purchasing solar, PAYG opens up renewable energy to thousands more. And by providing an easy financing option—pay-when-you-can vs. pay-on-this-date—it will get this solar into more homes, faster.
In fact, Quetsol expects to see sales increase by 1700%, distributing 100,000 kits and reaching over 505,000 people in the next five years. While Quetsol’s current solar kits save clients 20% of their previous candle and kerosene costs, the new model elevates this to 44% savings. The most promising aspect, though, is that a Pay-for-Service model like this one have the potential to be replicated as easily and successfully as telecommunication companies have done so throughout the world.
So, one last scenario to imagine: A new generation of utility companies that drive rural development and protect the environment at the same time.
The first prototype is currently being tested, but Indiegogo is the critical next step forward. Contributors will be able to directly sponsor a family if the campaign goal is reached. The minute that the campaign goes live, Mr. Rodriguez will sit in a pitch-black room and refuse to turn on his lights until the goal is reached. Visit Quetsol’s website and Indiegogo page to help them turn on the lights for Juan and, more importantly, for thousands of Guatemalans.
You’ve heard the buzz, and you want to start a social enterprise. That’s great – but where do you begin? Just as every tree begins with a seed, every enterprise begins with an idea. Maybe you already have an idea. If so, congratulations – you’ve come to the right place! This is the first post in an ongoing series on how to get your social enterprise off the ground.
Identify the Problem
What is a social enterprise? Basically, it’s a solution. The successful impact entrepreneur identifies a problem that no one else has solved, and then solves it. The first step is to identify a problem. How do you identify problems? Look around you. Talk to people. When in doubt, a good place for inspiration is Maslow’s hierarchy of needs. Does everyone in your community have food to eat, water to drink, and a place to sleep? Maybe you can help with employment, health, or physical security.
Create a Solution
You’ve identified a problem. The second step is to create a solution. Now, before you run off and come up with The Next Big Thing, do some research. Maybe you don’t have to reinvent the wheel. There may be a business model out there that you can adapt, and it may not even be used in a social enterprise. Look at Grameen Bank. Mohammad Yunus
didn’t invent finance – he just adapted it to the bottom of the pyramid. Or look at Sustainable Harvest. David Griswold didn’t invent coffee exporting – he just adapted it to include local farmers. Consider that your solution may not require revolutionary innovation – it may just require inventive adaptation.
So – you’ve identified a problem and created a solution. This means you’re already ahead of the curve, but you’re not done yet. The third step is to make your solution sustainable, whether that means your solution is practical and scalable (in the business sense), or minimal in its impact on the environment and resources. (Ideally, it’s both.) For example: mosquito nets in Africa. For decades, aid agencies imported mosquito nets to Africa. The aid agencies identified a problem (malaria, which, untreated, causes the deaths of nearly 1 million people in Africa every year), and then created a solution (distribution of mosquito nets). But their solution wasn’t sustainable – if funding dried up, aid agencies would no longer be able to distribute mosquito nets. This presented an untenable scenario.
A more sustainable solution to the malaria problem would be to develop and grow mosquito net production in-country. A to Z Textile Mills, a Tanzanian company that received start-up capital from Acumen Fund in 2003, is doing just that. A to Z is not only addressing the malaria epidemic, it is lowering shipping costs for each bednet, and creating jobs for Africans.
Problem leads to solution leads to sustainability. And, if you’re lucky, Jacqueline Novogratz mentions you in a TED Talk (at 12:20).
Entrepreneurs around the world are joining a growing movement to create positive, sustainable impact through private enterprise. At Agora Partnerships, our mission is to accelerate those visionary entrepreneurs who are redefining the role of business in society.
We are in the middle of an ambitious recruitment effort for our 2013 Impact Accelerator. This highly selective program provides access to human, social, and financial capital for a unique community of entrepreneurs throughout Latin America. The Accelerator kicks off with an entrepreneur retreat in Central America, followed by strategy consulting and investment readiness services, and admittance to the Impact Investing in Action conference hosted in the United States.
Over the past two years, we have worked with 18 company operating in some of the poorest regions of the Western Hemisphere. Over 70% of or Class of ‘11 received millions of dollars in investment, propelling these impact companies to an average 80% growth rate.
Now, we are expanding from our base in Central America and searching for 30 new companies spanning the whole of Latin America to help accelerate impact for the region.
I joined Agora Partnerships for this summer, tasked with answering the question (more or less): Where are all the women impact entrepreneurs?
This seemingly simple query led me to…Guatemala. Over the past month, I designed and implemented a series of recruitment presentations for Guatemala—the country that has yielded two of Agora’s most successful and charismatic women business owners: María Pacheco of Kiej de los Bosques and María Rodriguez of ByoEarth (“the Marías,” as we affectionately call them in-house). My recruiting team included: the effervescent Sara Lila Cordero, who heads all things marketing and communications in Agora’s Nicaragua office, and Rodriguez, an Agora Class of ’12 entrepreneur who is locally known as “the worm girl,” thanks to her on-the-rise organic composting business.
During our week-long “roadshow” in Guatemala, we spread the word of Agora’s 2013 Accelerator program, making stops at the major metropolitan—and entrepreneurial—centers of the country: Guatemala City, Antigua, and Quetzaltenango. The level of individual activity and collective energy we encountered during our visit far surpassed expectation.
In five action-packed days, we met with: international NGOs like the Rainforest Alliance and Counterpart International; regionally-focused investor groups like Grupo DNA; and dynamic local change makers, including Nikki Bahr (founder of CSR consultancy Sustainable Strategies), Daniel Buchbinder (founder of rural entrepreneurship group Alterna), Gabriela García Quinn (Guatemala director of Central American social change outfit Glasswing International), and Ivan Buitrón (leader in AGEXPORT, which supports, literally, thousands of export-ready Guatemalan businesses). We also met with prospective entrepreneurs, paying a visit to the ultra-cool Campus Tecnológico in a gritty corner of the city, as well as presenting at the up-and-coming, “green” HUB space.
Everywhere, we shared our vision—to be a one-stop shop for early-stage impact entrepreneurs serious about scaling their business and, in turn, their social impact. And everywhere, we heard the same story: while there are many one-off interventions, there are no comprehensive solutions like Agora’s Accelerator that gets small to mid-sized enterprises ready for growth capital and connect them with a growing network of impact investors.
As I met with actual entrepreneurs, I was struck by their hunger for additional resources and supports. At Quetzaltenango, for instance, Sara Lila presented on the Accelerator to a group of 120 rural women, largely micro-business owners, affiliated with the Vital Voices network. We had the enviable position of presenting right before lunch. However, the interest lasted far beyond our ten-minute “pitch.” Dozens of women approached us afterward. Hidden in their questions, I heard hope—that the Accelerator would be the solution for their businesses.
In Guatemala, the market of scalable social enterprises may be finite, but the vision and collaborative attitude of its leading players is anything but. Take, for example, Philip Wilson’s award winning company Ecofiltro, which is popularizing a simple yet effective clay filter as an ecological solution to water filtration. We toured his factory at the base of Antigua’s volcanoes, which he hopes will serve as a model operation for emerging countries globally.
“The Marias” are generous-spirited leaders, who when they encounter problems or gaps, create smart solutions. In addition to her innovative business venture, María Rodriguez is in the process of helping to incorporate the HUB in Guatemala City, which will provide much-needed convening space for start-up talent. And, María Pacheco brought international women empowerment non-profit Vital Voices to the country to tackle economic disparities along gender lines. The secret sauce to Agora is its people, and the human potential in Guatemala last week felt limitless.
Neela Pal joins Agora Partnerships from the Yale School of Management, where she is studying social sector management and organizational behavior. For her summer internship, she is helping Agora develop a recruitment strategy to increase women-owned and managed business enterprises in its Accelerator program.
Over the course of the next two weeks, I will be traveling throughout Nicaragua and Guatemala visiting “impact entrepreneurs,” a relatively new term that describes men and women who are using the power of private enterprise to solve social, environmental, and economic problems in their local communities. These entrepreneurs are members of Agora Partnerships’Accelerator Program.
“He Was Angry”
“He was angry before,” Josefina Quinac states with a smile referring to her husband’s demeanor prior to her beginning work, “but now, he’s different. Things have changed.”
Things are changing in the dusty Guatemalan village of Pastores about 10 km outside the picturesque colonial tourist town of Antigua. Josephina, 44, is a member of the Wakami value chain, one piece of a complex economic development puzzle that starts with a non-profit, is fueled by a business, and ends with real change in the lives of rural women.
Bracelets, Necklaces, and Wakami
In 2003, Guatemalan entrepreneur Maria Pacheco started Kiej de los Bosques (“Kiej” is a Mayan term meaning “harmony between earth and people)” with a focus on empowering women in rural areas of her native country. According to Maria, Guatemalan women typically invest 80-90 percent of their income back into the household. This domestic investment paves the way for improved educational opportunities, healthcare access, and sanitation within rural communities.
The process begins with Communities of the Earth, a business incubator that targets women in rural villages throughout Guatemala by teaching them how to make bracelets and necklaces. The women who receive the training work together in small groups (called “Wakami Value Chains”) to craft products for Kiej de los Bosques – a Guatemala City-based business that produces an assortment of handicraft products for both national and international consumption.
These groups, comprised of more than 300 individuals, 90 percent of whom are women, receive a monetary stipend based on the amount they produce per order. The products they create are then sold under the increasingly visible Wakami brand to buyers in Central America, the United States, and Europe. The brand will next expand to markets in South America, Asia, and Australia.
The Source of Prosperity
“I have worked with a lot of development organizations,” said Ligia Chinchillas, the general manager for Kiej de los Bosques. “They were all very afraid of the market, even resistant to it. But so much is based on the market. The market is a source of prosperity.”
Kiej has openly embraced the market… and fashion. The company has just completed a bold rebranding of its products. Once defined by “development friendly” images of rural women working on handcrafted products in the mountains of Guatemala, Kiej now embraces glossy modern images of young Central Americans sporting Wakami products as integral pieces of their progressive, fashionable wardrobes.
“He Helps with the Cleaning”
Back in Pastores, Josefina is making her daily 15-minute walk from the center of the village to her three-room, cement brick home at the end of a winding dirt road. When an order reaches the village from Kiej, she collects her supplies from Matilda, the leader of the Pastores women’s group, then spends her afternoons crafting on a wooden table next to her bed. She has been braiding, beading, and threading Kiej products for 6 years and makes, on average, about $122 a month, but it’s enough.
“When I started with Wakami,” Josefina explains, “we [her husband and four children] lived in a small wooden house. We couldn’t afford to send our kids to school, and everything was dependent on my husband. Now, we have this better, concrete home, and my children are all in school.” Josefina pauses. “Other things have changed too.”
Before joining Wakami Josefina said she was timid and shy, turning to her husband for permission to leave the village.
“Now, I am confident and open. I can go into Guatemala [City] whenever I chose, she said. “Before I had to do all the cleaning and housework,” Josefina continues. “Now my husband helps with the housework. My children, especially my girls, look up to me. They even help me with some of the work I do for Wakami.”
Partnership, not Charity
“So many people say, ‘Oh, you help all those women out in the country’,” said Chinchillas from the conference room of her Guatemala City office, “but that’s not how it works. We work with these women. They are our partners and help us produce all of these wonderful products that are then sent around the world.”
Once these women have an income,” Maria adds, “so much changes for them and their families. They become stronger, more independent. They become more involved in local politics because they are earning a wage and paying taxes. They demand things from their governments. The incomes they earn give them the power to make their dreams come true for both their families and themselves.”
MARKETING, MEDIA, & DEVELOPMENT
Facebook, Twitter, YouTube – social media terms now dominate the language of mainstream marketing. Companies around the world have adopted a barrage of digital tools to debut new products, gain feedback from consumers, and, more generally, communicate in interesting and compelling ways with their consumers. Though social media has emerged as the go-to toolkit for traditional profit-seeking companies, could it also be one of the key components of impact-oriented businesses to fighting poverty in the developing world? Agora entrepreneurs Will and Chris Haughey, along with their wooden toy company, Tegu, seem to think so.
TEGU, MAGNATES, & HONDURAS
Will and Chris launched Tegu (short for Tegucigalpa, the capital of Honduras) in 2009 out of the desire to create jobs in Honduras and to become the employer of choice in the impoverished nation. The company, which now employees 56 people in Honduras and six in the United States, has reinvented the traditional wooden block by incorporating magnets into its design. This simple addition allows for more play possibilities beyond simply stacking blocks one on top of the other.
“Our first priority when we started Tegu was to address unemployment in Honduras,” Will explains. “The more products we sale, the more jobs we create. If we can engage people with our story, then we can engage people with our products. Engaging people in our products and story ultimately results in more employment opportunities for people living in Honduras.”
LIKES, FOLLOWS, & VIEWS
Will admits he had limited experience in the social media space before starting Tegu. In fact, he did not create a Facebook account until 2008. However, over the past two years, Tegu’s social media accounts have grown appreciably. Currently, the company amasses over 3,600 Facebook likes, more than 1,800 Twitter followers, and nearly 30,000 views on its branded YouTube page. Though Tegu’s digital presence is strong across multiple platforms, Facebook has emerged as the centerpiece of its digi-strategy.
“We like to use Facebook to highlight new products and share images of what we’re doing in Honduras,” Will notes. “We currently have two products that were named on Facebook. We posted a new product and asked our followers to help us name it. We took their suggestions and acted on them.”
Will adds that Facebook has been a critical outlet for receiving feedback from customers, ultimately helping the company craft even better products. Just a quick scroll through their page reveals countless company “@mentions” by followers and a stream of shared photographs and videos from customers around the world. Tegu often responds to many of the posts as a way of keeping the conversation active, a process Will describes as “ongoing.”
A LAB COAT, NATIVITY SCENE, & THE MONA LISA
One of Tegu’s more innovative digital marketing campaigns involved showcasing the varied and often unexpected ways the magnetic blocks can be configured. The campaign, titled “Tegu Live,” employed Livestream, a live streaming video platform, as a means of interacting with their digital audience.
Over the course of the campaign, participants could communicate with a Tegu Genius on Tegu.com (via Twitter, Facebook and Livestream). Once navigated to the site, viewers found a mysterious man in a Tegu-branded lab coat, a stark white table, and a jumble of multicolored Tegu magnetic blocks. Viewers typed in their requests, watched as their vision was assembled by the unnamed “Genius,” and, in a matter of minutes, the mass of blocks was shaped into a helicopter, a ship, a checkered board, the Nativity Scene, and even the Mona Lisa, among other creations.
FACEBOOK, ENGAGEMENT, & IMPACT
“Using social media is a great way to engage people in your company or product,” Will concludes. “For us, when people are engaged and buying our products, then they are helping us to create critical employment opportunities for people living in Honduras. In that respect, using social media is an important part of achieving our aim of serving the poor through profit.”
If you are like many people, you are new to impact investing, have a mild notion of what it is, and believe that it could be important, maybe even revolutionary. But this notion is tempered by massive confusion surrounding the term.
Understanding the different agendas of the three key camps under the impact-investing umbrella can help you navigate this complex conversation.
Impact-First Investors (also called “Social-First”) The origins of the term impact investing begin with a handful of foundations and non-profit organizations (incidentally, nearly all of which were founded by entrepreneurs). These groups believed that investing in entrepreneurs was a better way to solve social problems around the globe rather than the project-based approach that has dominated development assistance since the 1960s. These foundations wanted to get affordable, “patient” capital to real entrepreneurs who could then turn it into measurable impact. For this group, which includes most of the founding members of ANDE, the primary purpose of impact investing is social – to serve the needs of society, as quickly and tangibly as possible
A good example of an impact-first investor is Kevin Starr at the Mulago Foundation, author of an excellent recent post on the dangers of impact investors chasing returns over impact. His definition of impact investing is:
The practice of putting money—loans or equity—into impact-focused organizations, while expecting less than a market rate of return
Return-First Investors (also called “Finance-First”)
This is a group of mostly mainstream investors interested in creating products for their clients that allow their money to generate a triple bottom line return – meaning a market rate of return and a measurable (or at least ratable) social and environmental return. Much of the attention around impact investing has been focused on these big players like JP Morgan and Prudential. The hope is that traditional finance companies will unlock billions in investment capital that also demands to know its social impact. Return-first investors are trained in closing deals that make money. For them, the defining feature of an impact investment is that it can favorably compete with the financial returns of a traditional investment. Ignia Fund is a good example of this approach, as is the official definition of impact investing from the GIIN.
Entrepreneurs and Field Builders The third group doesn’t consist of investors at all, but of non-profits and some foundations that are focused on entrepreneurial eco-system development and supporting the field at the entrepreneur level. This group includes many of the founding ANDE members and smaller start-ups. As a whole, this group believes that the key drivers of development are entrepreneurs, not investors, and that now is the time to focus our efforts on entrepreneurs. For this group, impact investors are key allies, but they lament that not enough of them are yet willing to pull the trigger, especially with smaller, angel deals, where their impact can be greatest. The basic allegiance of this group is to the entrepreneurs on the ground. An impact investor might ask, “How can I find good deals that created blended value?” The entrepreneur camp, on the other hand, asks, “How can we help entrepreneurs make better decisions that result in increased growth and increased impact?” B Lab is a great example of this camp.
A working definition of impact investing for this group is Agora’s own:
The practice of investing in impact entrepreneurs.
Working Together While each group has its own motivations and agendas, they must all rely on one another if we are to put ourselves on the path to a more sustainable capitalism for the 21st Century. Whether these groups can coordinate their resources effectively and work together is one of the most fundamental questions facing the movement today.