Scaling Mountains to Get to Scale

Letter from Executive Director, Sachi Shenoy

I’m not a marathon runner. Or a triathlete. Or a mountain climber. In fact, you could say that my only “extreme” passion is my obsession with fighting poverty at Upaya. 

That being said, 2015 was my Everest.

When we started Upaya nearly 5 years ago, I knew this would be the hardest work I'd ever done. What I didn’t know was that in 2015, earthquakes, floods and fires would threaten our own offices and our partners', and that our team would be challenged by life-threatening illnesses and staff transitions.

Even in the face of all this adversity, even with this mountain to climb, 2015 has also been our greatest success. Thanks to our team’s dedication and tenacity, we:

• Doubled Upaya’s investment portfolio! (10 partners and counting...)
• Attracted 5x in follow-on investment capital
• Had our 1st exit (and capital reinvestment)
• Doubled our job numbers: Upaya’s partners are now employing 2,329 individuals

The tough stuff is not often featured in year-end letters from small non-profits, but I think it’s an important story to tell. It is not only authentic, it exemplifies our spirit of resilience and teamwork. These are also the same traits we admire in our portfolio partners and their employees. Our newsletter includes profiles of two other fearless individuals: Jamuna and Wilma. I hope you read their stories. Their struggles and successes continue to fuel my commitment to this work, and have helped me raise the bar for 2016.

Next year, our goal is to double our outreach once again, and create over 5,000 jobs in 2016 for families like Jamuna’s. As I share these aspirations, I also extend my deepest gratitude. This work wouldn’t be possible without our very dedicated “base camp” team: You! I thank you sincerely for making this rocky year one that ended with such celebration and victory.

So, I take back what I said. I AM a mountain climber. At Upaya, we all are. We are the risk takers. The do-ers. The believers that it can be done.

Thank you for being a part of this hard, beautiful, life-changing work.

Sincerely,

Sachi Shenoy
Executive Director

Thoughts on GIIN's "Impact Measurement (IM) and Performance Management Training"

At Upaya, the process of collecting and assessing beneficiary data to track outcomes and measure impact is fundamental to our work. After all, four years ago the organization was founded with a hypothesis that providing jobs -- and not handouts -- is the most efficient and effective way for the “ultra poor” to progress out of poverty. To date, we have sought to prove or disprove this hypothesis through social performance measurement (what we internally refer to as “SPM”), the systematic collection and analysis of beneficiary level information.

I recently had the wonderful opportunity of attending the “Impact Measurement (IM) and Performance Management Training” in Bangalore organized by the Global Impact Investing Network (GIIN) in collaboration with international consultancy Steward Redqueen and Social Value International, to reflect on Upaya’s methodology and revisit some of these ideas. The purpose of the training was to introduce practitioners to different IM frameworks and ways in which these frameworks could be used to suit the context of an individual organization and its mission.

Some of my key takeaways from the training were:

• Don’t overstress the rigour; it should be “good enough”
• Data is not just for reporting but also for decision making
• Consider establishing a counterfactual in the setting

Financial and business decisions are made everyday on the basis of imperfect information provided by financial accounting frameworks. Yet when it comes to evaluating impact, we tend to hold ourselves to a higher standard or rigour --where randomized control trials are considered to be the gold standard. However, sometimes the fear of publishing imperfect impact data gets in the way of doing any IM activity. If the data is ”good enough” to spot trends, aid in decision-making and undertake some course correction, and not overly tax human or financial resources, then it is worth undertaking.

Secondly, these days it appears that impact data is mostly used for reporting outwardly to stakeholders, such as philanthropists and investors. In doing this, we overlook the critical role data can play in helping an entrepreneur and/or management team make decisions about the business itself. The challenge most often cited among practitioners is one of constrained resources - the buy-in needed to undertake the exercise of data collection and the need for doing it all. For an early stage enterprise that is working to expand the business, build the team, formulate marketing strategy, and raise funding, IM is a weighty commitment.

Data collected through impact measurement, however, should not be seen separate and distinct from business data. Instead, if an IM framework were designed to provide useful insights for the business about its beneficiaries, that could then inform refinements to the core product or service, then there exists a higher probability of entrepreneur’s buy-in and also better quality data.

Last, but certainly not least, is the need to accommodate the counterfactual in the actual impact assessment. A counterfactual simply put means “what would have happened anyways, without the intervention in question.”  A counterfactual could be in the form of state and national averages based on government data. Or it could be a more statistically rigorous “control group” or “non- intervention group.” The counterfactual, when compared with data that depicts the outcomes of the intervention, can give us a clearer indication of impact, or what positive effects can be attributed to the intervention. In essence, it can provide the necessary context and help us paint a picture of the impact that has occurred.

In the coming months, we will integrate some of these learnings into our SPM framework. We hope to make our system of impact assessment more robust so as to provide high quality information on the progress made out of poverty by our beneficiaries. Our goal is to simultaneously provide valuable insights and learnings to our entrepreneurs, to support the continued growth of their businesses and the creation of hundreds more jobs.

Upaya Welcomes Bangalore-based Saahas to LiftUP Project, Promotes Job Creation Through Waste Management

Upaya Social Ventures is proud to announce today that it has joined with India’s largest business angel group the Indian Angel Network (IAN), to invest in Bangalore-based Saahas Waste Management Private Limited (SWMPL).

SWMPL provides end-to-end waste management solutions for bulk waste generators in Bangalore while creating secure employment for women from disadvantaged communities. Following this agreement, the company will receive seed funding and business development support through Upaya’s LiftUP Project.

“The waste management problem in Indian cities is staggering and is growing fast with increasing urbanisation. At the same time, the ‘waste industry’ in India is largely informal and exploitative,” said SWMPL founder and CEO Wilma Rodrigues, who has 13 years of experience in the waste management sector.  

“SWMPL was founded to responsibly manage all kinds of waste generated within corporate campuses and institutions with the firm conviction that waste has to be handled at the source itself,” said Rodrigues.

The company provides on-site waste management solutions to a wide range of waste generators, beginning with an audit to determine the types of waste generated, recommendations for recycling solutions and infrastructure requirements.

Many of the on-site facility staff employed by SWMPL are women who have worked as informal waste pickers in highly exploitative and dangerous environments. The organization provides them with reliable, formal employment and regular salaries.

“Upaya's focus on ultra poor job creation really goes into the heart of our model and I am very glad to have Upaya join this round as they will help us to remain people-centric while growing as a movement for cleaner cities,” said Rodrigues.

Across the company SWMPL emphasizes safety with adequate protective gear and training for hygienic waste handling practices. The company provides each employee with a fair salary and full benefits.

“The SWMPL team is highly experienced and respected in the industry for their work,” said Upaya’s Director, Business Development Sreejith Nedumpully.

“We are excited to work with a great organization that helps corporations and institutions reduce their carbon footprint significantly and be more ecologically sustainable and socially responsible,” said Nedumpully.

Mr. Nagaraja Prakasam, lead IAN investor, commented on the company’s growth strategy saying, “SWMPL pioneered the zero waste campus model and has successfully delivered onsite waste management services to bulk waste generators. IAN Impact was launched in 2013 to support ventures working on the ‘triple bottom line’ -- like SWMPL -- as IAN would like to encourage the growth of social enterprises that are creating better lives for people.” As an active IAN impact angel, Prakasam has lead four other deals and has made 12 investments through IAN.

Upaya’s support to SWMPL has been made possible by Open Road Alliance, a private philanthropic initiative that provides grant capital to non-profits for mid-implementation projects facing an unexpected roadblock or a sudden catalytic opportunity.

Patricia Devereux, Steve Schwartz Join Upaya's Board of Directors

Upaya Social Ventures is proud to welcome Patricia Devereux and Steve Schwartz to the organization’s Board of Directors.

“We are thrilled that Patricia and Steve are joining the Board,” said Upaya’s Executive Director Sachi Shenoy. “Each brings valuable experiences, insights, and relationships that will serve the organization well as it continues to grow,” said Sachi. 

Patricia Devereux

Patricia Devereux most recently served as MasterCard’s Executive Director, Global Philanthropy. In this role, she transformed MasterCard’s corporate philanthropy program into a global program with more than 20 partners in 40 countries helping to drive the company’s financial inclusion strategy. She was also instrumental in the creation of the MasterCard Foundation, which is now the fourth largest private foundation in the world.   

“Upaya is leading the way in promoting a new model for ending extreme poverty, and I am excited by the opportunity to be a part of this burgeoning movement,” said Patricia.

Steve Schwartz

Steve Schwartz is no stranger to Upaya. As one of the organization’s co-founders, he oversaw marketing communications and operations over Upaya’s first five years. In addition to his transition to Upaya’s Board, Steve also recently joined Tableau Software as the company’s Corporate Social Responsibility Marketing Manager. 

“From the very beginning Sachi, Sriram [Gutta, Upaya’s third co-founder] and I talked about seating as much of Upaya’s day-to-day activities in India as possible. This is simply the next step in that process,” said Steve.   

While Upaya welcomes Patricia and Steve to the Board, the organization must also say a heartfelt thank you to Deepika Mogilishetty and Sonny Garg as their board terms come to an end. Each played a pivotal role in Upaya’s evolution in its earliest days and has expressed continued support for the organization in the coming years.

Upaya Invests in Kolkata-based Maitri Livelihood Services, Promotes Expansion of Sahayika Caregiver Program in India's Northeast

Upaya Social Ventures is proud to announce that it has invested in Kolkata-based caregivers training and placement company Maitri Livelihood Services Private Limited (Maitri).

Maitri recruits, trains, certifies, and creates fair and dignified employment opportunities for women from vulnerable backgrounds in East and Northeast India through its flagship “Sahayika” (one who helps) initiative. The company will receive funding and business development support through Upaya’s LiftUP Project framework.

“Domestic workers are vulnerable to socio-economic exploitation because they are unorganized and poorly skilled.  At the same time, millions of employers find it difficult to get skilled, reliable, trustworthy domestic workers. Maitri’s Sahayika programme is hence designed to assure dignity,  recognition and fair wage to domestic workers. While doing so, Maitri is also addressing a pressing problem faced by millions of families in urban India.” said Maitri’s founder and Managing Director, Gitali Thakur, an Assam native and 13 year veteran of livelihood promotion. “The company is building a safe ecosystem for women who would otherwise be vulnerable to an informal sector fraught with exploitative agents and little regulation,” said Thakur.

The Sahayika initiative is designed to build both the technical and interpersonal skills needed by domestic workers. Sahayikas receive training on a variety of home-based care services including cooking and housekeeping, child care (including health and safety skills), and geriatric and patient care. The company also verifies that the prospective employer’s household does not have a history of issues with domestic service workers, sets clear expectations for the nature of work, and briefs the family on the prospective Sahayika’s background, skills, and employment preferences. Furthermore, Maitri takes this time to educate each Sahayika on her employee rights including a regular salary, paid leave, a bank account, and other benefits enjoyed by her formal service sector counterparts. This extra effort creates trust and an open communication channel between Maitri, the Sahayikas, and the family.

Maitri is currently placing Sahayikas through two centers in Guwahati, Assam. It is also in the process of launching four new centers across Assam and Kolkata. Each center places a minimum of 25 Sahayikas per month.

“Maitri’s creation of dignified, stable jobs with opportunities for skill building makes it a natural fit within Upaya’s LiftUP Project framework,” said Upaya’s Director, Business Development Sreejith Nedumpully. “Maitri’s commitment to its Sahayikas allows each woman to not only earn a higher wage but also possess a greater degree of dignity and self-respect,” said Nedumpully.

New Report: Impact Investors See India’s Social Entrepreneurs Lacking Basic Financial Management Skills to be Investable

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Over the past four years, the Upaya team has repeatedly heard from impact investors that the pipeline of investable social enterprises in India is frustratingly thin. While these investors regularly hear about interesting concepts, they lament the lack of entrepreneurs who have the business management skills needed to lead such a venture to profitability. In fact, many leading investors have said that a social entrepreneur who does not have a sufficient command of fundamental business tools is not someone they can even really consider an entrepreneur.

Looking to turn these anecdotes into actionable information, Upaya is today releasing the first of a series of spot surveys that dig deeper into investors’ impressions of the entrepreneurs they encounter.

Titled What They Really Think: Perceptions of India’s Early Stage Social Entrepreneurs Among Impact Investors, the series provides data and recommendations to the multitude of incubators, training programs and mentorship networks currently operating in India. The report captures investor opinions about the collective critical skills and competencies of entrepreneurs, and starts a substantive conversation on improving the ecosystem for early-stage social businesses.

In “Spot Survey #1: Financial Management Capabilities,” 18 of India’s 25 most active impact investors shared their impressions of the financial management competencies of entrepreneurs they have conducted some level of due diligence on. The report looks at entrepreneurs' skills in utilizing a variety of financial management tools for decision-making. It also looks at the quality of documentation investors receive from entrepreneurs, as well as the ability of those entrepreneurs to use valuation tools to communicate the financial health and long-term projections of their companies with investors.

Click to download the report.

"Tamul Plates Social Impact Report: 2014 Baseline" Now Available

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During the summer of 2014, the Upaya staff and Tamul Plates management began work on this Social Performance report to document the economic and social background of the company’s beneficiaries. This report provides a snapshot of social metrics for 95 of Tamul Plates’ beneficiaries, serving as the baseline for reporting their progress out of poverty over time. 

Surveyors interviewed Tamul Plates beneficiaries across ten districts of Northeast India. For the purposes of this report, the respondents were broken into two geographic groups - the Lower Assam Group and the Upper Assam Group. Beneficiaries were evaluated across key social and economic metrics, including income, education, assets, and expenditure. Among the highlights:

• Households in the Lower Assam Group have a higher likelihood of falling below the $1.25-a-day poverty line than those in the Upper Assam Group. In particular, leaf plate producers (32 percent in the Lower Assam Group, and 36 percent in the Upper Assam Group) and raw material collectors (28 percent in both respondent groups) are the most likely to fall below the poverty line among Tamul Plates beneficiaries.
• Leaf plate producers are highly dependent on Tamul Plates, with income from Tamul Plates-related activities constituting the primary source of income for a vast majority of households across the Lower and Upper Assam Groups.
• Households spend roughly 50 percent of their total monthly expenses on food alone. Expenditure on school for children and miscellaneous (unplanned) expenses form the next two biggest categories. Savings constitute a very small component of total expense for households at 6–7 percent. 

A midline (check-in) survey will be conducted after 12 months for the same group of beneficiaries to measure the changes in income levels and quality-of-life indicators. Click here to download the full report.

Upaya exits its investment in Justrojgar, will recycle 100% of funds for future LiftUP Project partnerships

In March 2015, Upaya exited its investment in Delhi-based Justrojgar after its shares were bought back by the entrepreneur, Ajaya Mohapatra.

This is the first full exit of a partner from Upaya's LiftUP Project. The organization will re-invest 100% the returns from the transaction into a future LiftUP Project partner in a manner consistent with its Pioneering Capital model.

Upaya initially invested in the Delhi-based skilling company in 2012.

Upaya's Sreejith Nedumpully profiled on thealternative.in

As part of its coverage of the Deshpande Foundation's Development Dialogue 2015 in Hubli, thealternative.in sat down with Upaya's Director, Business Development Sreejith Nedumpully to talk about his previous work with Rope International, what initially drew him to Upaya, and where he sees the future of livelihood development in India. 

The interview has been reprinted below with the permission of thealternative.in, while the original article can be found here.

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Sreejith Nedumpully

In his role as Director (Business Development) at Upaya Social Ventures, Sreejith Nedumpully is enjoying the opportunity to realise his long time passion—building regional eco-systems of  small enterprises with big impacts. As the co-founder and former Managing Director of Rope International, a manufacturer and supplier of handmade and handloom woven natural products, Sreejith has had over two decades of expertise in the domain of rural livelihoods and the challenges of scaling small businesses.

At the 8th annual Development Dialogue 2015, organised by the Deshpande Foundation in Hubli, The Alternative spoke to Sreejith about his journey from working with rural artisans to funding impact creating enterprises and the role of small businesses in making big change.

You have been involved in rural livelihood generation for over a decade. What are some of the chief learnings that led you to co-found Rope International?

During my work with in microfinance with DHAN Foundation in 2002, I got first hand exposure to the enterprising nature of people in rural India and how access to finance – by generating livelihoods – is directly linked to increased rural incomes. Thus, creating opportunities for gainful employment of BOP populations, besides permitting access to finance, can also permit a regular income stream to support a better standard of living. It also became evident that raising rural incomes was key to ensuring the financial inclusion of BOP populations.

At that time, in the midst of the discussion about capturing BOP markets through appropriate technology and customised product design, I found myself siding with those who were looking at reversing this trend by facilitating rural to urban transactions. So, we started focusing on livelihood generation by tying up with companies to outsource a part of their production to rural areas by setting up manufacturing centres in villages, employing and skilling rural manpower especially women’s groups, and supplying raw material to them.

This enabled companies that wished to increase production but, due to lack of physical infrastructure from working at full capacity, were unable to employ more people on site. This outsourced manufacturing model built the capacities of rural people and absorbed them into year-round employment.

Did you see this this creating an entrepreneurial mindset among these people?

It definitely did lead to the development of leadership qualities and better negotiating skills among the women employed in these units. Microfinance activities in the village had already empowered SHG women economically to some extent, making them confident and adept at negotiating with bankers for favourable financial deals. Further, under the outsourced manufacturing model, each unit was put under the leadership of 2-3 women who were responsible for managing finances and operations and that really honed their leadership qualities. Witnessing this transformation fired my own entrepreneurial ambitions.

Rope provides global customers access to lifestyle products and home decor made by rural workers and artisans in India using natural fibres. Pic Courtesy – design21sdn.com

Was this then the beginning of Rope’s journey?

Yes, my initial idea was an extension of the outsourced manufacturing model – outsourcing both production and services to rural areas. With my idea incubated by IIT Madras, I was able to work on the upcoming rural BPO model while simultaneously building my own business plan for the rural manufacturing model.

In 2008, with seed funding from the IIT Madras incubator, we were able to launch Rope (now Rope International) with the aim of creating employment opportunities for rural artisans, many of whom were still employing age-old manufacturing techniques to create produce traditional designs. Many artisans had been left unemployed when demand for their crafts gradually disappeared.

We began Rope using a key account model – partnering with large brands like IKEA and Walmart with a large and steady demand for products with certain design specifications. By establishing rural manufacturing centres that met the supply requirements of these large clients, we were able to leverage the natural skill and traditional craft knowledge of the rural artisans, upskilling them in the process by introducing them to contemporary design ideas. The large volumes (sometimes 10 lakh pieces of a particular product) required by these brands helped us move beyond the level of handicrafts to a handmade production factory, with production flows, quality control mechanisms etc. all established within the village.

The work of Rope, initially centred around weaver clusters in Madurai began to expand to other districts Tamil Nadu, where we trained and employed a few hundred people.  As we got buyers from India and overseas, the quantum of production too began to grow. That’s how Rope began to be successful.

What were some key lessons about scale that you learnt through Rope?

With Rope, the idea was to create rural employment opportunities at scale, providing alternative livelihoods to people formerly employed, often as bonded labour in the textile mills and firecracker product units in Tamil Nadu. Our model involved setting up a unit within the village which employs about 50-100 women and replicate those units in neighboring villages. So in two years, we had six such units, each directly employing 60-70 women.

Besides this, each unit also indirectly employed about 30-40 women from the village who would take work home, supply at their own convenience rather than contributing to core production. By 2010, we had established 6 such clusters of units.  Besides production units, there was a central hubs that procured and supplied raw material as well as collected ready products from the units, they were places where quality care, packaging, and despatch took place. Thus, we managed to successfully create the best of village level production by shift a large part of the value chain to the rural areas.

Rope is now continuing to produce quality products in large volumes, creating rural livelihood opportunities, generating profit, and maintaining stable business with our key account customers.

Tamul Plates, an Assam based manufacturer of disposable palm leaf tableware is among Upaya’s portfolio companies. Pic Courtesy – dealcurry.com

In 2013, you shifted gears, moving to Upaya Social Ventures. What motivated this decision?

By 2013, Rope had achieved a degree of stability and production was going steady without the need for new marketing. I began getting restless, looking to create newer, more exciting growth models that weren’t dependent on scaling through the establishment and replication of manufacturing units. My own experience showed that  Indian government laws were prohibitive, making it especially difficult to access capital, thereby limiting the scale that a manufacturing enterprise can achieve, especially in the case of handmade products.

I have always been interested in working with rural entrepreneurs, helping them develop their business ideas, shape their models, and scale. Upaya gave me the opportunity I was looking for.

Can you tell us about Upaya’s work with early stage rural entrepreneurs and the gap that it is trying to fill?

India is capital-starved country with a big gap in accessing early stage funding, even in the impact investing space, where investors look for proven, profitable business models,, and look to minimise risk with smaller investment sizes. The focus usually, in the investment space, is more on profit and less on impact.

Upaya Social Ventures’ LiftUp Project bridges this gap by providing early stage, for-profit entrepreneurs with seed financing and business development support to help them launch and scale their business. As the first institutional investor, Upaya puts in an equity investment of Rs. 20-30 lakhs in each of these enterprises with proven business models and a revenue of about Rs. 10-20 lakhs. Investments are structured over a 3-8 year timeline, during which an enterprise can scale, attract follow-up capital and become profitable. We handhold entrepreneurs for a 24-36 month period, providing them with technical assistance, financial management, and developing effective market strategies.

We also provide advisory support and help them understand their beneficiaries better with annual surveys profiling potential customers. Working with entrepreneurs to collect and analyse social data on employees to monitor their progress out of extreme poverty.

What kind of enterprises does Upaya support?

We specifically target entrepreneurs, rural and urban, with long-term vision and a strong business plan. Our main focus is on strong business models that create jobs for the poor, ensure a secure income source, and improve their quality of life. While scalability is important to us, it alone will not determine whether we invest in a company or not. We examine the geographical limitations of SMEs, market crowdedness, product relevance, and employment generation before investing in them. At present, Upaya is supporting 6 SMEs across 4 Indian states working in areas ranging from handcrafted paper to urban sanitation. The challenge is in finding and identifying good entrepreneurs in remote regions, often not exposed to networking platforms like conferences.
 

Upaya’s business incubation support to local providers of essential services enables large scale job creation for the urban poor. Pic Courtesy - Samagra Sanitation 

How has Upaya gone about building an entrepreneurial eco-system for its portfolio companies?

Our focus right now is on supporting groups of ventures from a particular region, for example, in the north eastern states. This helps create a favourable eco-system that will attract other capital and service providers there, giving these entrepreneurs wider networks to tap into. For us, it is always more viable to enter a region where we can partner with other service providers.

MFIs, like MicroGraam, for example, which provide small entrepreneurial loans  will help meet the SME’s working capital costs to fulfil existing demands, enabling them to use Upaya’s funds for further growth and  expansion.

How does Upaya access finance to meet its capital requirements?

With early stage funding, we found that charity is relevant since donors are not looking for a quick exit from the venture, more patient with the capital deployed and reconciled with reaping lower returns (about 5-6%) than commercial and impact investors. So, Upaya, which is registered as a not-for-profit company in the US, raises philanthropic capital from family foundations and big donor agencies based in the US where interest in making recyclable capital deployments to sustainable and impactful social enterprises is on the rise.

What have been some of important learnings for you from this year’s Development Dialogue?

Given Upaya’s own focus on developing regional eco-systems that promote entrepreneurship, I find Deshpande Foundation’s regional hubs model very interesting. The sandbox model, by supporting budding entrepreneurs with access to capital, mentoring, etc., is creating an eco-system that can encourage the entrepreneurial spirit in the region. It is also enabling small enterprises to scale by inspiring and supporting replication in other places. It is important, while doing this, not to adopt a one-size-fits-all approach but to have business models that are customised to regional contexts, are specific to local needs, and that concentrate resources in smaller geographical areas. Thus, factoring scale into the model allows entrepreneurs to come on board irrespective of their size or reach, without scale serving as a barrier to entry.

While there are some models, like Akshaya Patra which have expanded across geographies, most enterprises are small and with application limited to the sandbox and being in the can be really beneficial to these small but profitable entrepreneurs working in niche areas who might not have pan-india scalability. The Hubli sandbox model, by providing support to these value creating enterprises has great relevance for the entrepreneurial needs of different parts of the country.

"Art to Mart" at the Deshpande Foundation’s Development Dialogue 2015

Following the Deshpande Foundation’s Development Dialogue 2015 conference in Hubli, thealternative.in published a series of session excerpts to share the learnings. I (Sreejith) had the chance to be a part of the "Art to Mart: How can we build an end-to-end value chain that brings artisans profitably to market?"  panel. 

The transcript of that session has been reprinted below as it appeared on thealternative.in. The original article can be found here.

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With over six million people (officially) working with Handicrafts in India, traditional handicrafts are a major source of income for a large number of people in rural communities, and have a huge market potential, about 20,000 crore according to some estimates, across the globe.

But while the market itself seems to be thriving, the livelihoods for most of these artisans are not.Various factors – like wages, market price gaps, and lack of technology – are forcing these artisans to move away from the handicrafts industry, to more profitable work.

How does one create a sustainable, equitable value chain for these markets? How do we ensure that rural artisans – all artisans, for that matter – are able to reach the right markets without losing out on the profits due to them?

A panel discussion hosted by Sattva at the Development Dialogues 2015 brought together practitioners who work across the craft value chain in India,: Sreejith from Upaya Social Ventures and ROPE International; Neelam Maheshwari from Navodyami.org, and RangSutra‘s Sumita Ghose, moderated by Rathish Balakrishnan of Sattva.

Edited excerpts from the discussion:

Can market led solutions bring about equitable development?

Sumita: If we are talking about an equitable model of development, it is possible only in an organisation owned collectively by all, which is why RangSutra is a company owned by these artisans. It gives you a say in how the company is run, your wages etc. Earlier, a lot of the women we worked with were paid a pittance while working for middlemen, being paid per piece.

Now, they are paid properly, according to the material, skill and time inputs required. Having shares in the company gives them not just a right but also a responsibility. They ensure that the work is quality work because they know that the company’s profit decides their dividends.

The idea that your work is valuable, that there are people who are going to buy it and that you can make profit out of it gives them a power, an awareness of the value of your work, and that comes with equitable ownership. Using your own money makes a difference because it’s something you believe in, versus just doing something out of program funds.

An incident that really motivated me is when I visited this woman’s house in a village and she had framed a share certificate we had given her. She said it was the only property that I own, the land and the house are owned by my husband’s family. She was so proud.

Should the producer/community facing entity be different from the market-facing entity?

Sumita: We decided in the formation of RangSutra not to have many organizations, we don’t have one community facing and another market facing, that’s too complicated!

What these artisans do need are quality inputs, access to markets, efficiency, timing, delivery response etc. That remains a challenge especially in our case, where 95% of the artisans we work with are from villages.

Sreejith: A very important thing is for artisans to produce what sells, to keep updating what he makes. Can we find alternatives to the saree that a weaver can make if the saree market is going down? It’s possible. Like with artisans making mats for sleeping etc.. that market has completely vanished, nobody uses them anymore.  A few players including Industree started making table mats or runners with the same material, a lot of these artisans were able to come back to their profession.

Sreejith: I completely agree that we should have a model that combines the equitable value distribution of community owned model with the efficiency of the dynamism of a private enterprise. But if I had to choose one, I’d choose market focused, more dynamic and efficient model for the question of sustainability.

Let me tell you an example which inspired me to entrepreneurship: In 2005, in Thanjavur, I visited some of the weavers’ cooperative societies that started with the best of intentions but were not working very well. We went to procure some sarees and find market for it to give an assured market to weavers.  The cooperative societies complained that they had a huge stock of unsold sarees and therefore were unable to procure more from weavers. The weavers said that 90% of the weavers had migrated to cities to look for other jobs, so they had very little skilled labour.

They told me that someone had visited them from Holland, and was stunned by the beauty of these pieces but he asked them to make scarves or shawls as there was no market for sarees in Holland. But back then, there was no internet or any way of getting in touch with the market(or that man) and they got in the same rut of producing sarees in cooperative societies. The weavers told me they don’t want to weave sarees if there is market for it, they are glad to make anything else if it’s sold.

If that type of market dynamism were possible in a community led model, it would be great. But it’s not. Another reason is the shortage of capital.

I think for these reasons, the sustainability of the enterprise depends on their ability to continuously engage the artisans, irrespective of the structure is.

We always look for scale. Would you say that a simpler model could scale better?

Sreejith: A simpler model is more accountable, more efficient etc but that depends upon the entrepreneur who runs it. Of course, you need to scale, scaling is great, but it is not easy. Just because it has worked for some organizations in some sector, it doesn’t mean it will for all.  It takes investment in capacity building, in system and community owned structure to have a good organisation. In some cases, private entrepreneur can do it much more efficiently and they have access to capital.

Neelam: To think that in 60 years in India, we have had just one FabIndia.

We don’t have enough models, we should look at these people as beneficiaries, but also entrepreneurs. For me, it’s an information gap, we need to connect producers to market opportunities. There are so many artisans, we need many more models, we can’t stick with one or two models that we think are good.

Sumita: Today, there are also lots of people leaving the field, I have seen that it’s more for young men than women. For women, it’s convenient as it allows them to earn a livelihood while working from home, but sometimes with the men, it’s more profitable to work in a city in some other job.

Sreejith: In my experience, I’d say men too are interested… provided they have a sustained income from craft. It’s not that they want to preserve the art of anything, they really need a livelihood.

Which one is more relevant to artisans, the B2B or B2C model?

Sreejith: I think B2C is extremely relevant, but in my experience, it takes more capital and therefore for  smaller entrepreneurs with  less access to capital it’s a difficult ball game. Look at FabIndia, it’s a very successful B2C model, but it takes a lot of capital.

When I started my company (ROPE International) in 2007, I was attracted by B2B opportunities and therefore I’ll talk more about that. When we started out, we did a market research and we saw that the US had 60 or 70 retailers double the size of FabIndia. They said that India has beautiful artisanal products but they don’t source majorly from India as they had issues about production, organization, compliance to social norms and so on in India. So when I started ROPE, my challenge was to build a model where consistent large scale, quality production is possible.

Sumita: RangSutra’s overarching goal is sustainable livelihoods for artisans. So for us, B2C model wasn’t viable for us when we started out. It is more difficult in India, because people take hand-skills for granted, they don’t understand why they have to pay more. Globally there is much more respect (than India) for handmade, because most people in other parts of the world have lost that skill. We do have challenges given our goal, there have been situations where we have had to make an order and make no margin at all just so that an artisan can work.

The panel wrapped up with 2 important takeaways: Building sustainable livelihoods is the obviously the most important thing to keep artisans in their work. Produce what sells, be flexible.

This article is part of a series of panel discussions and reports from the Deshpande Foundation’s Development Dialogue 2015 conference in Hubli. The Development Dialogue is a conclave of like-minded people from across the country who believe in entrepreneurship as a way of nurturing scalable solutions for development, an International social entrepreneurship ecosystem conference hosted by Deshpande Foundation India.

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Upaya Joins With Ennovent IIH, LAF: Creative Venture Fund to Expand Youth Employment and Employability Through Investment in Anant Learning & Development

Upaya is proud to announce today that it has come together with Ennovent Impact Investment Holding (Ennovent IIH) and LAF: Creative Venture Fund (LAF:CVF) to invest in Anant Learning & Development (Anant), a Delhi-based company that is working to ensure young people from poor communities across India have adequate skills training and regular access to secure stable employment with credible employers. Upaya will provide funding and business development support to Anant through its LiftUP Project framework.

Anant has developed a two-track model for improving labor markets for young people. First, the company provides placement and post-placement services through its Rozgarmela.com platform to youth in both urban and rural communities across India. Second, Anant consults with private and public sector employers to assess the effectiveness of their skill development programs through skills assessments and post-placement tracking. Anant currently operates in nine states [within India].           

“Having overseen many vocational training projects in the past, I saw that the young men and women who graduated out of training programs quickly fell back out of the formal sector workforce,” said Anant Founder and CEO Ajit Singh.

“These young people often claimed frequent miscommunication of salary, benefits as well as job roles by training and placement agencies while, at the same time, employers complained of high attrition and need for credible intermediaries for sourcing candidates. The misalignment of incentives of training and placement agencies is a central issue, and I thought that a more transparent, data-driven approach could iron out the inefficiencies in the market,” said Singh.

Unlike many placement websites in India, Anant does not collect fees from the young people being placed. Instead, the company harnesses its data collection capabilities to provide actionable insights to employers, training agencies, and government agencies so that each can improve the efficacy and efficiency of their efforts.

Singh expects to enroll 10 employers every month on Rozgarmela.com, who are collectively projected to hire approximately 250 candidates.

The Ennovent Circle, an exclusive group that collaborates to accelerate innovations for low-income markets, facilitated the investment in Anant. Both Upaya and Ennovent IIH are Ennovent Circle members.

 “The unique selling point of Anant is its strong linkages to the industry and direct contact with the beneficiaries. This helps the company understand the needs of the potential employees and connects the disconnected rural youth to the employment system,”said Ennovent Circle Manager Joel Rodrigues. “The Ennovent Impact Investment Holding is optimistic about the impact Anant will be able to create at the grass roots through this investment,” said Rodrigues.

Upaya’s support of Anant has been made possible by LAF:CVF, a venture philanthropy fund that invests in employment and empowerment initiatives that provide vulnerable youth around the world with the means to create a better life for themselves.

“Upaya sees Anant’s platform as enhancing the ability of young men and women from poor communities to earn a stable, dignified living,” said Upaya’s Director, Business Development Sreejith Nedumpully. “By harnessing technology along with a geographically diverse network of trainers and assessors, Anant is able to remove the inefficiencies from the system,” said Nedumpully.

Upaya Teams Up With LAF: Creative Venture Fund To Bring Employment Opportunities to Vulnerable Youth

Upaya and LAF: Creative Venture Fund (LAF:CVF) have come together to build skills and create thousands of jobs for young women and men living in India’s poorest communities. Through this partnership, Upaya and LAF:CVF will identify, invest in, and provide business development support to promising early-stage ventures with significant youth employment potential via Upaya’s LiftUP Project initiative.

Together, the two organizations will work to support multiple new ventures and create significant new employment opportunities across India.

LAF:CVF is a venture philanthropy fund that invests in employment and empowerment initiatives that provide vulnerable youth around the world with the means to create a better life for themselves. This partnership lays the groundwork for LAF:CVF to make its first investments in India following similar efforts in Haiti and Kenya. 

“Not enough organizations are focused on giving youth opportunities to build critical life and job skills while also ensuring they have the opportunity to utilize those skills to earn a viable living,” said LAF:CVF Executive Director Kate Genereux. “Sachi and her team have an incredible track record of providing critical financial and advisory support to promising entrepreneurs who have, in turn, become large scale employers of young people in their areas,” said Genereux.   

Upaya’s flagship program, the Life-Changing Interventions for the Ultra Poor (LiftUP) Project incubates early-stage enterprises in low-income communities by combining patient seed equity funding with hands-on financial management support. Upaya’s goal is to help each enterprise reach financial stability, scale, and become a significant local employer.

“From our initial conversations it was clear that LAF:CVF leadership shared Upaya’s vision of poverty alleviation and youth empowerment through employment.  We are thrilled to translate that philosophy into action and help young men and women from poor communities earn a stable, dignified living.” 

Assam-Based Tamul Plates Receives Follow-On Investment from Artha Initiative & Upaya Social Ventures

Tamul Plates Marketing Pvt. Ltd. is announcing today that the company has come to an agreement with Artha Initiative and Upaya Social Ventures on an investment that will allow Northeast India’s leading producer of palm leaf tableware to significantly expand its operations across the region.

The deal is notable as Tamul Plates is the only established producer of disposable tableware in the Northeast - a region with more than 100,000 hectares of arecanut under plantation and one of the poorest areas of the country. 

“This investment is a recognition that Tamul Plates is well positioned to meet the growing demand for high quality, environmentally responsible, and ethically produced products,” said Tamul Plates CEO Arindam Dasgupta. “Working in the Northeast, the company benefits from a unique combination of access to the highest quality raw materials and a producer base that takes great pride in its craftsmanship,” said Dasgupta.

Tamul Plates produces and markets high-quality, all-natural disposable plates and bowls made from arecanut (palm) tree leaves and sells them under the “Tambul Leaf Plates” brand. The company’s clientele includes a mix of restaurants, fast food establishments, event managers, and direct-to-consumer retailers.

This investment follows a recent agreement between Tamul Plates and the Government of Assam to supply the equipment for and train an extended network of affiliate rural producers. The investment by Artha and Upaya will allow the Barpeta-based company to make use of that expanded affiliate producer network by diversifying its product line, expanding its domestic sales and distribution networks, and opening export markets for its products.

“It has been a highlight of the Artha Venture Challenge to uncover a pioneering and innovative enterprise in Tamul Plates,” said Artha Initiative’s Director Audrey Selian.  “We are particularly happy to be co-investing with Upaya, and look forward to continued efforts in collaboration sector-wide through our AVC and ArthaPlatform.com programming,” said Selian. Artha Initiative is associated with Switzerland-based Rianta Capital Zurich.  

Disposable arecanut dinnerware is hygienic, chemical-free, compostable, microwave safe - and in high demand among urban consumers around the world. The production and sale of natural arecanut dinnerware not only reduces the deforestation and pollution associated with the production of traditional disposable dishes, but also provides a viable livelihood to disadvantaged communities.

“Upaya has been very impressed by the work of Arindam and his team over the past year, and believe that the company’s growth plans will benefit both customers and producers alike,” said Upaya’s Director, Business Development Sreejith Nedumpully. “We are proud to join the Artha Initiative in backing this promising enterprise, and are exciting about the company’s potential,” said Nedumpully. Upaya was Tamul Plates’s first investor.

This co-investment in Tamul Plates is the first deal completed under the formalized collaboration framework between Artha and Upaya that was announced in November 2014. Per that agreement, the two organizations are working together to deploy seed capital to help SGBs scale and create employment for the poor, share best practices around sound financial management, and disseminate tools and training for the benefit of India's wider ecosystem.

2014 Annual Report Available Now

Right click to download the Annual Report (5.1MB)

Take a look back at a year of great progress for Upaya and its partners! 

Download the organization's 2014 Annual Report here.

Drishtee, Upaya Come Together to Launch New Rural Supply Chain Social Venture

Upaya Social Ventures and Drishtee Development and Communications Ltd. are proud to announce a social venture collaboration that will create new opportunities for rural artisans to rely on their trade to earn a stable and dignified living. This pilot project with Drishtee will fill gaps in regional value chains by connecting groups of producers in rural communities across Assam, Bihar, and Uttar Pradesh with raw material suppliers and wholesale buyers of their products.

The pilot provides these groups - known as Community-Owned Enterprises (COEs) - with the technical training, management infrastructure, and market linkages needed for community-level entrepreneurship to thrive beyond their immediate area.

“In building Drishtee, we saw a new opportunity in organizing and formalizing the thousands of sole proprietors in or adjacent to our network,” said Drishtee Co-Founder and Managing Director Satyan Mishra. “Right now, village level producers are generally on their own. They are sole proprietors with very little reach outside their immediate area, and do not have the means or ability to develop customer relationships with larger clients for their product or service,” said Mishra.

Drishtee is a social enterprise that provides goods and services across rural India through locally owned village kiosk franchises. The kiosks provide services such as health, education, banking, microfinance, and livelihood services, as well as market linkages for independent farmers and other agri-processors. The Drishtee network currently serves the needs of over 14,000 rural households.

“This pilot with Drishtee - a successful company in its own right - is somewhat different from the typical business Upaya incubates through the LiftUP Project. However, the pilot’s ambitious and unique model provides an opportunity to secure stable, dignified livelihoods for small scale rural producers by connecting them with larger regional and national buyers,” said Upaya’s Director, Business Development Sreejith Nedumpully.

The initial pilot will focus on incubation of three to four COEs in the handloom textile and apparel production value chain. Per the initial plan, each of the prospective COEs will perform different steps in the process including thread spinning, weaving, sewing and garment finishing. Over the initial months of the pilot, Drishtee will organize and formalize the groups, provide training in design and quality control, and provide the necessary connections with wholesale customers. Each COE affiliated with Drishtee will employ at least 10 -15 people on a consistent basis.

“By building individual skills and allowing each person to focus on a piece of the production process, each participant can earn a living without fully bearing the burden of managing their own sole proprietorship” said Nedumpully.

At the time the company is launched, it will be lead by Vikas Mukundan, a Drishtee veteran who was selected to head up the new project. Throughout the process, Vikas will be supported by Mishra as well as members of the Upaya team.

As the pilot reaches its one-year mark, Upaya and Drishtee will review the progress toward the milestone goals and consider an expansion of the program.

Four interesting takeaways from the GIIN/ Dalberg “Landscape for Impact Investing in South Asia” report

On 18 December 2014, the Global Impact Investing Network (GIIN), in partnership with Dalberg Global Development Advisors, released a report that provides a “state of the market” landscape analysis of the impact investing industry in South Asia. The Landscape for Impact Investing in South Asia looks at the $8.9 billion in deployed impact investment capital in six countries – India, Bangladesh, Pakistan, Myanmar, Nepal, and Sri Lanka – and paints a picture of a “diverse but growing impact investing market across South Asia.”

As the report has circulated amongst the Upaya team, four main points have jumped off the page. Some of them mirror observations we’ve seen through our own experience investing in India, and others shed light on issues we are wrestling with. In no particular order:

Two of the top five areas for impact investment in South Asia – Manufacturing and Agriculture/ Food Processing - are directly contributing to livelihood enhancement. That said, they are still only 17% of the identified market.

Broadly speaking, manufacturing and agri-processing are two broad areas under which our team has focused its livelihood development efforts and we are excited to see them crack the top five areas for impact investment. 

However, the fact that the two segments combined are still a smaller percentage of the impact investment market than each of the top two categories - Financial Services and Energy – shows that we still need to expand the conversation about job creation and its social benefits in the impact investment community.  

“There is also a need to bring less-exposed enterprises into the fold in a number of countries. Even in India, where formal networks of entrepreneurs exist, it is difficult to find enterprises that are not part of these networks.”

This point really hits the heart of one of the biggest challenges in the impact investment space – pipeline. Right now, too many impact funds are only looking at the businesses that self-identify as social enterprises, and are only doing due diligence in that limited pool. The result is a sort of “social venture ghetto” where a subset of entrepreneurs are continually showcased together at business school competitions and conference panels, thus creating the impression that they represent the full scope of social ventures in the space.

Not coincidentally, the investors who have been successful are the ones who have not limited their purview to that ghetto. For Upaya, the majority of entrepreneurs we support do not necessarily self-identify as social enterprises, but simply as businesses operating in poor communities. Friend of Upaya Artha Initiative has taken a similar view of the issue with their Artha Venture Challenge, a competition that has uncovered several great companies outside of the mainstream social enterprise conversation. In both cases, Upaya and Artha have had success in finding the types of investment opportunities that were sitting outside the standard impact investor conversation but are having a positive impact through their work.

“[In India] funds are shifting toward a less opportunistic and more hypothesis-driven approach to selection; in this new approach, these funds start with the identification of a problem in a given sector, then identify a potential solution (hypothesis), and subsequently seek organizations that contribute to this solution.”

Among the team we’ve long been wary of the proliferation of impact investing funds whose portfolio companies are united only by a broad notion of “positive impact” rather than a specific type of change they are working toward.  Our concern is that, without a unifying objective, funds will scatter investments across a variety of issue areas and miss the opportunity to aim significant resources at a specific problem.

Of course, Upaya has developed its own hypothesis – support Small & Growing Businesses that can be large scale employers in ultra poor communities – and are pleased to see that others are starting to bring their own theses into sharp relief. I would certainly point to our friends at Omnivore Partners as a great example of what can happen when a fund pursues clear and measurable outcomes in a specific area (in their case, agricultural supply chains).

In India, “foreign funds are prohibited from investing in debt and, as a result, most of the capital from [foreign] impact funds is deployed through equity instruments. Consequently, small domestic funds are emerging to fulfill the need for early stage debt.”

Accessing affordable working capital debts is a continual challenge for many SGBs in India, including some of Upaya’s partners at various points in their early lifecycle.

For much of the past year, our team has worked with domestic lenders to find creative and effective working capital solutions for our partners. What they are now coming to see that, while smaller domestic lenders are playing a role, these funds still have a big gap to bridge if they are to fulfill the credit needs of SGBs. It is an issue that Sreejith, Tanya, and the team are working hard on, and we are all glad to see this observation in the report.