Upaya’s 2012 Annual Report is now available(Right click > "Save As..." to download).
Upaya Selected for 2013 Clinton Global Initiative Membership
Upaya is proud to announce that the organization has been selected as a complimentary member of theClinton Global Initiative (CGI) for 2013.As part of CGI’s Market-Based Approachestrack, Upaya will share broadly its perspective on job creation as a solution for ultra poverty.
“We are honored that Upaya has been selected for complimentary membership and are excited about the opportunity to share our experience with other CGI members,” said Upaya’s Executive Director Sachi Shenoy.
CGImembership includes access totrack convenings, as well as admission to the CGI Annual Meeting to be held September 23 – 26 in New York City. The Upaya team will also work with CGI staff to develop a new partnercommitmentthat will extend the benefits of Upaya’s work to thousands of Indian families in need.
“For many years the ultra poor were either overlooked or deemed ‘too hard to reach’ by conventional development programs,” Shenoy said. “This is a great chance to show that not only is it possible to meaningfully help the poorest make progress out of poverty, but that it can be done in a financially self-sustaining way,” she said.
Established in 2005 by President Bill Clinton as an initiative of the Clinton Foundation, CGI convenes global leaders to create and implement innovative solutions to the world's most pressing challenges. CGI Annual Meetings have brought together more than 150 heads of state, 20 Nobel Prize laureates, and hundreds of leading CEOs, heads of foundations and NGOs, major philanthropists, and members of the media. To date CGI members have made more than 2,300 commitments, which have improved the lives of over 400 million people in more than 180 countries. When fully funded and implemented, these commitments will be valued at more than $73.1 billion.
For more information on CGI, please click here.
Sachi Shenoy Judges Global Social Venture Competition, Discusses Job Creation for the Poorest with Berkeley-Haas Students
Upaya’s Executive Director Sachi Shenoy was among the distinguished business leaders invited to Berkeley, CA to judge the 18 finalists of the Haas School of Business’s annual Global Social Venture Competition (GSVC). Founded in 1999, the GSVC is the world’s longest running social business plan competition. In regional competitions held between November 2012 and April 2013, more than 650 entrant teams from 37 countries pitched their social impact business plans.
While in Berkeley, Sachi also joined peers from the Omidyar Network, Riders for Health, and The Citizens Foundation USA on a panel titled “Social Enterprises in the Developing World.” During the discussion she shared insights from Upaya’s experience creating jobs and measuring social change with Berkeley Haas students and GSVC participants. That video can be viewed in its entirety here or by clicking the video image below. For more information on the GSVC, please click here.
Upaya receives 501(c)(3) status, changes URL to upayasv.org
As of 31 January 2013, Upaya Social Ventures (EIN 80-0713334) is recognized by the Internal Revenue Service as a nonprofit 501(c)(3) organization. Following this change in status, Upaya and Jolkona Foundation have agreed to close out our fiscal sponsorship agreement effective 1 April 2013.
With its nonprofit tax status in place, Upaya has also transitioned its web domain to upayasv.org. Going forward, upayasv.com will re-direct to the new domain, while staff will continue to receive emails at both their .org and .com domains.
Upaya's fiscal sponsorship agreement with Jolkona was originally signed in 2011 to ensure that individual donors and grant-making foundations could contribute to Upaya's work prior to Upaya obtaining its own tax exempt status. Under this arrangement, all of Upaya's reporting to the IRS was incorporated into Jolkona's annual 990 filings. However, in keeping with Upaya's value of transparency, Upaya-specific financial statements for 2011 and 2012 have been posted on the Finance and Governance page.
Editorial for nextbillion.net: What's Next for Impact Investing - How to bridge the 'Pioneer Gap' and support entrepreneurs in the earliest stages
Co-authored with Upaya Advisor Brian Arbogast, this article was originally published on 30 March 2013 on nextbillion.net. In December 2013, nextbillion.net readers voted this post one of the year's most influential.
By mid 2011, Naveen Krishna, founder of SMV Wheels in Varanasi, India, employed 443 impoverished rickshaw pullers. Speaking with him then, one would not see any trace of the trials he endured two years earlier when he was burning through his savings and struggling to line up funds to launch SMV. He was not alone - entrepreneurs throughout the world struggle to find support for their ideas in the early years. Most run out of cash and have to scrap their ideas. Fortunately for Krishna, he received angel funding from his mentor, Sumit Swaroop, saving him from having to give up on SMV. By 2011, Krishna had refined his model and attracted $250,000 from five different impact investors.
A worker with SMV Wheels maintains one of the many rickshaws in the fleet, which employs hundreds of rickshaw pullers. (Image credit: SMV)
Announcements of impact-branded seed funds and investornetworks have become so commonplace they no longer seem novel. It is heartening to see so much capital being deployed to these funds. However, the fact is most are structured to onlyinvest in companies that are already succeeding and ready to scale. Their fund managers cannot afford not to reap a return, so it is extremely hard for these funds to take chances on novel ideas or unproven approaches. The resulting Pioneer Gap – best captured in the Monitor Group and Acumen Fund’s “From Blueprint to Scale” report – has been exposed, leaving many to ask what do we need to do to ensure that entrepreneurs like Krishna have the angel funding they need?
Seeing the Need for Pioneer Capital
We founded Upaya Social Ventures with a mission to alleviate extreme poverty through job creation. We attack the Pioneer Gap head on by investing in early-stage (often unproven) concepts and empowering entrepreneurs like Krishna, who can be large-scale employers of the ultra poor.
In its earliest incarnation, Upaya was a for-profit concept, ready to harness social investment capital to realize its vision. However, even the most socially minded investors could not justify our uncertain return expectations with the high risk of funding startups rooted in extremely poor regions of North India. Nor were they willing to accept the overhead needed to provide hands-on business development support to entrepreneurs in the launch phase. These discussions reinforced for us the economic infeasibility of constructing a venture fund composed of small seed investments (less than $100,000) that can cover the costs of intensive technical assistance while producing a risk-appropriate financial return in a short amount of time.
We knew we needed to build a “safety valve” for the traditional venture model that would allow us to quickly back nascent but promising ideas and work alongside the entrepreneur to build the company. After extensive due diligence, we came to see philanthropic funds as the ideal capital to fill this role, ready to take chances in areas where return capital feared to tread. Furthermore, housing both the investing and technical assistance functions within a nonprofit – instead of splitting them through a hybrid model - opened access to foundations and donor agencies to more easily underwrite the needed business development support. Internally we called this strategy “Pioneer Capital,” and saw it as the best fit for our partners’ needs.
Like traditional grants, Pioneer Capital can provide the necessary cushion for entrepreneurs in the launch phase. However, unlike traditional grants, Pioneer Capital has a chance of producing financial upside for the investor. We at Upaya do believe that a handful of our investments will attain exits that yield decent returns, but those returns are exclusively restricted for reinvestment in future Upaya partners. Upaya’s goal is not to get rich off our investees, but to create a virtuous cycle of investment that can continually launch socially beneficial businesses.
Casting off the direct profit requirement freed the Upaya team to make small, catalytic investments into a dairy supply chain, silk weaving business, and domestic service training and placement firm for slum-dwellers. Alongside our seed funding, we have worked closely with these entrepreneurs and helped them assemble investor-ready business plans, financial statements, operational plans, HR procedures, and social metrics collection systems.
We have watched these businesses evolve from ideas scribbled on a dinner napkin into tangible operations that collectively employ more than 500 ultra-poor individuals, many earning a stable income for the first time. Furthermore, eager impact investors have approached each of our partners about possible investments as soon as they see a working unit model and feasible plan for scale.
What We’ve Learned Along the Way
There are countless others who are committed to catalyzing change in everything from clean energy to sanitation to health care that could benefit from our experience. We’ve learned plenty of lessons through our work and are happy to share them in the hope that they will help others fill the Pioneer Gap and create new impact investment opportunities in their areas of expertise. These lessons include:
Above: The son of a Samridhi employee milking a cow in front of the family home near Barabanki in Uttar Pradesh. (Image courtesy of Upaya Social Ventures)
Unique problems rarely have textbook solutions: As entrepreneurs experiment with their models, they need help from more experienced professionals. Some social business incubators provide technical support through required classroom-based training or off-site workshops. While they have value, this type of standardized instruction takes entrepreneurs out of the day-to-day management of their businesses and does not always equip them to adapt their models to their local realities. We find tremendous value in working with the entrepreneur on their turf, integrating the instruction into their reality. For example, when Upaya invested in Samridhi, a dairy company in Uttar Pradesh, it became clear that local cultural barriers made it hard for women to leave the home for several hours a day to work in a central dairy facility. Thus, it would be impossible to replicate dairy models that were successful in other geographies. By working alongside the entrepreneur in the field we were able to adapt the plan so that women could work from home. Without this onsite mentorship, we could not have helped the Samridhi team assemble a viable dairy model that, today, employs hundreds of local men and women.
Above: Traditional wooden looms have passed down for generations by weaving families in the poor communities in and around Bhagalpur, Bihar. An Eco Kargha employee follows a traditional method for spinning bobbins by hand. (Image courtesy of Upaya Social Ventures)
Don’t make it a beauty pageant: Often the most effective solutions for a community don’t involve cutting-edge gadgetry or websites. Rather, expansion of commodity businesses, manufacturing, or service work may have a bigger impact - but investors must clearly understand their own goal to see the potential. This was the case with Upaya’s selection of Eco Kargha, a weaving company based in Bhagalpur, Bihar. Despite a centuries-old reputation for producing high quality silks, wools, and linens, the weaving industry in Bhagalpur was struggling to be a source of meaningful employment. The sole-proprietor and co-op based models that dominated the market lacked the sales and quality control capacity to take in and fill large domestic and international orders. Seeing an opportunity, Eco Kargha developed a concept that could market woven products, manage large wholesale orders, and in turn create steady, full-time employment in Bhagalpur. Of course, using wooden handloom technology to produce traditional sarees is hardly the type of “innovation” that captures the imagination of most social VCs. But because Upaya had oriented its selection process around a specific social goal – sustainable jobs – we backed a business with the potential to pay higher wages and make it possible for weaving to be a primary livelihood.
Don’t try to hit a grand slam if nobody is on base: Too often impact investors - even those trying to focus on the seed stage - are enamored with massive outreach numbers and pass up businesses that don’t immediately appear “scaleable.” As the “From Blueprint to Scale” report made clear, there is a lot of hard work that precedes scale, and impact investors should not expect entrepreneurs to reach this point with one single swing of the bat. Instead, Upaya encourages all of its partners to first prove a financially viable unit model with a measurable level of social benefit before developing its scale plan. This approach can be seen in our partnership with Justrojgar, a company whose blend of training, placement, and employment support for service industry workers could help hundreds of thousands in the next few years. However, rather than trying to go for that scale immediately, we are working with the Justrojgar team to focus on one segment of its business - and only 50 pilot households – to refine its operational model and prove the unit economics. In turn, the company will be in a better position to showcase its social and financial potential to impact investors in successive funding rounds.
Looking Ahead
Impact investing is at an interesting crossroads. As Omidyar Network’s Matt Bannick and Paula Goldman articulated perfectly: “It is as if impact investors are lined up around the proverbial water pump waiting for the flood of deals, while no one is actually priming the pump!” If the goal is to encourage entrepreneurship and build a rich pipeline of novel solutions to age-old social problems, we must find creative strategies like the Pioneer Capital approach to give startups a better runway.
If we fall short, there's no telling how entrepreneurs like Krishna will ever have the chance to make a difference.
Knowledge@Wharton profiles MokshaYug Access
MokshaYug Access (MYA) was recently profiled in Knowledge@Wharton in an article that highlights how the company's "first-mile" dairy supply chain is creating new opportunities for the rural poor.
The article also includes information about a recent study conducted by Upaya that shows how MYA is making dairy a more reliable, full-time livelihood for farmers in Karnataka's villages.
To read the article, click here.
Upaya promotes "Pioneer Capital" in NextBillion's "What's Next for Impact Investing" Series
Upaya's Executive Director Sachi Shenoy and Advisor Brian Arbogast share the story of the organization's evolution and introduce the idea of "Pioneer Capital" in NextBillion's "What's Next for Impact Investing" Series.
Justrojgar Awarded First Runner-Up in "Power to Empower" Competition
Upaya proudly congratulates Ajaya Mohapatra and the Justrojgar team for being named First Runner-up in the non-student category of the Power to Empower business plan competition. A partnership between the National Skill Development Corporation (NSDC) and India@75, Power to Empower "[encourages] innovative and implementable business solutions that contribute to the development of a sustainable vocational skills ecosystem in India." This year's competition received 234 nominations and over 100 applications.
"We are extremely excited to see Justrojgar recognized by the NSDC for its potential to transform the lives of the urban poor," said Sriram Gutta, Upaya's Director of Business Development. "By training slum-dwellers on needed skills and ensuring they get social benefits, Justrojgar is creating job opportunities in a market with enormous potential," Gutta said.
As First Runner-up, Justrojgar will receive a free delegate pass to the Sankalp Unconvention Summit 2013 courtesy of the Villgro Innovations Foundation, the opportunity to participate in the Deakin University’s (Australia) Sponsored Entrepreneurship program, a Complimentary TiE Annual Associate Membership, and a bundle of classes and mentorning courtesy of the Sunstone Business School.
Judges Saurabh Srivastava, Rajan Navani (both left) and MV Subbiah (far right) congratulate Ajaya Mohapatra (center) and Ashish Gupta
Ashish Gupta (left) and Ajaya Mohapatra present to the judges in the competition's final round.
Changes at Samridhi Agri-Products
With
as one of Upaya’s core values, we are committed to sharing our successes, challenges, and failures with our partners, donors and industry peers equally. It is in that spirit that we would like to provide an update on a pair of changes that have recently taken place with
.
- In January Samridhi management chose to move the location of its first Bulk Milk Chilling (BMC) facility before the second was brought online. The company needed to better space the collection centers to reach the largest number of dairy farming families. As a result, 46 of the original Samridhi employees - including several women who had been profiled on our website - are no longer within the zone of service and have been transitioned out of their roles. However, the company was careful not to leave them in a precarious situation. Samridhi management took steps to accelerate the livestock ownership transfer to the individual employees and a large majority now own the cows and goats that had been in their care.
This was a very difficult decision for both Samridhi and Upaya, however, we hope to re-incorporate these villages into the Samridhi supply chain as the company continues to expand.
- Unrelated, Samridhi Co-Founder and CEO Lokesh Singh has transitioned out of his day-to-day management role with the company and has been replaced as CEO by his Co-Founder Niraj Pareek. Biswanath Swain, who has been with the company since its inception, has filled the COO role. The Upaya team has been part of this transition planning and is working closely with both Niraj and Biswanath to ensure that the company’s operations continue to follow its plan for growth.
What does all this mean for Upaya? We have always known that startup enterprises face a unique set of challenges and that, because of their size, the changes they experience can feel quite dramatic. As such, we intentionally designed our LiftUP Project to be patient with investments and work alongside partners so they can have the confidence to make adjustments as issues arise. Both Sriram and Sachi were in Lucknow with the Samridhi team in mid-January and we continue to be optimistic that the company will be able to navigate through this period of change. In fact, during our visit we were happy to find that Samridhi was reaching the same percentage of ultra poor families as before and the company was enthusiastically embraced in the communities where it is operating.
From the beginning of our partnership, we have had full faith in the Samridhi model to create jobs and improve livelihoods. Despite these recent changes, this belief has not wavered. We thank you for your continued support and please do not hesitate to contact a member of the Upaya team directly if you have any questions.
"Promoting Entrepreneurship, Combating Poverty" on Indiaspora.org
Upaya's Sachi Shenoy was asked to share her thoughts on the potential for change found at the intersection of entrepreneurship and philanthropy.
Click to read her thoughts on Indiaspora.org.
