Entries in Social Business (19)


Big business? Investing in businesses with social benefit

A recent article in the Guardian observed that there is a growing trend of impact investors  funding services for new consumers moving towards the middle class.

These investors look for businesses that have a social or environmental benefit while also turning a profit. One such investor, Leap Frog, estimates the market that includes those who are moving out of absolute poverty and seeking goods and services amounts to 4 billion people, meaning there is tremendous potential in this space.

This potential is translating into rapid growth for companies like Bima, which means “insurance” in Swahili. Started just five years ago, it has grown to nearly 18 million customers in Asia, Africa and Latin America. Bima sells life insurance through mobile phone network operators – a kind of loyalty program that delivers gains for the operator, and an insurance safety net for people long locked out of financial services.

Still, even as the UN prepares to move forward with a new development agenda that calls on greater involvement from the private sector, some have concerns about the actions and impact of private equity in developing markets.

We are interested in your thoughts -- do you have an example of businesses that do well by doing good? And what are the best tools for building businesses with social benefits?

-- Jay Jakub



Another view on sustainable social business

We are very interested in the work that Erik Simanis is doing in the sphere of social business and new business models. Erik is passionate about social impact, and with an MBA and PhD in business strategy and sustainability, he has guided start-ups, green-field ventures, and product teams in Eastern Europe, Africa, India, and South America over the past 20 years.

As his work makes clear, he is not interested in vague notions of social responsibility or “shared value” that have no foundation in real-world business principles. We recommend two papers (both published in the Harvard Business Review) for an overview of Semanis' outlook and approach (click on titles for the full text):

  • Reality Check at the Bottom of the Pyramid -- "If companies wish to launch flourishing ventures capable of transforming the lives of millions of low-income people across the developing world, they must get back to basic business tenets. However laudable its mission, a business built on unrealistic expectations will fail just as surely at the bottom of the pyramid as in a developed market."
  • Profits at the Bottom of the Pyramid -- "Blinded by devotion to social missions, too many companies with grand ambitions overlook profitable opportunities that match their resources and skills and jump into ventures that overwhelm their capabilities. A more realistic assessment of the challenges at the bottom of the pyramid can help companies generate the profits that will make socially beneficial businesses sustainable over the long term."

While we may approach some of the practical challenges from a different direction, we share a commitment to rigorous measurement and building an approach to social business that is sustainable for the long term.

-- Bruno Roche and Clara Shen


Addressing Ghana's counterfeit drug problem one text at a time

Image Source: Bloomberg, Photographer: Nana Kofi Acquah

Drug Lane, which runs through a market in the heart of Accra, Ghana, is littered with vendors selling painkillers and antibiotics from various pharmaceutical companies, reports a recent Bloomberg article.  Drug Lane's system, however, has such little oversight and is so permeable that as many as one in three medicines sold there could be counterfeit, according to the U.S. Centers for Disease Control and Prevention, compared to just 1% in the U.S. and Europe. This is a major issue for Ghana and other African regions, where according to one study, fake and poorly made malaria drugs contributed to the deaths of more than 100,000 children across Africa.

While many agencies and NGOs have tried to address the issue, one Ghanaian entrepreneur in particular is making headway in the crackdown of Drug Lane and other areas like it. Bright Simons launched his company, mPedigree Network, in 2007. The company sells software that manufacturers use to label individual packs of medication with a 12-digit code hidden under a scratch-off panel on the packaging. Those who purchase the medication can text the code to mPedigree to determine if the product is authentic or not. The company believes that being based directly in one of the regions worst hit by counterfeit drugs offers a competitive advantage, and others agree. According to Jorn Lyseggen, a San Francisco-based entrepreneur:

African entrepreneurs, African startups, (and) African companies, of course are the first and the best to find a solution to local problems.

Technology and local knowledge are powerful tools to help address social issues like counterfeit drugs in African regions. Here at Mars, we are working with one startup through our Kenya-based entrepreneur accelerator program, Maua, called Reliefwatch. The startup helps developing countries that lack the infrastructure to effectively manage supply chains track expired and out of stock medications and medical supplies through cloud technology.

We want to hear from you. Are there other examples in developing countries where technology is intersecting with social issues to drive solutions?

-- Clara Shen


Impact investing evolution?

Impact investing -- an investment approach that intentionally seeks to generate a measurable social impact as well as a financial return -- is gaining greater attention from "mainstream" investors, according a recent article by David Bank in Impact Alpha.

While the precise definition of "impact investing" may still be the subject of some debate, it's hard to argue against the statement that Goldman Sachs' acquisition of Imprint Capital "could signal that the impact investing market has graduated from the white-papers-and-conferences stage to become a core part of the banks’ client-retention strategies and asset-management offerings." Bank also points out that Goldman decided to buy an existing specialist asset manager rather than building up it's own in-house capability, suggesting that other smaller funds specializing in impact investment may become acquisition targets.

With these new dynamics, it's reasonable to ask what this might mean for the future direction of impact investing -- will managers' approach change? Will the mix of institutional vs. family investors shift at all? Will the number of funds and/or the amount of capital directed towards social businesses increase?

Finally, we will be interested to see how these issues play out where it matters most -- among the businesses striving to create a social impact, and the communities in which they operate.

Image source: Impact Alpha

-- Clara Shen



Next wave of social innovators blur the line between profit and purpose

In a recent Fast Company article, Phillip Haid, the co-founder and CEO of PUBLIC, a cause-marketing agency and incubator, stated companies have realized the value of combining the revenue-generating and philanthropic sides of their business, believing that co-existence produces greater impact and revenue.

He identifies four companies within the next wave of social innovators that embrace profit and purpose as the new way to do business:

  • Uncharted Play produces an energy-harnessing soccer ball called the Soccket. It provides off-grid power to kids and families in rural and remote areas and refugee camps to improve learning, air quality, and health and increase income potential;
  • Teeki provides eco-conscious, conflict-free activewear made from recycled plastic bottles;
  • Rareform repurposes billboards into surf bags, backpacks and totes, and is a member of 1% For The Planet program, which means it donates 1% of its revenues; and
  • LSTN takes proceeds from every pair of headphones sold and puts them towards restoring hearing to one individual.

Phillip Haid concludes that creating a social impact doesn't require companies to go outside themselves to effect positive change.

What other social purpose businesses are you aware of? We'd like to know.