Wednesday, 21 October 2009
The growing number and capacity of local intermediaries in emerging markets is a success story of Small and Growing Business (SGB) investing. Yet, they have not found their space in the investment value chain. They are underutilized as a potential deal source and investment advisor, with investment funds relying on parallel structures to make investments. This failure to adapt to new possibilities is stunting the growth of SGB investing.
To read more, click here... opinions welcome!
Having said that, im not sure its supposed to be easy. Those months of really trying show dedication and initiative: Real entrepreneurs are found through a tough selection process. I dont want to undersell it, but supporting a nascent industry in develping countries is not always easy and requires an edge. Not that one is supposed to say this out loud, but its not like im trying to pull up any ladder and am always happy to help those who really try. I am mainly basing this on my experiences which brought me into contact with a lot of people that were just not ready for this, and in the end always left unhappy and with the organization in tatters. There is a darker side to this too: I was in the fortunate position to be able to afford the low wages and distance to family and friends. Many are not, and I am fully aware that this drives an industry that is carved more of one mind than is probably good for it...
The reason I've been thinking about this are a series of posts on Next Billion, most prominently "Looking for ways to get invloved", which seems to advocate Fellowships as the new internships (although internships are still available). New Ventures and the organizations listed are only continuing (or have led) a proliferation of websites and events that give an "in" to the industry (Just Means, Social Edge). By an large they are doing a great job supporting a larger, more sophisticated talent pool, but i wonder at what point there will be too much of a good thing.
Monday, 27 July 2009
There's a lot of things you get by being out here. Experience, excitement, or energy for instance. You also get weird illnesses that let your face swell up the size of a watermelon and mean you can't step outside your apartment for weeks on end. Like me. Thought I might share these rather apetizing photos of me with, well, Mumps. The whole thing sounds worse than it is, particularly with modern advances in painkillers. Its just that its rather a drag. A month in the UK to get my immune system back up to speed sounds like just what I need...
Sunday, 14 June 2009
The impact of this is practical on many levels. For a first, I have the impression that it helps me assimilate here. I'm different enough as it is ;)
Sent from my BlackBerry® smartphone from Zain Nigeria
Monday, 18 May 2009
Wednesday, 13 May 2009
Monday, 11 May 2009
Tuesday, 7 April 2009
Sunday, 5 April 2009
Sunday, 29 March 2009
In a country like Nigeria, where most wealth is held by a tiny minority, you’ve got to wonder how much impact enterprise development really has on poverty alleviation. This is a view that was mirrored by a few authors in the Africa section at Foyles, which I got the chance to browse on a recent lazy afternoon in London. Corruption plays a part in this, but so does the standard way of doing business in these countries, where access to key players means nearly everything.
Microfinance and similar initiatives play a large role in “broadening the ownership of businesses” (Alitheia’s mission), but such initiatives represent a fraction of the total economy. The above statement is largely portrayed as “conventional wisdom” amongst my peers and there are, of course, plenty of examples to support it. In my frustration with the limited scale of social enterprise, the sectors continued drive towards paternalism and my urge to help by enabling people to make a life of their own has driven my thinking the same way as my peers. Unfortunately that’s all I have to go on right now. Initial research shows me that the field is overly political, which tends to distort facts. If anybody who reads this has a clue where to look for reasoned qualifications of the above statement or comparative figures, I’d be delighted to hear from you.
The idea appeals to me partly because of my experiences with IDG and Intellecap. Firstly I realized that what we need in development and what everybody is looking for are two different things. This struck me again at a recent social enterprise event in London, where people urging those present to “listen deeply” were adamant about supporting entrepreneurship by bridging the “missing middle”. Though I don’t doubt the validity of the concept I’m unsure about its application and potential to help bring large number of people out of poverty. We look for striking examples of innovation (which we may well need in some cases – green energy for instance), but what we really need is marginal improvement on existing products and services (often simple process improvement). With these marginal innovations we could deliver the services that people already demand and obtain more efficiently and to a larger part of the population.
Secondly I realized that these entrepreneurs are hard to find. My job in India constituted of searching for and supporting them. Alas only few were of the kind where you’d have no doubt in applying the label to – obsessed, innovative, inspiring and successful at once. Real entrepreneurs, of the kind we look for, are in short a rare breed. Self-motivated and intelligent people with multiple commitments are however not. People like my mother seek self-employment and may not look to expand their business beyond a certain size. Others are more ambitious but are limited by their ability or inventiveness. All have local ties of some sort and know what the market needs. Franchisees are, in short, abundant.
The market in the US is a case in point. So plentiful are the franchisee offers that innovative matchmaking services have had to be created to make the choice easier. Be it services or manufacturing; everything is run through franchise operations – even chicken production for the most part I hear. For an outsider the depth of the industry is astonishing – the pizza industry in America alone is said to be worth $30bn.
The opportunity in places like India the opportunity is palatable, with several outfits taking advantage already. Naturally a big market with a surging middle class and a whole host of new, more sophisticated tastes means that providers have to roll out at speed, often necessitating franchising strategies. Moreover economies in places like India, and Nigeria for that matter, are often dominated by a few conglomerates, from Dangote to Reliance. Meanwhile, 98% of the businesses are sole proprietorships or the like, mostly operating as traders. They are run by quintessential franchisees with limited imagination, a feeling for local demands and shallow growth opportunities. The vast majority stay the size they are until it’s time to past them on to the children, who might grow the business slightly out of necessity.
What’s stopping us from grabbing this opportunity for the good? Several things, in my opinion. Firstly, despite the choice of franchisable enterprises there’s a dearth of truly integrated franchise packages at the small scale, which make it as easy as possible for the entrepreneur. This is especially true for socially conscious ideas; the franchise space is dominated by corporate like McDonalds. One of the reasons may be that the former have not found the right marketing mix to attract franchise operators. Another might be that at the BOP level the initial capital contribution expected of franchisees might prove prohibitive. If that is the case it is the originators of the franchise have to structure their offer differently, maybe in collaboration with microfinance institutions.
An example of franchising at the lower end of the economic spectrum recently caught my eye in India. Trendyworks launched a huge “Say No To Jobs!” publicity campaign in Hyderabad in promotion of their “Web Entrepreneur Program”, a Rs. 16,000 (roughly $350) 3-month course designed to help the student become a self-sufficient web-designer. The promotion was professionally staged, with billboard, radio, SMS, online features, advertising catchy slogans, taster courses and freebies. The latter included Trendyworks’ own proprietary web-design software used in the course, the continued use of which seemingly constituted the second phase of the franchise operation. The third phase seems to be continued deal flow following graduation from the program, naturally including royalty payments to Trendyworks. The effect could be described as the largest no-cost, quality assured outsourcing centre. It also diversifies the risk for the corporate parent, as cash flow occurs during every phase of the process. Without this program it may only be able to rely on sales of its software. Though it stretches the definition of franchising slightly, it shows how a combination of good packaging, professional processes and thoughtful business models can create new opportunities for profits and social improvement even at the lower end of the economic spectrum.
Applying such a model to easily transferable businesses and technologies such as biogas, affordable building, education, etc could bring huge scale to socially conscious ideas at low cost. The Access Healthcare Initiative, now part of the Centre for Emerging Markets Solutions at the Indian School of Business, is trying to do so by getting MBA students to document successful health delivery models and bringing them to other emerging markets (think pharmacy’s in Afghanisthan).
Venture Philanthropist organizations, from Aavishkaar to Acumen, have spent countless dollars hunting innovative local social enterprises the world over. What remains more often than not are huge databases of underutilized proprietary ideas (see the HoneyBee network). Although venture capital techniques have improved their performance, young enterprises inevitably face growing pains few are able to overcome. As a result, these kind of start-ups are rarely able to make good on their promise. It may be better to switch the focus of our initiatives to franchising the ideas we have identified rather than seeking and supporting new ones.
Do you have or know of a franchiseable socially conscious business model? What other barriers do you see? Is the search for truly entrepreneurial, innovative business models at the BOP really failing? Any comments welcome.
Wednesday, 18 March 2009
The technology our partners, Fruition, created was used to a large part in Sankalp, a Rockefeller Foundation supported business plan contest coming to fruition soon.