Most start-ups in the social enterprise space are faced with two key issues. First, start-up or seed capital and second, long-term sustenance of the business and the entrepreneur.
However, for 35-year-old Ketan Parmar, a Gujarat-based social entrepreneur, both these aspects have been taken care of for the next three years. Parmar’s Krishi Naturals, based at Vadodara and Rajkot, encourages farmers to grow organic vegetables and fruits (those for which chemically-treated fertilisers aren’t used). It then connects the farmers to consumer groups in the two towns. Through the last two months, Parmar has convinced about a dozen farmers from around these towns to grow only organic vegetables. He has also mobilised a motley group of 25-odd consumers committed to buying only organic vegetables and fruits. Parmar has a markup on the organic produce these consumers buy, which he sources from the farmers, and supplies at the doorsteps of each buyer.
He would take time to build a critical mass of organic producers and consumers for his business to be viable, before expanding to other towns of the state. What gives Parmar respite is for three years, he is assured of financial support for the venture from a joint initiative of Mumbai-based Tata Institute of Social Sciences (Tiss) and Singapore’s DBS Bank.
|DBS: MENTORING SOCIAL ENTREPRENEURS|
Hundreds of kilometres away, 27-year-old Sandeep Mehto’s Bharatcalling works in remote tribal areas of Hosangabad district, Madhya Pradesh, disseminating information on opportunities in higher education. Though he may take a while to figure a viable business model for the venture, a fellowship from the DBS-Tiss social entrepreneurship programme would help him sustain his family for three years. “I can focus on the work and scale up the venture,” says Mehto, who also secured seed capital.
In the first year, nine social venture start-ups from TISS are being supported by DBS Bank’s India operations. These vary across social objectives and impact. One of them supplies drinking water in the arid Sikar district in Rajasthan, another encourages mechanised farming in Srikakulam, Andhra Pradesh. A third uses rag pickers in Mumbai to generate bio-gas from urban waste.
“What appealed to us was none of the students from the programme would sit for campus placements, but launch their own ventures in due course,” says Sudeep Bhalla, head (group strategic marketing & communications), DBS India. The bank runs similar programmes in Singapore, HongKong, China, Taiwan, and Indonesia.
In the last four years, 80 graduates have passed the Tiss social entrepreneurship programme. Earlier this year, a Tiss-DBS team vetted the five-year business plans of 20 such aspirants. The plans were validated on social impact and the change the venture would lead to, Prof Satyajit Majumdar, chairman, Centre for Social Enterprise, Tiss. The institution also runs an incubation centre that offers basic office space for start-ups. This is the first time a corporate group has entered into a tie-up to financially support social entrepreneurs from a TISS programme. “As a financial institution, we understand enterprises. We wanted to bring that expertise to help build social enterprises across Asia,” says Bhalla.
The support is in the form of an annual grant that essentially acts as seed or growth capital. In some cases, additional support to entrepreneurs comes from fellowships that help them meet sustenance issues, while they focus on expanding business. Grants and fellowships vary, based on business plans. Most ventures are expected to become self-reliant in three years. The fund flow to the start-ups is subject to their meeting pre-decided performance parameters over a period of time, says Majumdar.
DBS also acts as a mentor to the start-ups, helping them streamline operations, put various processes in place, while facilitating networking opportunities. “Sustainability of the project is the key,” says Bhalla. The idea, he adds, is to optimise their social impact, while improving their commercial viability at the same time.
DBS supports 17 social enterprise ventures across Singapore (four), China (four) and India (nine), with an annual budget of S$500,000 (Rs 20 crore). Though a part of the banks’ corporate social responsibility initiative, there is a business driver to the programme as well.
In 2008, DBS launched ‘The social enterprise package’, a financial product, in Singapore. This was followed by launches in China in November this year. The product offers DBS’ social enterprise clients cheaper loans, cash management solutions, a no-minimum-deposit-or-balance facility, a waiver on several annual charges, among others. Currently, the bank has about 80 social enterprise clients, largely in Singapore, who avail of this product. Next year, DBS plans to launch an India-centric product, targeting social enterprises in the country.
Bhalla feels these are early days for DBS in the social enterprise space in India, saying, “We are just about wetting our feet.” Majumdar says large companies in India have refrained from investing in the social enterprise space, largely because of the lack of a clear path on returns on investment. “This is just first step in developing a business ecosystem for social entrepreneurs to conduct their business in a sustainable way,” says Majumdar.
Then, like Parmar and Mehto, many young social entrepreneurs would be able to live their dreams.
Series on firms fostering entrepreneurship in tier-II & -III towns concluded