What does it take to scale a social impact investment? Pretty much the same as it takes to scale any start-up company you have invested in!
Capital and human resources, but even more importantly, the understanding of your market and its drivers. Irrespective of whether the market is public or commercial, and for every new segment of the market one wishes to address, one also needs to understand the gaps experienced by all stakeholders including the final beneficiaries with the current product/service/solution. The main difference being that at this 2019 EVPA Annual Conference session we were mainly looking at scaling from the point of view of how many lives will be changed for the better as a result – not whether the social purpose organisation as such necessarily grew. And for impact to be broad, deep and sustainable, it will entail systemic change.
Scaling can take many different forms as our three table hosts outlined with their case studies – Rob Shelton from Miller Center for Social Entrepreneurship in California outlined how Hippocampus, an early childhood education enterprise in India, had benefitted from their Accelerator programme to take the model into a different Indian state, and into Mexico – changing both business model, leadership and organization to achieve the latter.
Jochen Herdrich, of impact fund manager Bon Venture, discussed the challenges (funding, networks, communication, different legal and welfare structures) of entering new geographical markets. This even where their portfolio investment, AfB, had a unique and proven business model in Germany, taking over discarded IT hardware, mainly from companies, which is then subjected to certified data deletion, refurbishing and marketed to second hand customers. By employing people with disabilities, AfB reduces the negative impact on the climate from new production as well as disposal (often through burning) of electronics, and creates a positive impact for individuals who rarely find suitable jobs in the primary labour market.
As an early stage venture philanthropy investor, IKARE discussed the journey they had been on together with Shifo Foundation. The long-term patient engagement and catalytic funding had been key in fine-tuning Shifo’s own business model and enabling the move from a fully digitized solution to the Smart Paper Technology version for registering children under five in low resource settings, thereby ensuring that they can be duly immunized and protected against dying from preventable diseases. While initially taking longer, the piloting and fine-tuning of the system in one district, based on multi-stakeholder feed-back, had proven, together with its affordability for government, to be a success factor for subsequent scaling, step by step, first regionally and then nationally to replace the current system in developing countries.
Anne Holm Rannaleet is Executive Director at IKARE Ltd