Amazing Progress in Eradicating Extreme Poverty

According to a new World Bank report, 114 million people worldwide moved out of extreme poverty in 2013, accelerating an overall positive trend that researchers have observed over the past two decades. There is much to celebrate: as stated in the report, “the world had almost 1.1 billion fewer poor in 2013 than in 1990, a period in which the world population grew by almost 1.9 billion people.” 

India in recent years has made remarkable strides, and is a significant contributor to this trend. Just five years ago, around the time Upaya was getting off the ground, we lamented the fact that experts a few years earlier reported over 400 million people living in abject poverty in India. This put the country on par with — or even exceeding — the same numbers reported for all of the countries in sub-Saharan Africa combined.

Today, India as a country still houses the largest number of people living in extreme poverty, but this figure is now estimated to be 224 million. Economic growth, increased employment, and rising incomes have all contributed to this progress. We at Upaya are proud to play our role in encouraging inclusive growth, and nurturing the development of investable businesses that create lasting, dignified employment for the most marginalized communities.

The World Bank deems a household living under $1.90/day as living in extreme poverty. Upaya ensures that the jobs it helps create pay incomes in excess of this amount. But just as important as the increase in income is ensuring the regularity and stability of that income stream. Households that remain mired in abject poverty are often reliant on cobbling together “odd jobs” in the informal economy – manual labor, trash collection, and even begging when nothing productive materializes – to make ends meet. On a good day, there is work to be had and a wage earned. On a bad day, there is no work, and hence no income. An entire family goes to bed hungry, anxiously hoping that its luck will improve tomorrow. This erratic and uneven and unpredictable existence does not allow a household to build a firm economic foundation and move out of poverty.

In keeping with our mission to create dignified jobs for the poorest of the poor, Upaya from day one has been committed to not only track how many jobs have been created, but also monitor how incomes have improved, and how these incomes have helped previously destitute families make improvements to their quality of life. We refer to this practice of collecting, assessing, and reporting data as social performance management (SPM), and this activity over the years has yielded invaluable insights for our entrepreneurs and other stakeholders. Are households making progress out of poverty in the ways we expect? If not, are there refinements we can make to our interventions to effect better outcomes?

This week, we are releasing a report for Maitri Livelihood Services, one of our partner businesses working in the Northeast states of West Bengal and Assam. Maitri provides skill development, training, and job placement opportunities in the domestic work sector for women from economically disadvantaged backgrounds. Traditionally, women working as housekeepers, cooks, nannies, and at-home nurses have dealt with highly informal work arrangements. It was not uncommon for employers to delay compensation to workers, negotiate below-market wages, and deny workers basic rights in terms of number of hours or working conditions. Maitri is bringing much needed structure and formality to this sector: women who are trained and placed in affluent households are guaranteed a steady and reliable income, an assurance of their rights and safety, and proper recourse in case of any conflict.

Our report demonstrates that Maitri jobholders do indeed benefit from increased, reliable income. It also points to improvements these households are able to make to their quality of life as a result -- such as being able to afford formal electricity and gas connections. The household is less likely to live in extreme poverty the longer a jobholder maintains her relationship with Maitri. We fully expect to see positive improvements in other indicators as time passes, such as housing quality, asset purchases and savings patterns.

In the coming weeks, we plan to release reports for two other partner businesses, Saahas and ElRhino, as well as a year-end portfolio wide assessment. Preliminary findings reveal significant improvements to household income, job satisfaction, and overall well-being. We view these developments as critically important components in our continued fight against extreme poverty. Knowledge is indeed power … studying the exciting progress our jobholders make over time, and listening closely to their feedback and ideas, allows us to fully engage these hard-working, ambitious women and men and empower them to build pathways to a better life on their own terms. 

Upaya extends debt to partners in India for the first time

Upaya Social Ventures has made 10 equity investments into Indian-based businesses employing the very poorest but until now, has not been able to extend debt due to regulatory restrictions. For the first time, in August of 2016, we have been able to structure small loan agreements with our partners to provide working capital assistance as they grow their businesses.

Parvata Foods

The first partner to receive debt from Upaya is Parvata Foods. Parvata aims to eliminate middle-men in the agricultural value chain so that poor farmers can keep more of their profit. Founded by Siddhi Karnani and Anurag Agarwal, their particular focus is to process and market the organic products from the state of Sikkim in northeastern India, which was recently declared the first fully organic state in the country. They source their products—currently spices and squash— from about 100 farmers with one to two acres of land who previously earned about $0.75 to $1.50 per day per person. Upaya has extended a two-year loan to Parvata and may make an equity investment in the future.

The second partner to receive an Upaya debt investment is Karmantik, a Delhi-based enterprise that aims to revive artisanal hand-crafted shoes. Founded in 2015  by Sruthi Niveditha Kande and Apoorva Kamath, who are alumni of the Young India Fellowship Program of Ashoka University. "Upaya came in at a time when we needed support to push ourselves forward, and for that we are very grateful," according to Kande.

Karmantik artisan

Scaling Mountains to Get to Scale

Letter from Executive Director, Sachi Shenoy

I’m not a marathon runner. Or a triathlete. Or a mountain climber. In fact, you could say that my only “extreme” passion is my obsession with fighting poverty at Upaya. 

That being said, 2015 was my Everest.

When we started Upaya nearly 5 years ago, I knew this would be the hardest work I'd ever done. What I didn’t know was that in 2015, earthquakes, floods and fires would threaten our own offices and our partners', and that our team would be challenged by life-threatening illnesses and staff transitions.

Even in the face of all this adversity, even with this mountain to climb, 2015 has also been our greatest success. Thanks to our team’s dedication and tenacity, we:

• Doubled Upaya’s investment portfolio! (10 partners and counting...)
• Attracted 5x in follow-on investment capital
• Had our 1st exit (and capital reinvestment)
• Doubled our job numbers: Upaya’s partners are now employing 2,329 individuals

The tough stuff is not often featured in year-end letters from small non-profits, but I think it’s an important story to tell. It is not only authentic, it exemplifies our spirit of resilience and teamwork. These are also the same traits we admire in our portfolio partners and their employees. Our newsletter includes profiles of two other fearless individuals: Jamuna and Wilma. I hope you read their stories. Their struggles and successes continue to fuel my commitment to this work, and have helped me raise the bar for 2016.

Next year, our goal is to double our outreach once again, and create over 5,000 jobs in 2016 for families like Jamuna’s. As I share these aspirations, I also extend my deepest gratitude. This work wouldn’t be possible without our very dedicated “base camp” team: You! I thank you sincerely for making this rocky year one that ended with such celebration and victory.

So, I take back what I said. I AM a mountain climber. At Upaya, we all are. We are the risk takers. The do-ers. The believers that it can be done.

Thank you for being a part of this hard, beautiful, life-changing work.

Sincerely,

Sachi Shenoy
Executive Director

Thoughts on GIIN's "Impact Measurement (IM) and Performance Management Training"

At Upaya, the process of collecting and assessing beneficiary data to track outcomes and measure impact is fundamental to our work. After all, four years ago the organization was founded with a hypothesis that providing jobs -- and not handouts -- is the most efficient and effective way for the “ultra poor” to progress out of poverty. To date, we have sought to prove or disprove this hypothesis through social performance measurement (what we internally refer to as “SPM”), the systematic collection and analysis of beneficiary level information.

I recently had the wonderful opportunity of attending the “Impact Measurement (IM) and Performance Management Training” in Bangalore organized by the Global Impact Investing Network (GIIN) in collaboration with international consultancy Steward Redqueen and Social Value International, to reflect on Upaya’s methodology and revisit some of these ideas. The purpose of the training was to introduce practitioners to different IM frameworks and ways in which these frameworks could be used to suit the context of an individual organization and its mission.

Some of my key takeaways from the training were:

• Don’t overstress the rigour; it should be “good enough”
• Data is not just for reporting but also for decision making
• Consider establishing a counterfactual in the setting

Financial and business decisions are made everyday on the basis of imperfect information provided by financial accounting frameworks. Yet when it comes to evaluating impact, we tend to hold ourselves to a higher standard or rigour --where randomized control trials are considered to be the gold standard. However, sometimes the fear of publishing imperfect impact data gets in the way of doing any IM activity. If the data is ”good enough” to spot trends, aid in decision-making and undertake some course correction, and not overly tax human or financial resources, then it is worth undertaking.

Secondly, these days it appears that impact data is mostly used for reporting outwardly to stakeholders, such as philanthropists and investors. In doing this, we overlook the critical role data can play in helping an entrepreneur and/or management team make decisions about the business itself. The challenge most often cited among practitioners is one of constrained resources - the buy-in needed to undertake the exercise of data collection and the need for doing it all. For an early stage enterprise that is working to expand the business, build the team, formulate marketing strategy, and raise funding, IM is a weighty commitment.

Data collected through impact measurement, however, should not be seen separate and distinct from business data. Instead, if an IM framework were designed to provide useful insights for the business about its beneficiaries, that could then inform refinements to the core product or service, then there exists a higher probability of entrepreneur’s buy-in and also better quality data.

Last, but certainly not least, is the need to accommodate the counterfactual in the actual impact assessment. A counterfactual simply put means “what would have happened anyways, without the intervention in question.”  A counterfactual could be in the form of state and national averages based on government data. Or it could be a more statistically rigorous “control group” or “non- intervention group.” The counterfactual, when compared with data that depicts the outcomes of the intervention, can give us a clearer indication of impact, or what positive effects can be attributed to the intervention. In essence, it can provide the necessary context and help us paint a picture of the impact that has occurred.

In the coming months, we will integrate some of these learnings into our SPM framework. We hope to make our system of impact assessment more robust so as to provide high quality information on the progress made out of poverty by our beneficiaries. Our goal is to simultaneously provide valuable insights and learnings to our entrepreneurs, to support the continued growth of their businesses and the creation of hundreds more jobs.

Upaya Welcomes Bangalore-based Saahas to LiftUP Project, Promotes Job Creation Through Waste Management

Upaya Social Ventures is proud to announce today that it has joined with India’s largest business angel group the Indian Angel Network (IAN), to invest in Bangalore-based Saahas Waste Management Private Limited (SWMPL).

SWMPL provides end-to-end waste management solutions for bulk waste generators in Bangalore while creating secure employment for women from disadvantaged communities. Following this agreement, the company will receive seed funding and business development support through Upaya’s LiftUP Project.

“The waste management problem in Indian cities is staggering and is growing fast with increasing urbanisation. At the same time, the ‘waste industry’ in India is largely informal and exploitative,” said SWMPL founder and CEO Wilma Rodrigues, who has 13 years of experience in the waste management sector.  

“SWMPL was founded to responsibly manage all kinds of waste generated within corporate campuses and institutions with the firm conviction that waste has to be handled at the source itself,” said Rodrigues.

The company provides on-site waste management solutions to a wide range of waste generators, beginning with an audit to determine the types of waste generated, recommendations for recycling solutions and infrastructure requirements.

Many of the on-site facility staff employed by SWMPL are women who have worked as informal waste pickers in highly exploitative and dangerous environments. The organization provides them with reliable, formal employment and regular salaries.

“Upaya's focus on ultra poor job creation really goes into the heart of our model and I am very glad to have Upaya join this round as they will help us to remain people-centric while growing as a movement for cleaner cities,” said Rodrigues.

Across the company SWMPL emphasizes safety with adequate protective gear and training for hygienic waste handling practices. The company provides each employee with a fair salary and full benefits.

“The SWMPL team is highly experienced and respected in the industry for their work,” said Upaya’s Director, Business Development Sreejith Nedumpully.

“We are excited to work with a great organization that helps corporations and institutions reduce their carbon footprint significantly and be more ecologically sustainable and socially responsible,” said Nedumpully.

Mr. Nagaraja Prakasam, lead IAN investor, commented on the company’s growth strategy saying, “SWMPL pioneered the zero waste campus model and has successfully delivered onsite waste management services to bulk waste generators. IAN Impact was launched in 2013 to support ventures working on the ‘triple bottom line’ -- like SWMPL -- as IAN would like to encourage the growth of social enterprises that are creating better lives for people.” As an active IAN impact angel, Prakasam has lead four other deals and has made 12 investments through IAN.

Upaya’s support to SWMPL has been made possible by Open Road Alliance, a private philanthropic initiative that provides grant capital to non-profits for mid-implementation projects facing an unexpected roadblock or a sudden catalytic opportunity.

Patricia Devereux, Steve Schwartz Join Upaya's Board of Directors

Upaya Social Ventures is proud to welcome Patricia Devereux and Steve Schwartz to the organization’s Board of Directors.

“We are thrilled that Patricia and Steve are joining the Board,” said Upaya’s Executive Director Sachi Shenoy. “Each brings valuable experiences, insights, and relationships that will serve the organization well as it continues to grow,” said Sachi. 

Patricia Devereux

Patricia Devereux most recently served as MasterCard’s Executive Director, Global Philanthropy. In this role, she transformed MasterCard’s corporate philanthropy program into a global program with more than 20 partners in 40 countries helping to drive the company’s financial inclusion strategy. She was also instrumental in the creation of the MasterCard Foundation, which is now the fourth largest private foundation in the world.   

“Upaya is leading the way in promoting a new model for ending extreme poverty, and I am excited by the opportunity to be a part of this burgeoning movement,” said Patricia.

Steve Schwartz

Steve Schwartz is no stranger to Upaya. As one of the organization’s co-founders, he oversaw marketing communications and operations over Upaya’s first five years. In addition to his transition to Upaya’s Board, Steve also recently joined Tableau Software as the company’s Corporate Social Responsibility Marketing Manager. 

“From the very beginning Sachi, Sriram [Gutta, Upaya’s third co-founder] and I talked about seating as much of Upaya’s day-to-day activities in India as possible. This is simply the next step in that process,” said Steve.   

While Upaya welcomes Patricia and Steve to the Board, the organization must also say a heartfelt thank you to Deepika Mogilishetty and Sonny Garg as their board terms come to an end. Each played a pivotal role in Upaya’s evolution in its earliest days and has expressed continued support for the organization in the coming years.

Upaya Invests in Kolkata-based Maitri Livelihood Services, Promotes Expansion of Sahayika Caregiver Program in India's Northeast

Upaya Social Ventures is proud to announce that it has invested in Kolkata-based caregivers training and placement company Maitri Livelihood Services Private Limited (Maitri).

Maitri recruits, trains, certifies, and creates fair and dignified employment opportunities for women from vulnerable backgrounds in East and Northeast India through its flagship “Sahayika” (one who helps) initiative. The company will receive funding and business development support through Upaya’s LiftUP Project framework.

“Domestic workers are vulnerable to socio-economic exploitation because they are unorganized and poorly skilled.  At the same time, millions of employers find it difficult to get skilled, reliable, trustworthy domestic workers. Maitri’s Sahayika programme is hence designed to assure dignity,  recognition and fair wage to domestic workers. While doing so, Maitri is also addressing a pressing problem faced by millions of families in urban India.” said Maitri’s founder and Managing Director, Gitali Thakur, an Assam native and 13 year veteran of livelihood promotion. “The company is building a safe ecosystem for women who would otherwise be vulnerable to an informal sector fraught with exploitative agents and little regulation,” said Thakur.

The Sahayika initiative is designed to build both the technical and interpersonal skills needed by domestic workers. Sahayikas receive training on a variety of home-based care services including cooking and housekeeping, child care (including health and safety skills), and geriatric and patient care. The company also verifies that the prospective employer’s household does not have a history of issues with domestic service workers, sets clear expectations for the nature of work, and briefs the family on the prospective Sahayika’s background, skills, and employment preferences. Furthermore, Maitri takes this time to educate each Sahayika on her employee rights including a regular salary, paid leave, a bank account, and other benefits enjoyed by her formal service sector counterparts. This extra effort creates trust and an open communication channel between Maitri, the Sahayikas, and the family.

Maitri is currently placing Sahayikas through two centers in Guwahati, Assam. It is also in the process of launching four new centers across Assam and Kolkata. Each center places a minimum of 25 Sahayikas per month.

“Maitri’s creation of dignified, stable jobs with opportunities for skill building makes it a natural fit within Upaya’s LiftUP Project framework,” said Upaya’s Director, Business Development Sreejith Nedumpully. “Maitri’s commitment to its Sahayikas allows each woman to not only earn a higher wage but also possess a greater degree of dignity and self-respect,” said Nedumpully.

New Report: Impact Investors See India’s Social Entrepreneurs Lacking Basic Financial Management Skills to be Investable

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Over the past four years, the Upaya team has repeatedly heard from impact investors that the pipeline of investable social enterprises in India is frustratingly thin. While these investors regularly hear about interesting concepts, they lament the lack of entrepreneurs who have the business management skills needed to lead such a venture to profitability. In fact, many leading investors have said that a social entrepreneur who does not have a sufficient command of fundamental business tools is not someone they can even really consider an entrepreneur.

Looking to turn these anecdotes into actionable information, Upaya is today releasing the first of a series of spot surveys that dig deeper into investors’ impressions of the entrepreneurs they encounter.

Titled What They Really Think: Perceptions of India’s Early Stage Social Entrepreneurs Among Impact Investors, the series provides data and recommendations to the multitude of incubators, training programs and mentorship networks currently operating in India. The report captures investor opinions about the collective critical skills and competencies of entrepreneurs, and starts a substantive conversation on improving the ecosystem for early-stage social businesses.

In “Spot Survey #1: Financial Management Capabilities,” 18 of India’s 25 most active impact investors shared their impressions of the financial management competencies of entrepreneurs they have conducted some level of due diligence on. The report looks at entrepreneurs' skills in utilizing a variety of financial management tools for decision-making. It also looks at the quality of documentation investors receive from entrepreneurs, as well as the ability of those entrepreneurs to use valuation tools to communicate the financial health and long-term projections of their companies with investors.

Click to download the report.

"Tamul Plates Social Impact Report: 2014 Baseline" Now Available

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During the summer of 2014, the Upaya staff and Tamul Plates management began work on this Social Performance report to document the economic and social background of the company’s beneficiaries. This report provides a snapshot of social metrics for 95 of Tamul Plates’ beneficiaries, serving as the baseline for reporting their progress out of poverty over time. 

Surveyors interviewed Tamul Plates beneficiaries across ten districts of Northeast India. For the purposes of this report, the respondents were broken into two geographic groups - the Lower Assam Group and the Upper Assam Group. Beneficiaries were evaluated across key social and economic metrics, including income, education, assets, and expenditure. Among the highlights:

• Households in the Lower Assam Group have a higher likelihood of falling below the $1.25-a-day poverty line than those in the Upper Assam Group. In particular, leaf plate producers (32 percent in the Lower Assam Group, and 36 percent in the Upper Assam Group) and raw material collectors (28 percent in both respondent groups) are the most likely to fall below the poverty line among Tamul Plates beneficiaries.
• Leaf plate producers are highly dependent on Tamul Plates, with income from Tamul Plates-related activities constituting the primary source of income for a vast majority of households across the Lower and Upper Assam Groups.
• Households spend roughly 50 percent of their total monthly expenses on food alone. Expenditure on school for children and miscellaneous (unplanned) expenses form the next two biggest categories. Savings constitute a very small component of total expense for households at 6–7 percent. 

A midline (check-in) survey will be conducted after 12 months for the same group of beneficiaries to measure the changes in income levels and quality-of-life indicators. Click here to download the full report.

Upaya exits its investment in Justrojgar, will recycle 100% of funds for future LiftUP Project partnerships

In March 2015, Upaya exited its investment in Delhi-based Justrojgar after its shares were bought back by the entrepreneur, Ajaya Mohapatra.

This is the first full exit of a partner from Upaya's LiftUP Project. The organization will re-invest 100% the returns from the transaction into a future LiftUP Project partner in a manner consistent with its Pioneering Capital model.

Upaya initially invested in the Delhi-based skilling company in 2012.

Upaya's Sreejith Nedumpully profiled on thealternative.in

As part of its coverage of the Deshpande Foundation's Development Dialogue 2015 in Hubli, thealternative.in sat down with Upaya's Director, Business Development Sreejith Nedumpully to talk about his previous work with Rope International, what initially drew him to Upaya, and where he sees the future of livelihood development in India. 

The interview has been reprinted below with the permission of thealternative.in, while the original article can be found here.

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Sreejith Nedumpully

In his role as Director (Business Development) at Upaya Social Ventures, Sreejith Nedumpully is enjoying the opportunity to realise his long time passion—building regional eco-systems of  small enterprises with big impacts. As the co-founder and former Managing Director of Rope International, a manufacturer and supplier of handmade and handloom woven natural products, Sreejith has had over two decades of expertise in the domain of rural livelihoods and the challenges of scaling small businesses.

At the 8th annual Development Dialogue 2015, organised by the Deshpande Foundation in Hubli, The Alternative spoke to Sreejith about his journey from working with rural artisans to funding impact creating enterprises and the role of small businesses in making big change.

You have been involved in rural livelihood generation for over a decade. What are some of the chief learnings that led you to co-found Rope International?

During my work with in microfinance with DHAN Foundation in 2002, I got first hand exposure to the enterprising nature of people in rural India and how access to finance – by generating livelihoods – is directly linked to increased rural incomes. Thus, creating opportunities for gainful employment of BOP populations, besides permitting access to finance, can also permit a regular income stream to support a better standard of living. It also became evident that raising rural incomes was key to ensuring the financial inclusion of BOP populations.

At that time, in the midst of the discussion about capturing BOP markets through appropriate technology and customised product design, I found myself siding with those who were looking at reversing this trend by facilitating rural to urban transactions. So, we started focusing on livelihood generation by tying up with companies to outsource a part of their production to rural areas by setting up manufacturing centres in villages, employing and skilling rural manpower especially women’s groups, and supplying raw material to them.

This enabled companies that wished to increase production but, due to lack of physical infrastructure from working at full capacity, were unable to employ more people on site. This outsourced manufacturing model built the capacities of rural people and absorbed them into year-round employment.

Did you see this this creating an entrepreneurial mindset among these people?

It definitely did lead to the development of leadership qualities and better negotiating skills among the women employed in these units. Microfinance activities in the village had already empowered SHG women economically to some extent, making them confident and adept at negotiating with bankers for favourable financial deals. Further, under the outsourced manufacturing model, each unit was put under the leadership of 2-3 women who were responsible for managing finances and operations and that really honed their leadership qualities. Witnessing this transformation fired my own entrepreneurial ambitions.

Rope provides global customers access to lifestyle products and home decor made by rural workers and artisans in India using natural fibres. Pic Courtesy – design21sdn.com

Was this then the beginning of Rope’s journey?

Yes, my initial idea was an extension of the outsourced manufacturing model – outsourcing both production and services to rural areas. With my idea incubated by IIT Madras, I was able to work on the upcoming rural BPO model while simultaneously building my own business plan for the rural manufacturing model.

In 2008, with seed funding from the IIT Madras incubator, we were able to launch Rope (now Rope International) with the aim of creating employment opportunities for rural artisans, many of whom were still employing age-old manufacturing techniques to create produce traditional designs. Many artisans had been left unemployed when demand for their crafts gradually disappeared.

We began Rope using a key account model – partnering with large brands like IKEA and Walmart with a large and steady demand for products with certain design specifications. By establishing rural manufacturing centres that met the supply requirements of these large clients, we were able to leverage the natural skill and traditional craft knowledge of the rural artisans, upskilling them in the process by introducing them to contemporary design ideas. The large volumes (sometimes 10 lakh pieces of a particular product) required by these brands helped us move beyond the level of handicrafts to a handmade production factory, with production flows, quality control mechanisms etc. all established within the village.

The work of Rope, initially centred around weaver clusters in Madurai began to expand to other districts Tamil Nadu, where we trained and employed a few hundred people.  As we got buyers from India and overseas, the quantum of production too began to grow. That’s how Rope began to be successful.

What were some key lessons about scale that you learnt through Rope?

With Rope, the idea was to create rural employment opportunities at scale, providing alternative livelihoods to people formerly employed, often as bonded labour in the textile mills and firecracker product units in Tamil Nadu. Our model involved setting up a unit within the village which employs about 50-100 women and replicate those units in neighboring villages. So in two years, we had six such units, each directly employing 60-70 women.

Besides this, each unit also indirectly employed about 30-40 women from the village who would take work home, supply at their own convenience rather than contributing to core production. By 2010, we had established 6 such clusters of units.  Besides production units, there was a central hubs that procured and supplied raw material as well as collected ready products from the units, they were places where quality care, packaging, and despatch took place. Thus, we managed to successfully create the best of village level production by shift a large part of the value chain to the rural areas.

Rope is now continuing to produce quality products in large volumes, creating rural livelihood opportunities, generating profit, and maintaining stable business with our key account customers.

Tamul Plates, an Assam based manufacturer of disposable palm leaf tableware is among Upaya’s portfolio companies. Pic Courtesy – dealcurry.com

In 2013, you shifted gears, moving to Upaya Social Ventures. What motivated this decision?

By 2013, Rope had achieved a degree of stability and production was going steady without the need for new marketing. I began getting restless, looking to create newer, more exciting growth models that weren’t dependent on scaling through the establishment and replication of manufacturing units. My own experience showed that  Indian government laws were prohibitive, making it especially difficult to access capital, thereby limiting the scale that a manufacturing enterprise can achieve, especially in the case of handmade products.

I have always been interested in working with rural entrepreneurs, helping them develop their business ideas, shape their models, and scale. Upaya gave me the opportunity I was looking for.

Can you tell us about Upaya’s work with early stage rural entrepreneurs and the gap that it is trying to fill?

India is capital-starved country with a big gap in accessing early stage funding, even in the impact investing space, where investors look for proven, profitable business models,, and look to minimise risk with smaller investment sizes. The focus usually, in the investment space, is more on profit and less on impact.

Upaya Social Ventures’ LiftUp Project bridges this gap by providing early stage, for-profit entrepreneurs with seed financing and business development support to help them launch and scale their business. As the first institutional investor, Upaya puts in an equity investment of Rs. 20-30 lakhs in each of these enterprises with proven business models and a revenue of about Rs. 10-20 lakhs. Investments are structured over a 3-8 year timeline, during which an enterprise can scale, attract follow-up capital and become profitable. We handhold entrepreneurs for a 24-36 month period, providing them with technical assistance, financial management, and developing effective market strategies.

We also provide advisory support and help them understand their beneficiaries better with annual surveys profiling potential customers. Working with entrepreneurs to collect and analyse social data on employees to monitor their progress out of extreme poverty.

What kind of enterprises does Upaya support?

We specifically target entrepreneurs, rural and urban, with long-term vision and a strong business plan. Our main focus is on strong business models that create jobs for the poor, ensure a secure income source, and improve their quality of life. While scalability is important to us, it alone will not determine whether we invest in a company or not. We examine the geographical limitations of SMEs, market crowdedness, product relevance, and employment generation before investing in them. At present, Upaya is supporting 6 SMEs across 4 Indian states working in areas ranging from handcrafted paper to urban sanitation. The challenge is in finding and identifying good entrepreneurs in remote regions, often not exposed to networking platforms like conferences.
 

Upaya’s business incubation support to local providers of essential services enables large scale job creation for the urban poor. Pic Courtesy - Samagra Sanitation 

How has Upaya gone about building an entrepreneurial eco-system for its portfolio companies?

Our focus right now is on supporting groups of ventures from a particular region, for example, in the north eastern states. This helps create a favourable eco-system that will attract other capital and service providers there, giving these entrepreneurs wider networks to tap into. For us, it is always more viable to enter a region where we can partner with other service providers.

MFIs, like MicroGraam, for example, which provide small entrepreneurial loans  will help meet the SME’s working capital costs to fulfil existing demands, enabling them to use Upaya’s funds for further growth and  expansion.

How does Upaya access finance to meet its capital requirements?

With early stage funding, we found that charity is relevant since donors are not looking for a quick exit from the venture, more patient with the capital deployed and reconciled with reaping lower returns (about 5-6%) than commercial and impact investors. So, Upaya, which is registered as a not-for-profit company in the US, raises philanthropic capital from family foundations and big donor agencies based in the US where interest in making recyclable capital deployments to sustainable and impactful social enterprises is on the rise.

What have been some of important learnings for you from this year’s Development Dialogue?

Given Upaya’s own focus on developing regional eco-systems that promote entrepreneurship, I find Deshpande Foundation’s regional hubs model very interesting. The sandbox model, by supporting budding entrepreneurs with access to capital, mentoring, etc., is creating an eco-system that can encourage the entrepreneurial spirit in the region. It is also enabling small enterprises to scale by inspiring and supporting replication in other places. It is important, while doing this, not to adopt a one-size-fits-all approach but to have business models that are customised to regional contexts, are specific to local needs, and that concentrate resources in smaller geographical areas. Thus, factoring scale into the model allows entrepreneurs to come on board irrespective of their size or reach, without scale serving as a barrier to entry.

While there are some models, like Akshaya Patra which have expanded across geographies, most enterprises are small and with application limited to the sandbox and being in the can be really beneficial to these small but profitable entrepreneurs working in niche areas who might not have pan-india scalability. The Hubli sandbox model, by providing support to these value creating enterprises has great relevance for the entrepreneurial needs of different parts of the country.