In the News

The Silicon Valley Approach to Building Capacity with Social Entrepreneurs

Source: http://go.worldbank.org/2SZ2BH5OT0

May 22, 2009—Social entrepreneurs are a powerful force for reducing poverty in the developing world. Since 2003 Santa Clara University’s the Global Social Benefit Incubator (GSBI™) has helped more than 100 award-winning social entrepreneurs make their businesses grow and get results in key sectors such as agriculture, water, clean energy, information technologies, education, and health.

The GSBI™ helps entrepreneurs with “best of breed” ideas to build sound business plans and to connect with savvy mentors in Silicon Valley who provide guidance and share their knowledge and skills.

“These are people with tacit knowledge—people who know things—and can translate ideas into strategies and action,” said Jim Koch, Co-Director of the GSBI, at a WBI seminar yesterday for Bank staff and partners. “We make sure there is a close match between the mentor and the specific needs of the enterprise.”

The percentage of GSBI alumni that are “scaling,” that is, growing in beneficiaries served and with a positive cash flow, is more than three times the rate of conventional for-profit incubators. One key success factor is GSBI’s rigorous two-phase selection process. This year about 20 high potential social ventures will be selected from some 350 applicants.

“They all have great ideas,” says Pat Guerra, Co-founder of the program. “Business planning is what they lack. We start by asking them very basic question about cash flow, income, expenses, and how they plan to reach the people they want to serve—their markets. Have they thought about the demographic and psychographic segments?” he adds.

Ideas are tested on several parameters: Is the technology sound? Is there potential for reach or scale? Is there franchise potential? And why should target beneficiaries choose your product ort service over other options or even over non-consumption?

GSBI uses a Silicon Valley-type business model adapted to the social entrepreneurship sector where, according to Koch, there is more capital available than there are deals made.

After a mentor-moderated distance learning program to assess business plans, top performers are invited to an intensive two-week face-to-face session in California where they delve into case studies and interactive exercises including practical skills in marketing, finance, business modeling, and organizational capacity building, and how to measure social benefits. The applicants present their plans to Silicon Valley entrepreneurs and venture capitalists, after which they put together a tactical plan for implementation on the ground.

The group stays connected online with MBA student advisors and with innovation partners such as World Resources Institute and the Acumen Fund, which provide legal, management, and other development services. “We’re bridge builders in a fragmented market,” says Koch. “Social entrepreneurs don’t have an eco-system of their own--a place where they can share ideas and get information the way folks can in Silicon Valley.

Alumni have articulated what they want: skills, networking, and sharing knowledge. According to Guerra, business development is about both competition and “co-opetition” --the increased productivity and trust that comes from cooperation.”

GSBI’s Social Enterprise Innovation Network is a purpose-driven Web-based platform that provides resources based on user profiles—your objectives and the roles and business needs of people on your team. It provides access to libraries of materials, a space where you can share ideas with people who care, and tools to hammer out concrete business plans--or maybe just an “elevator pitch” to help sell yourself to funders.

After seven years GSBI boasts a solid list of growing alumni organizations that serve millions of beneficiaries, including Digital Divide Data, B2BPriceNow, Drishtee, IDE-India, Thamel.com, Freeplay, Gram Vikas, Kiva, IDE-India, and VisionSpring.

“This is exactly what we mean when we talk about the wholesale approach to capacity building,” noted Randi Ryterman, the seminar moderator and WBI’s Director of Innovation and Change Management. “Connecting people with usable knowledge through peer networks and strategic partners.”

The seminar was presented by the World Bank Institute’s Development Marketplace, the World Bank’s competitive grant program that funds innovative early-stage projects with high potential for development impact and replication. Innovative solu¬tions are identified through merit-based competitions organized at the global, regional, and country levels. WBI works with other organizations that provide platforms for innovation such as Ashoka and Santa Clara University to expand the pool of innovative ideas and projects.