In the social enterprise world, one key issue that constantly resurfaces, as it would in any growing sector, is one of funding and identifying a properÂ investment pipeline. The accessibility and Â availability of start-up funding is crucial to startups, and in the case of social enterprises, a largely untapped market. Here’s where Invest2InnovateÂ (i2i) comes into the picture. They areÂ a social enterprise intermediary that supports the growth of social entrepreneurship in new markets, helping funders and early stage entrepreneurs see eye to eye.
I had the opportunity to connect with Kalsoom Lakhani the founder and CEO of i2iÂ to interview her about her recently launched social enterprise. A trailblazer and native to Pakistan, Lakhani launched i2i’s pilot in Pakistan in September 2011 with plans to expand operations to other countries post 2012. Here’s what she has to say about her startup and the space:
1) What is most interesting to you right now in the social enterprise space?Â
There are many interesting innovations taking place right now – from groundbreaking SMS crowd-mapping tools to agriculture-based innovations for small farmers. Innovative tools & approaches of engaging and empowering low-income communities are coming up constantly. But I’m also extremely interested in the growth of the impact investment space, and where we are right now in terms of the community as an emerging asset class, whether or not this type of investment breeds better social impact metrics, and whether the capital is flowing to the right places. There are still a lot of spaces we need to fill when it comes to connecting capital to social enterprises, particularly at the early-stage, and it’s interesting to see how crowd-funding and other innovative ways of raising capital are becoming potential solutions to help fill that gap.
2) Why start up i2i? Why is this the time to enter into the market?Â
i2i was launched in order to help address some of the disconnects in the social entrepreneurship space. Prior to launching the company, I worked in venture philanthropy for over three years, providing seed funding and support to early-stage social enterprises mainly in Pakistan. I was first exposed to the “space” then, and quickly immersed myself in all things social entrepreneurship & innovation. It has been fascinating and motivating to see growing ecosystems in markets like India, Latin America (Mexico, Brazil, Chile are good examples), and East Africa. Beyond higher access to capital (a lot of impact investors operate in these countries), we’ve seen the growth of other players that further support social enterprise – incubators, accelerators, government policies (in some cases), intermediaries, etc.
i2i was founded to take a similar ecosystem approach in the “untapped” markets – that’s a lot of jargon I know, but essentially we provide tailored services to early-stage social enterprises to grow their businesses and connect them to capital. Pakistan, our pilot market, is a great example of a country where there is a significant need for more innovative and market-based approaches to development – 66% of the population live on under $2 a day – but where the environment for social entrepreneurship is relatively new. Entrepreneurs often lack the tools & services to maximize the potential of their models and attract capital, especially in markets like Pakistan, where the volatile political and security situation hurt the investor environment. There is a lot opportunity for i2i, as an intermediary, along with other partner organizations, to be the architects of the ecosystem, fostering the social entrepreneurship space both from the top-down and the bottom-up.
3) What is the biggest misconception you see in the world of social enterprise and where do you stand on the issue?Â
I think the biggest misconception in social enterprise is that it’s ok to stop at the “warm & fuzzy” and throw the term around irresponsibly. It drives me crazy. Social enterprise ultimately combines the best of the business and the charity world – it begs the question, “Could we magnify social impact if we take a business approach to development?” Social entrepreneurship is not the solution to everything, but in some cases, it can be really effective. For instance, if rural low-income communities that are off the electricity grid use kerosene as their light and heat source, not only is it a costly product, but it poses terrible health and environmental ramifications. Displacing this demand for kerosene with clean energy solutions provides these low-income communities with better alternatives at comparable prices, ultimately contributing to poverty alleviation. Social enterprises need to demonstrate social and/or environmental impact – that is what tends to qualify the “social” in the equation, but at the end of the day, they are businesses that need to have strong models and be sustainable in the long-term. Sometimes that gets lost in the “warm & fuzzy” stories we hear in the space, which are great in communicating an organization’s vision and building a community of supporters, but there needs to be substance behind that story.
4) What is one action would like people to take once they know if i2i?Â
If you are a social enterprise, especially in Pakistan (since that is our pilot), get in touch with us to get an assessment of your business and how i2i can provide services (from business development to communications/marketing) to help your organization grow. If you are a potential investor (both for i2i and/or interested in early-stage enterprises in new markets), we’d love to talk to you! And finally, if you are just a supporter, we are always excited to hear your feedback and make our model better.