Guest blogger Sasha Dichter is Director of Business Development at Acumen Fund. Before joining Acumen, Dichter held senior positions in the corporate citizenship departments of GE Money and IBM. He earned a B.A., M.A., and M.B.A., all from Harvard University.

By Sasha Dichter

Today, we had the pleasure of meeting with the MicroDrip team to discuss their drip irrigation systems being rolled out in the Thar desert region of Pakistan. Dr. Sono is the visionary founder of the Thardeep Rural Development Program (TRDP), which is incubating MicroDrip as a for-profit to serve poor farmers living in the desert. TRDP, the non-profit, provides support services, like education and training, to these farmers.

This is my second chance to meet Dr. Sono, who spoke at Acumen Fund's 2007 Investor Gathering and Celebration last November. Dr. Sono was joined at the meeting by Saqib Khan, the COO of Micro Drip, and Javaid Chaudhry, MicroDrip's Technical Sales Manager.

MicroDrip is a for-profit company that sells and distributes drip irrigation systems to farmers in the Thar region. Acumen Fund has supported the formation of MicroDrip as a for-profit company and is making a US $500,000 loan to support their growth.

Acumen Fund has been working with drip irrigation since 2003, when we first funded International Development Enterprises India (IDEI), an NGO that had the ingenuity to engineer drip systems that were inexpensive enough to make economic sense for farmers making as little as $1 a day. MicroDrip now buys these systems from Global Easy Water Products (GEWP) in India, a recent Acumen Fund investment in scaling the domestic and international distribution of affordable irrigation technologies available to smallholder farmers. This is a powerful partnership across the India/Pakistan border.

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Guest blogger Sagar Gubbi is a technology graduate based in Bangalore with a deep interest in social and environmental sectors in India. He maintains a popular social entrepreneurship blog on Social Edge, and he is the co-founder of 'EcoForge', an investment advisory and consulting firm for social and environmental venture funds.

In this post, Gubbi responds to Allen Hammond's series on taking Base of the Pyramid models to scale. This week, NextBillion.net will publish responses from a number of BoP experts and practitioners, followed by a concluding post from Hammond.

By Sagar Gubbi

When I first read the BoP article by C.K. Prahalad and Stuart Hart three years ago, it triggered several thoughts in my mind and I remember having endless discussions with my friends on the ideas put forth in the article. Reading through Allen Hammond's posts this week on ‘Transformative Sector Strategies', I have experienced a sense of déjà vu, with a lot of thoughts being triggered in my mind all over again. If the work carried out by people like C.K. Prahalad, Stuart Hart and others was responsible for triggering widespread interest in the BoP, WRI's model, outlined in Al's posts, has the potential to take it to the next level.

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We live in a world obsessed with growth. According to the National Bureau of Economic of Research (NBER), there have been only four recessions in the US since 1980. Between March 1991 and March 2001, the US experienced the longest economic expansion in its history. It comes, therefore, as no surprise that BoP experts seem to be concerned only with applying BoP lessons toward stimulating growth. In this post, I would like to suggest the possibility of using BoP knowledge as a palliative action in places that are experiencing extreme hardship and as a first step towards returning to normalcy.

One of the defining characteristics of BoP markets is the lack of connections with global markets. This lack of connections results in smaller markets with fewer competitors and higher prices. Furthermore, BoP markets suffer from a lack of infrastructure, efficient bureaucracy and the legal, political and economic certainties that are normally provided by public actors. Now, what happens in an area afflicted by disaster or violence where some or all of these variables are totally non-existent? Would BoP lessons be applicable in these cases?

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Guest blogger Ryan Gunderson writes about sustainable, scalable solutions to end global poverty on his Riches For Good blog. A finance professional with an MBA from the University of Michigan's Ross School of Business and seven years of Fortune 500 experience, Ryan is transitioning to part-time work to allow him to pursue his goal of helping 1 million people out of $1-a-day poverty. He welcomes help in reaching his goal and can be reached at richesforgood@yahoo.com.

In this post, Gunderson responds to Allen Hammond's series on taking Base of the Pyramid models to scale. This week, NextBillion.net will publish responses from a number of BoP experts and practitioners, followed by a concluding post from Hammond.

By Ryan Gunderson

"The biggest reason most poor people are poor is because they don't have enough money." Why did Paul Polak find the need to write that embarrassingly obvious statement in a book? Because the development community has a long history of overlooking the concept. My initial reaction to Allen Hammond's series on transformative sector strategies is that he is perpetuating the common mistake of ignoring income generation. One of his sentences particularly strikes a wrong chord with me: "How do you meet the unmet needs of four billion people?" To me, the appropriate question is "How do you help people raise their incomes so they can afford to meet their unmet needs?"

Consider his phone example for a minute. Hammond shares a reasonable level of detail about how WiFi networks can be built relatively affordably in rural areas, theoretically at a profit to companies. (I will ignore for a moment that in his example he implies a regional government may be more interested than its for-profit partners in expanding its WiFi network). But Hammond does not talk convincingly, in my opinion, about how phone and Internet access will help raise individuals' incomes. He mentions that a phone user could solicit information about how to raise pigs, and he mentions that quality of life would improve from less walking.

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Guest blogger Blair Miller is a Manager of Business Development at Acumen Fund. She has lived and worked in Senegal, South Korea, India, and El Salvador. Her pursuit of a literature degree the University of Virginia opened her mind to the importance of social change and her MBA from Michigan gave her the practical skills to make that change a reality.

By Blair Miller

As I walked into Desmond Tutu Center in New York on Thursday night, I wasn't quite sure what to expect from the social networking event hosted by Good Capital. Good Capital is an investment fund aiming to accelerate the flows of capital to social enterprises, and they successfully convened an incredible group of colleagues, investors, and friends.

Just to give you a sense of the event, my first conversation was with two women from Scojo Foundation, an Acumen Fund investee that reduces poverty and generates opportunity through the sale of affordable reading glasses. I then had the pleasure of talking with Tim Freundlich, a partner at Good Capital, who - among other things - told me of the upcoming conference they are hosting in San Francisco in October. This was followed by a conversation on community building with Jed Emerson, one of the leading thinkers on Blended Value and also an Acumen Fund and Good Capital Advisor.

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Guest blogger Brian Trelstad is the Chief Investment Officer of Acumen Fund. Before joining Acumen Fund, Brian spent four years at McKinsey as a consultant in the healthcare and non-profit practices and as an editor of the McKinsey Quarterly. Prior to McKinsey, he worked as a case writer at Stanford University's Center for Entrepreneurial Studies and was the lead environmental staffer for President Clinton's AmeriCorps program.

In this post, Trelstad responds to Allen Hammond's series on taking Base of the Pyramid models to scale. This week, NextBillion.net will publish responses from a number of BoP experts and practitioners, followed by a concluding post from Hammond.

By Brian Trelstad

Al Hammond's enthusiasm for the bigger picture is refreshing. His transformative sector strategies are a bit of a departure from the norm for someone like me, who spends most of his time evaluating individual investments and, as a result, often loses the forest for the trees. I am surprised, however, to hear that this topic doesn't keep Jacqueline up at night, as the entire Acumen Fund team is constantly thinking about how to take businesses - even those serving upwards of a million people - to the next level of scale.

Our strategy is to find great models like Medicine Shoppe or Water Health International and build them into profitable companies that are providing critical goods and services to the poor at scale (defined as 1 million plus customers). It's also critical for us to share the lessons and insights gleaned from the investing/management experience with the private capital markets and public sector to help shape the next generation of investment strategy and public policy.

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This post is the fourth in a five part series on a radical new approach to scaling BoP business models, what we call a transformative sector strategy. In this segment, I discuss the common characteristics that make BoP business models in different sectors scalable solutions.

Searching for Transformational Models in New Sectors

If building the missing infrastructure could transform rural connectivity and health care, what about access to clean drinking water, especially for smaller rural and peri-urban communities? That's a proposition that WRI and Santa Clara University's Global Social Benefit Incubator are researching. There are some promising models in the field, such as Water Health International, that are beginning to scale. There are a number of additional enterprises, five of which will be mentored intensively in this year's incubator class. There are some promising new filtering technologies that use less energy than existing technologies, as well as other interesting approaches that have yet to be applied in emerging markets; we are undertaking a detailed comparison of both existing and newer technologies.

A number of community-initiated business models have produced good results, but they aren't easily replicable and don't scale. So we are analyzing both franchising and public-private partnership business models. Many of the elements that make rural connectivity and rural health care promising appear to be present in the water sector. It is too early to say what will emerge out of the research, but the scale of the unmet need is clear - a billion people without access to clean drinking water.

And after water, why not BoP energy? Our preliminary thinking is that there at least three sub-sectors of interest: Off-grid power and lighting, from mini-hydro to LED lighting; efficiency improvements in energy-using devices, such as cook stoves and motorbikes; and locally-grown, produced, and consumed biofuels that don't compete with food. We know of prototype enterprises and projects in each sub-sector, some of them already beginning to scale. We believe that the recent, rapid evolution of technology options will continue and can be adapted for the BoP. And we know that the unmet need is very large.

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This post is the third in a five part series on a radical new approach to scaling BoP business models, what we call a transformative sector strategy. In this segment, I describe how this strategy could transform the health sector in emerging economies.

Last Mile Health Care Delivery

Talk to people in the rural communities of southern Mexico, in the new urban communities on the southern edge of Bogota, or in almost any village in rural Africa about getting decent access to healthcare, and their answer is the same: it usually costs more to get to a clinic, a doctor's office, even a pharmacy, than the cost of the service itself. In Bogota, most of the government-supported health services are in the north of the city, such that it can cost people in these new refugee communities a day's work plus bus fare across town and back to get help. Lack of access defines part of the last mile health care dilemma, and that means distributional business models, such as franchising, can be important.

Talk to Health Stores in Kenya, an enterprise trying to staff small pharmacies with nurses, and another part of the problem becomes clear: the sheer lack of doctors, nurses, and pharmacists in emerging markets. There are not anywhere close to the number of skilled professionals needed to cover rural areas, and these health workers overwhelmingly refuse to live either in rural areas or in urban slums. So technologies, organizational models, and legal changes that enable local diagnosis and remote practice by doctors and pharmacists could play a critical role.

Still a third factor leaps out from the data in The Next 4 Billion report that shows clearly that low-income households spend between a third and a half of their out-of-pocket health care expenditures on drugs. They typically don't go to doctors or clinics or hospitals, but rather to pharmacies or some other source of medicines and seek to self-medicate. That means they often get a guess as to what's wrong with them instead of a diagnosis.

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Do you run a small-to-medium size enterprise operating in India, Indonesia, China, Brazil or Mexico? Does your company have an innovative business model that delivers strong environmental and social benefits? Are you seeking debt or equity capital in order to grow your business?

If so, apply for the New Ventures program in these countries. The New Ventures program of the World Resources Institute supports the growth of businesses that deliver social and environmental benefits by providing business advisory services and access to capital. Enterprises that have been supported by New Ventures have raised $120M in capital. Moreover, 98% of New Ventures enterprises are still in operation.

The application deadlines for each country are:

• India: May 15th
• Indonesia: May 16th
• Mexico: June 30th
• China: TBD
• Brazil: TBD
  

For more information and access to the application form, please visit the specific country websites. For an English language version of the Indonesia application form, please contact slall@wri.org.

This post is the second in a five part series on a radical new approach to scaling BoP business models, what we call a transformative sector strategy. In this segment, I tell the story of a rural connectivity pilot project; an example of this new model for development in action.

A Last Mile Model for Rural Connectivity

Son Tay commune, Quang Ngai Province. I was sitting across a table in a remote rural outpost of Vietnam, negotiating (via a translator) with the manager of a local radio station about access to his tower. He asked a series of technical questions and seemed satisfied with the answers, but then he wondered aloud: "Can we get Internet access here?" He didn't just want it for the radio station, it emerged, but for the surrounding small community - even though nobody there yet owned a computer. The manager understood that internet access could help transform their opportunities. And when we agreed to mount a small antenna to serve the community, the tower was ours.

The negotiation was part of a two year long process to pilot a novel approach to rural connectivity. It involved building an advanced, broadband network in three communes (groups of villages) in a very poor province in central Vietnam to provide Internet-based phone service and Internet access. Quang Ngai Province has no Internet access for its million-plus population outside of the provincial capital, and phone ownership is about 3 percent.

But the province does have an AUSAID-funded rural development project (RUDEP) that had built trust by doubling farmer's incomes in many communes, and optical fiber to every district capital (owned by the national electric utility, EVN, which also owns a mobile phone company, EVN Telecom). Ultimately all of these became partners in the effort, as did USAID's Last Mile Initiative, Intel and other equipment providers.

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Position: Senior Researcher, BoP Energy Sector Analysis, Institute for Financial Management and Research (IFMR)

Location: Chennai, India

Organization: The Centre for Development Finance of the IFMR is a development economics research and action centre. It was formally established in February 2006 with a mission to support development finance - the conversion of finance into development. We primarily focus on sustainable models for financing infrastructure and services, as these are essential inputs into any vision of equitable development.

Description: The senior researcher will be responsible for research and related activities analyzing the Base of the Pyramid energy sector in India. The senior researcher would be expected to undertake a comprehensive study to quantify BoP energy needs and existing uses, conduct stakeholder and expert interviews, conduct focus groups, and perform a competitive analysis of emerging and established off-grid and household energy technologies in order to develop a strategy and series of projects for improving access to clean, sustainable energy at the BoP.

For more information, see the full job description. To apply, send a cover letter, writing sample, and resume to shaanti.kapila@ifmr.ac.in.

This post is the first of a five part series on a radical new approach to scaling BoP business models, what we call a transformative sector strategy. In this segment, I introduce the conceptual framework for this innovative poverty-alleviation model.

"It doesn't exactly keep me up at night, but I do think about it a lot." Jacqueline Novogratz, head of Acumen Fund, and I were talking about getting to scale - about expanding private sector business development and investment aimed at empowering and providing basic services to the poor to the point of making a real impact.

I felt exactly the same, and I've had similar conversations with colleagues at Santa Clara University, at Ashoka, at private investment funds, and elsewhere. Ever since we finished our report on The Next 4 Billion, the numbers haunt me. How do you meet the unmet needs of four billion people?

Convincing a dozen multinational companies to take this market seriously isn't enough. Doubling or quadrupling the capacity of the organizations that mentor social enterprises and BoP-serving small and medium businesses won't do it either. Even investing hundreds of millions of dollars in individual enterprises in this sector doesn't guarantee success. I think the goal has to be to transform whole sectors in ways that catalyze mainstream investment in BoP economic activity and unleash market forces. To get there, I think we need a more systematic approach.

A Next-Generation BoP Approach: Transformative Sector Models

In this and subsequent posts, I'm going to suggest one such approach that I and my colleagues at WRI and elsewhere have been developing for several years, and that we are now starting to take into the field. I'm proposing this scaling model tentatively, and asking for feedback and for comparisons to other scaling models.

The approach builds on the perception that there is a growing amount of public and private capital available to fund BoP strategies - almost every month now I hear about a new BoP private equity fund - and the conviction that the bottleneck is a shortage of solutions in the form of investable enterprises. In venture capital jargon, what's missing is the "deal flow." And I'm suggesting that the way to create that deal flow and unleash a rising tide of investment is to focus not on individual entrepreneurs, not on individual companies, but on economic sectors.

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As Ana first reported back in February, Ashoka's Changemakers and the Global Water Challenge have partnered to open a worldwide search for ideas and projects with the potential to transform the provision of sanitation and water worldwide.  The search, entitled Unclogging the Water and Sanitation Crisis, began with a call for projects and culminates this Sunday, when voting closes.

This is a competition through collaboration, meaning that the Changemakers community gets to nominate projects, vet them and vote for the winner.  (If you've never heard of Changemakers, check out Leslie Berger's concise profile of their work in the Stanford Social Innovation Review.) 

The water and sanitation competition is coming to a close; 9 finalists have been selected by the community, and voting is open.  If you haven't already, drop by the Changemakers site and vote - it only takes a few minutes, and your voice actually counts (the winner gets $5,000 cash and is eligible for up to $1 million worth of Global Water Challenge grants). 

In an era when most decisions - political, business - are made in back rooms away from our inquiring eyes, Changemakers represents real change.  By opening up the decision making process to anyone with a web connection, they are democratizing (and crowdsourcing) at the base of the pyramid.  Happy voting...

It was sunny, and tempting to sit outside at the University of San Diego to enjoy the weather. Inside, however, a group of global practitioners and scholars - organized by Patricia Marquez of USD and Carlos Rufin of Sussex University and Babson College - were discussing the role of utilities at the Base of the Pyramid. (See 'attachments' at the end of this post, where I have uploaded the meeting's full agenda as a PDF.)

Utilities provide basic services - telecommunications, water, power - that are essential to people's lives and increase their productivity. But a decade ago, many utilities in emerging markets were failing—service to low-income communities was poor, and many of their customers simply didn't pay or acquired the service informally.

The picture that emerged in San Diego, however, was more optimistic. A number of utility companies have engaged BoP communities and increased their willingness to pay, in return for investment that improved service quality. Codensa, a power utility in Columbia with 400,000 non-paying customers (out of a total of 2 million), reduced non-paying customers dramatically. Manuel Bueno has an excellent analysis of the Codensa case in his post, "The Codensa Case: Electricity and Related Services for the BOP in Colombia," from December, 2007. And mobile phone companies improved service and access to service dramatically compared to legacy fixed-line telecom companies (sometimes another branch of the same company).

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