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At the recent 2009 Net Impact Conference, I overheard a number of students talking about participating in TheNext:2010 Case Writing Competition. 

"Are you going to enter the competition?" said one student.

"Yeah, I think it'll be a great opportunity to get more involved in this field," replied the other.

Indeed, this case writing competition is an excellent way to contribute to the emerging field of business for social impact and interact with leading figures in the space.  But to enter, you must complete an Intention to Compete Form by January 15, 2010. 

We have an all-star lineup of judges for the competition. Bob Kennedy (Executive Director, WDI), Brian Trelstad (Chief Investment Officer, Acumen Fund) and Virginia Barreiro (New Ventures Global Director, WRI) have each agreed to be a judge for the competition. In addition, we have recently added base of the pyramid guru Ted London (Senior Research Fellow and Director, Base of the Pyramid Initiative, University of Michigan) and Ravi Anupindi (Professor of Operations and Management Science, University of Michigan).

To make the competition meaningful and relevant to the field, the case competition will center on key questions that the three sponsoring organizations are currently wrestling with:

• Where can markets work best to address issues of poverty?
• What business models and business innovations are effective in developing scalable businesses serving low-income markets in the developing world?
• What are the consumer behaviors - in terms of spending and decision-making - that define market opportunities?
• How can market-based approaches to poverty alleviation achieve their goals while also protecting natural resources and preventing environmental degradation?
• How can the public and/or private sector best support the development of businesses serving the poor?

The hope is that these cases will be used to better inform their organizations, help academics teach this material to future leaders, and ultimately, make a tremendous social impact on the ground.  

And an added reason to participate in this competition? Prize money!  Prizes will be awarded as follows:

• First: $1000
• Second: $500
• Third: $250
• Fourth and Fifth: $100

Finally, winners will be interviewed and profiled on NextBillion.net and will receive an autographed copy of Jacqueline Novogratz's new book, The Blue Sweater. 

Cases are due April 30^th, 2010.  For more information on the competition, please click here or email me.

New Ventures (NV), an initiative housed at the World Resources Institute, is one of NextBillion.net's sponsors. Established in 1999, it is one of the pioneering organizations supporting entrepreneurship as an engine for inclusive growth and sustainable development in emerging markets. NV is now approaching a milestone in its history with its 10th anniversary fast approaching and a new strategic plan that will be executed jointly by WRI and the a network of New Ventures Local Centers located in six of the world's most vibrant emerging economies.  

The past decade has seen a lot of activity in NV with almost 250 supported enterprises worldwide; it's also seen a remarkable evolution of the sector where it operates with increased recognition of the role of entrepreneurship and SMEs in addressing the challenges of poverty and environmental degradation. In this context, New Ventures is entering a new phase and making important adjustments to its operating structure aiming to better serve its mission. Part of this is the redesign and relaunch of our communications strategy; the attached request for proposal (below) aims to identify capable vendors that work with us in the redesign of our visual identity and web properties.

We look forward to hearing from dynamic and capable service providers in the US and abroad. The deadline for submission of proposals is January 22, 2010. You can download the RFP clicking on the link below and also contact me directly for any further inquiries.

Request_for_Proposals_-_New_Ventures_WRI.pdf

Well, are you?  If you are, then be sure to apply to this year's Unreasonable Institute.  The Institute is an social enterprise incubator / fellowship / peer-selected investment fund all rolled into one somewhat messy, completely brilliant ball.

OK, in truth, it's not enough simply to be unreasonable.  You must also be starting or running a social venture, and be wholly committed to it.  Not only that, you must be willing to work with a cohort of like-minded social entrepreneurs to create an environment in which a rising tide lifts all boats - this is not just about you.  To understand the full eligibility requirements for the Unreasonable Institute, check them out here.

So, what is this all about?  Simply put, the Unreasonable Institute brings 25 high-potential, high-impact entrepreneurs for training, mentoring and cohort-building every summer.  This is the incubator aspect.  So what - just another incubator, right?

Wrong.  The Unreasonable Institute has recruited a stable of top mentors - including Paul Polak (IDE), Paul Hudnut (The BOPreneur), Dennis Whittle (Global Giving), Lindsay Clinton (Intellecap) and Bob Patillo (Gray Ghost Capital) to name a few. 

Beyond mentoring, the Institute builds a true cohort of enterprises during the 10-week program.  And it's not just a cohort - it's a judge and jury.  At the end of the Institute, the 25 entrepreneurs will vote on the best business plans - Apprentice-style - and the winner will take home $100K to help run the venture.  2nd place wins $50K.  The Unreasonable Village Fund press release has full details (PDF).

For details on the program, I strongly recommend Steve Hamm's post over at BusinessWeek, which gives a better run down than I'll be able to.

Most importantly, apply!  Applications are due December 15 and the process is neither onerous nor particularly long.  Worth a shot, as they say...

Editor's Note: This post first appeared on the Plug-In Blog hosted by E+Co.

MIT Press publishes innovations each quarter. Its fall 2009 issue, “Energy for Change” is well worth reading. It is a study in well established and newer thinking regarding energy issues.  Some of it is old news not listened to enough (“The California Effect” by Art Rosenfeld), and some of it is newer and better and gets more attention (Matthew Bunn et al in “A Future for Nuclear Power”). But for me the most important and telling article is Vinod Khosla’s “Whose Rules?” article.

This article is extraordinarily well grounded, especially as regards to establishing the carbon intensity of an economy as a measure of progress,  the four macro-criteria for negotiations success* and its powerful statement regarding the need for reducing the cost of capital to differentiate low from high carbon development.

My colleagues and I have spent the last two decades investing in more than two hundred developing country clean energy enterprises and are constantly aware of the disadvantage clean energy faces vis-à-vis the cost of capital.  It is significant that these two hundred enterprises – representing a quarter billion dollars of mobilized capital — produce as a portfolio (after losses and after all costs) the very 3% IRR the author cites as the lower boundary that funds such as World Bank IDA should underwrite.

This return is feasible, predictable and practical via investments in local clean energy enterprises. What this means is this: if the world’s public and private sector leaders were willing to underwrite such investments at 3% we believe an enterprise-centered approach to clean energy development would erase energy poverty for the 1.5 to 2.5 billion people who suffer from it.

This is an outcome desired by many.  For these last few decades hundreds of entrepreneurs have imagined and then created a world where clean energy for the poor can be delivered at an all-in return of positive 3%.  But they have struggled against the voices who proclaim “that’s not commercial”.

What a pleasure to hear voices as influential as Mr. Khosla and innovations zero in on the cost of capital as the critical lever.  I particularly love this quote from Khosla:

I believe that access to cheap capital (and thus lower financing costs) is vital; in fact the cost of capital may be the most critical tool in developing a lower carbon GDP economy.

*NOTE on 4 criteria: International agreements must

1. meet CO2 targets in ways acceptable to different participants;
2. be morally acceptable rather than forced and accepted under duress;
3. be politically acceptable inside participating countries; and
4. adjust to changing circumstances.

I envision these criteria as a triangle composed of the first three criteria, on which is balanced a board named “international CO2 agreement” along which a weight of change moves.  If any side of the triangle – the balance of power among the participants, the underlying societal values or domestic politics – is too short then reaching agreement is unlikely. And the weight that slides along this board – changing reality as CO2 is understood and its consequences realized – must be accommodated.

Those who have been involved with the Base of the Pyramid for some time will know that it is often striking (and frustrating) how often among all the information about BoP markets, there seem to be many anecdotes about the promise they hold, but little substance about how exactly to achieve it.

Trying to figure out exactly “what works” is, in fact, fiendishly hard to do. This lack of knowledge about what works and what does not is partly due to the fact that the BoP concept is still in its infancy. We at NextBillion try to spread the word about such solutions from the likes of Al Hammond (see his last ‘notes from the field’: 3, 4, and 5) and Phil LaRocco (see his opinions about platforms: 1 and 2) as well as act as a discussion forum and networking space for individuals interested in the BoP. Yet, the amount of experts willing and with enough time to share their experiences in the field is sorely lacking.

Recently a new website has appeared trying to cover that gap in knowledge. MajorityMarkets.org is an initiative led by the Opportunities for the Majority Office (OMJ) at the Inter-American Development Bank (IADB) focused in Latin America and the Caribbean and with the objective of stimulating the joint development of successful business plans for low-income markets.

The OMJ is the first (and so far only) office in any Multinational Development Bank specifically promoting and financing private sector business models targeted to low-income communities. Since its inception between 2006 and 2007, it has had time to accumulate experiences and learnings directly from its many investments in the field. MajorityMarkets.org also includes an impressive array of partners who will also contribute their own nuggets of wisdom to the debate. This is expected to result in a virtual dialogue between partners (and open to all visitors) to further refine possible business models worth exploring and investing in.

Regular visitors to their site should expect to find articles about business models and project stories that OMJ staff or any of their partners have seen work first-handedly as well as an ongoing debate among the partners about their possible replicability and scalability.

Moreover, its writers are individuals with plenty of field experience. In this line, Luiz Ros, current manager of the OMJ office is an old friend from NextBillion.net. While Luiz was Global Manager for Markets and Sustainable Enterprise at the World Resources Institute (WRI), he supported and encouraged NextBillion as it took its first baby-steps in the Internet world. In a nutshell, and what makes MajorityMarkets.org pretty unique, is that it is designed with the ultimate objective of finding and supporting economically and socially profitable business opportunities. 

This is just a brief overview of what they have to offer. Considering that the webpage is in its very initial stages I would encourage our readers to make it a visit and return frequently. I have big expectations for this website.

If you'd been to the Chowpatty beach in Mumbai on November 19, you would have found a group of people squatting together  with a couple of portable toilets in the vicinity. If you didn't check the papers in the morning, you would probable have thought it was part of a ritual of some bizarre cult. Instead, what these people were doing was showing support for the 2.5 billion people all over the world that lack access to basic sanitary facilities. The folks at Chowpatty beach were not alone. People all over the world were celebrating the "World Toilet Day" by taking part in "The Big Squat".

"If there are five people in each family, then we require 500 million household toilets. Then, we require another 500 million away-from-home toilets - in the workplace, in schools, in religious places, in the marketplace, in transport centers. So in this market, we need 1 billion toilets." says Jack Sim, founder of World Toilet Organization (WTO) (which conceptualized the World Toilet Day) in a interview with Beyond Profit.

The oft-avoided topic is becoming a major cause of worry for developing countries. According to a paper written by Rowshan Nantaz (Associate Professor, Department of Civil Engg, BUET), Dhaka City Corporation runs only 69 public toilets for a city whose population is beyond 10 million. And this isn't half as bad as the condition in Nigeria (est population as of 2008:151.3 million), where reports suggest that there are less than 500 public toilets.

In a recent article by Reuters, Sim was quoted saying "You see it long enough, and there is a basic acceptance that dirt is normal. But being repulsed by dirt, its smell and sight is a natural defence against disease". He estimates that the sanitation market is in excess of 1 trillion USD (which, for sake of comparison,  happens to equal India's GDP). Still, it's interesting to note there have been times in the past where investors have hesitated to invest in this sector,which happened in the case of Saraplast, nowadays one of the fastest growing portable toilets companies in India today. Despite having made record profits for the last three years they had a tough time attracting investors, until Aavishkar finally saw sense in the business and bought a 21% stake for an undisclosed amount this last August. Saraplast will be tying up with the New Delhi municipality for the Commonwealth Games in Delhi next year.

Ecotact (an Acumen Fund investee) is another interesting organization working in the sanitation industry that has received lots of publicity lately. It's Ikotoilet brand works on the build-operate-transfer principle of public-private partnership and plans to open another 200 facilities in Kenya in the near future. An interesting variation to the standard pay-per-use toilet model here is that it complements the toilet facility with additional service such as shoe shining, soft drinks and newspapers, which bring in additional revenue.

The Pee Poo bag, made by a Swedish architect provides an effective solution to the problem for its low cost, biodegradable and since its lined with urea, it sanitizes the feces and doubles up as fertilizer when buried. However, such solutions can at best be a short term measure to a problem which is closely related to the water and sewage industry. In fact, sanitation sufres in many rural areas due to the poor state of the water works and the high costs involved in initial investments. Maintenance costs also become a considerable issue once the public toilets are setup. Issues such as keeping the toilet dry, ensuring there is adequate water supply and flushing function is working become issues of prime importance.

Despite of these challenges, sanitation concerns are huge and growing, which presents an undeniably attractive market opportunity for innovative enterprises willing to tackle it. 

One of the privileges of working on NextBillion.net is having the opportunity to meet, discuss and interact with a talented group of Staff Writers that are making important contributions to the Base of the Pyramid movement from different positions and perspectives. David Lehr and Jenara Nerenberg are two of the dynamic folks that make the NextBillion conversation possible. Today, NextBillion announces Jenara's and David's transition out of the formal team of Staff Writers.

We'll continue to hear from both David and Jenara, I'm sure, as they continue to develop interesting projects at the organizations that host them: Mercy Corps in the case of David and CNN in the case of Jenara. On behalf of Rob and the rest of the NextBillion team, we extend our best wishes in their continuing journeys.  

We're also happy to welcome our latest addition to the team of Staff Writers: Rishabh Kaul, a senior at the Birla Institute of Technology and Science in Pilani. You can read more about Rishabh in his profile page and can look forward to his first blog post coming up in just a few hours.

We're constantly in the looks for voices and perspectives that can help us in the effort of keeping NextBillion a timely and valuable resource. If you're interested in becoming a Staff Writer or know someone who does, please do contact us! 

Water innovation spreads from India to East Africa... but first these opportunities:

Are you an MBA student looking for a relaxing break over the holidays?  Sorry.  The Global Social Venture Competition call for entrants is out - inviting both for-profit and non-profit social ventures to enter as long as they intend to create a self-sustaining revenue stream.  Teams must have a graduate business student on them.  The prize pool is worth $45,000 but the turnaround for an executive summary is fast - January 20, 2010.  It's a truly global competition - last year sustainable building material company EcoFaeBrick from Indonesia walked away with the top prize.

Second, Agora Partnerships is accepting applications for its Fellowships, which bring management and finance talent to Central America - Managua or soon San Salvador - to work with small business entrepreneurs there and build Agora's ongoing capacity to support them.  The deadline for this one is January 8.   

The Ripple Effect - the Acumen/IDEO collaboration backed by the Gates Foundation - has made it across the Indian Ocean from South Asia to East Africa, initiating partnerships with four water and sanitation companies and NGOs in Kenya.  This will include Kentainers (manufacturing water containers), Maji Na Ufanisi (community toilets and water kiosks), PureFlow (household water purification and now business-in-a-box water kiosks), and Umande Trust (super-local piped water distribution) - with more extensive write-ups on each organization, as well as stories about the Ripple Effect team's interaction over recent weeks with these groups, on the Ripple Effect blog.

Another Acumen partnership - this one with the Aga Khan Development Network - announced the roll-out of health-related microinsurance products through health clinics in several neighborhoods in Karachi (which is, after Shenzhen, the the world city of over ten million people you heard least about in Western media).  In addition to coverage in the event of serious illness, obstetric care, and accidents, services include innovative products that complete planned savings and provide lines of credit in the event of the death of a family's breadwinner.   

A LiveMint article that I missed last week but just saw ran down a collection of MFIs in India that are dipping their toes in housing finance but doing so with a lot of skepticism (Basix, Madura Micro Finance, Bhartiya Samruddhi Finance, SKS, and Ujjivan Financial Services).  But this comes in tandem with a new push of investment from both established conglomerates and new investors into the Indian affordable housing market ("affordable" being a segment defined differently by different people, but I live in San Francisco so I know all about this phenomenon).  There's room enough for everyone - or more accurately, there should be, because there's an estimated 25M unit housing deficit in urban areas that's growing at up to 2M units a year.

The MFI's quoted in the article express concerns about loan size, potential default rates, and a much greater need for paperwork than with livelihood loans.  Home loans can obviously come with collateral, but MFIs would need to develop expertise in this new form of collateralized lending.

Despite the need, my guess is that MFIs' cautiousness is linked in part to the fact that this seems like a potentially touchy moment for MFIs to get into housing.  With reporters eager for scoops that counter the conventional wisdom, stories accurate or not are popping up asking whether microfinance is a base of the pyramid subprime bubble.  Going into housing invites unflattering comparisons. 

The question I ask myself is whether MFI's are well-positioned to do housing.  In the past year I've spoken a few different groups - from large investors like the Sorenson Housing Opportunity Fund to start-ups like Micro Home Solutions - that hope to tap social ties and relationships built by MFIs and formal sector employers to reduce the risk of making housing loans, then connect this with existing housing finance expertise.  If Countrywide in the U.S. had been using social ties and working through community organizations to evaluate their customers, default rates might be a lot lower (of course, they'd have to have wanted to evaluate their customers in the first place, but that's a different question). 

Last month I had the distinct pleasure of spending two full days with five entrepreneurs from Indonesia. These entrepreneurs are unique in many ways - but bound together by a sincere desire to lead change in Indonesia - through certified forest products; tidal wave power; and even handicrafts for the wedding sector (yes, may sound trivial, but Dewi, the entrepreneur, will be quick to tell you that in Indonesia over 200 of the 240 MM population want to get married!).

What struck me most about the two days was not the ambition, determination and innovation of these entrepreneurs. I am fortunate enough to see these characteristics with relative frequency thanks to our six New Ventures Centers in Latin America and Asia. What most intrigued me about them was their overwhelming optimism (sometimes with a flair of nationalism) but nonetheless contagious and sincere. Their optimism enabled me to get wrapped up in what is possible, rather than what is not possible, something that is often too apparent in a country as complex as Indonesia. Too often, I hear the stats:  Indonesia is consistently ranked low in Ease of Doing Business Reports (IFC 2010 - Indonesia in 122 out of 183); 40% of population lives in poverty;  it has the sixth highest rate of deforestation, and so forth.

Continue reading this article

The formal launch was perhaps the most difficult part of the journey so far. Because both the Governor of the State and the Finance Minister were coming, the local political officials were determined that everything should be perfect. And they made demand after demand on our local staff, who literally worked around the clock for several days to pull everything off. And they did! The launch was perfect, capped by the public request of the Finance Minister that we build 600 units across the state and the private promise from both officials that they would help in numerous ways. 

Even more moving, to me, was the experience of seeing patients-lots of patients-crowding our waiting rooms.

On some days, we had as many as 50 patients come to a unit-compared to a design goal, 6 months after launch, of 35. So we scrambled to hire more doctors, train more clinical assistants, and equip a second clinical room that we had fortunately designed into the healthpoints.  A couple of incidents brought home to me what our service meant to these communities. One patient had come in with a wound in her thigh, running a bad fever. Guided by the doctor on the telemedicine link, the clinical assistant cleaned and bandaged the wound, and the pharmacist filled the doctor's prescription of antibiotic.

I saw the patient two days later, and she was feeling much better, and very happy that she had not had to go to the district hospital many miles away.  And one of our drivers had a high blood pressure incident-so we took him into the healthpoint, and the clinical assistant/telemedical doctor promptly took care of him.  In both cases, prompt, accurate treatment helped avert what could have been a much worse outcome. Equally meaningful was seeing a young boy come to collect his family's safe drinking water from our unit-less dramatic, but equally important for health.

We randomly survey our patients after treatment, and the feedback is that they feel very well treated at a healthpoint and think our prices fair ($1 to see a doctor, with an introductory rate of 60 cents, which just happens to be the price most of the village quacks-informal practitioners-charge). Women, in particular, like our service and the opportunity to see a woman doctor via telemedicine; the village quacks and the occasional government doctor are all male.

Of course, formal surveys can be misleading-sometimes people tell you what they think you want to hear. But an informal survey gave the same answer-our driver spent long days sitting in his car, listening to the villagers talk among themselves as they walked past him on the way home, and he reports the same consensus. The bottom line is that we seem to be on target with our customers, and that the pent-up demand for high quality healthcare services-at least in this part of rural Punjab--is larger than anyone knew.  

We still have a long way to go to build a successful business, even though we are already getting inquries from other countries that also want healthpoints-a team from the Philippines is coming in December, and one from Vietnam soon after. And building village healthpoint units eats lots of cash, so we have to raise much more. But now we know exactly what we need to do to improve processes, gain efficiiencies, and continue to build volume to get to scale. And more importantly, we know that our market wants the product-and we have the satisfaction of seeing a concept turn into a living-even life-preserving-venture.