Mexico’s Digital DivideEntrepreneurship | January 4, 2012
This 'digital divide' is starkly evident in the city of Nezahualcoyotl, Mexico state, which hugs the hem of Mexico City. It’s also a place where solutions are being created.
As the government and large corporations fail to adequately address to these needs, many young enterprises have taken on the challenge to bring innovative yet affordable products and services to cater to this segment. These enterprises, sometimes referred to as social enterprises, create a win-win situation by offering innovative solutions for the poor at an affordable price point while generating profits for shareholders.
For instance, B2R technologies, a rural BPO, is setting up clusters of rural BPO service delivery centers to provide business support services to global clients. Rural India has formerly only been seen as a supplier of labor to urban India, but B2R is changing that by providing rural educated, unemployed youth with the opportunity to earn a viable livelihood. This also contributes to reverse the forced migration to the cities as well as provide opportunities to those who cannot migrate. Their goal is to set up 70 centers employing more than 6000 youth over the next 5 years.
These enterprises have a strong affinity to create solutions which have a positive social as well as environmental impact. This impact brings long term sustainability to the society and the environment at large.
The Funding Gap
Entrance of social enterprises, has also attracted some level of attention from Angel Investors and Venture Capitalists (VCs) in the space. But “Social Investing” still being an evolving asset class, investors have followed a fairly risk averse approach – i.e. they are likely to invest in companies who have displayed proof of concept or proof of market.
This leads to a classic chicken-and-egg problem. Entrepreneurs need capital to build prototypes, acquire customers and reach a critical mass in the market. But, VCs will not invest in before the product and the business model is proven. The fact is financial support is most needed when the enterprise is prototyping its product or running a pilot for its service and is yet to generate revenues. Because of lack of financial backing at early stage, most of the highly innovative and game-changing ideas fail to prosper.
Early Stage Impact Investing
Early Stage Impact Investors are investors who have realized this problem of the Funding Gap and are willing to take a higher risks than VCs. Thus, these investors are willing to take on the market risk, technology risk and many-a-times business model risk.
It is with the support of such investors that social enterprises can actually move to the next level and begin to make an impact. In the recent years, early stage impact investors such as First Light Ventures, Aavishkaar, Unitus Seed Fund, Ennovent Impact Investment Holding among others have emerged to back such enterprises.
Ennovent Impact Investment Holding, for instance, partners with early stage social enterprise by providing seed stage investment of upto USD 60,000 with a follow-on investment of USD 270,000.
Ennovent also recently launched the Impact Circle i.e. an exclusive group of individual & institutional investors looking to support high potential entrepreneurs creating a sustainable impact at the base of the economic pyramid in India. The Impact Circle members look to invest in seed to profitable sustainable enterprises looking to raise financing from USD 25,000 to USD 3 million in equity, debt or quasi-equity for 5-7 years.
These investors not only provide investment but also non-financial support that adds tremendous value to these enterprises such as developing strategic partnerships, scaling-up to new markets and regions, hiring talent etc.
The entry of these new early stage impact investors in the Indian market augurs well for the social entrepreneurship sector. Watch out for new innovative game-changing start-ups that redefine the way businesses perceive opportunities in rural India.
About the Author
ennovent accelerates innovations creating a sustainable impact on low income people. We work with a global network of entrepreneurs, investors and experts to discover, finance and scale up the best innovations. We envision sustainable living for people at the base of the economic pyramid.
The views expressed above are those of the author, and not necessarily representative of the views of the Mahindra Group.