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New engines of social changeA new batch of entrepreneurs is merging profits with societal benefits and catching the eye

of venture capitalists, says Anirvan Ghosh

There were capitalists, for whom profit was the only touchstone of business. Then there were

socialists, for whom money-making was sin and working for societys good was paramount. Thetwain were destined not to meet. After the economic liberalisation however a battery of youngentrepreneurs has proved otherwise, welding the two ideologies into a credible revenue model.

Call it social entrepreneurship or by any other name, such businesses are catching the eye of theinvestor, and transforming the social paradigm.

Sample this. Barefoot College, started by Bunker Roy in 1972, has turned women school

dropouts in villages into barefoot solar engineers. Located at Tilonia village, Rajasthan, itserves over 125,000 people and has been a stunning example of social change while being a

profitable venture. These women now have an income, installing and maintaining solar systems.They are a common sight in villages near the Barefoot campus, replacing dirty, more expensive

lanterns. We told the villagers to pay as much as they do today for kerosene, wood, batteries,torches and candles. It comes to around Rs 225 a month. And they were willing to pay, says

Roy.

There are many more, like Suresh Martin Chauhan in Haryana, who runs a farm like acorporation. Here the labourers working on the farm are shareholders. From being bonded

labourers to shareholders is a cataclysmic change for them, says Chauhan. He uses the principlesof modern business-diversification, constant innovation and ploughing back profits into R&D.

Social entrepreneurs seek higher profits, yet are willing to accept lower margins and operate in

more difficult market environments as long as they are able to offer social benefits. The verynature of their field activities may reflect a pursuit of what Abraham George, CEO of George

Foundation, says is a mission-related impact, as opposed to normal businesses that are moreconcerned about competition and product differentiation.

Another company with a direct social impact was launched by GS Gul Muhammad in 1996 in

the Backwaters of Kerala. Today the backwaters connecting four villages along a 23-km stretch-Valiyaparamba, Thrikkarippur, Cheruvathur and Padanna-account for 70% of Indias backwater

mussel production. Gul Muhammads zeal has changed the economy of a village in Kerala, andthe fortunes of 3,500 villagers. Gul has empowered the village folk remarkably. People like him

give us hope, said local legislator K Kunhiraman, pointing to brick-built houses with properroofs to show how mussel farming had improved the lot of the local community. The best part

has been the clear social impact. When that happens, people are fine with you making a profit asyou do not appear like a greedy capitalist, rather a concerned citizen, says Prof K Kumar at IIM

Bangalore.

There are also others that have had less visible impact. Companies like the Bangalore-basedhanaX, an online-offline person-to-person lending platform that allows Indians to lend and

borrow money from each other. Much of the loans are distributed to needy communities for

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So while VC and PE funds crowd the sector, and while more professionals choose to lend their

expertise as social entrepreneurs, this wave of innovations needs to benefit the poorest lot, andthere are around 600 million of them in India, while counting their profits. They are already

doing a great job, but when they target the poorest alone, then they would have truly arrived,

George adds.