Bala Vikasa CSRB Urges Social Entrepreneurs To Prioritize Product Development Over Fundraising Efforts

Creating a positive impact can be daunting for social entrepreneurship startups, as securing initial investments becomes a hurdle and raising funds in a continuum can be a challenge
Bala Vikasa CSRB Urges Social Entrepreneurs To Prioritize Product Development Over Fundraising Efforts

Whilst studying in the US around five decades ago, Telangana-based Bala Singareddy was awed at the quality of life Americans enjoyed. It was much removed from the one she had left behind in her hometown, Reddypalem, where people struggled to get a continuous supply of water or electricity. Despite her marriage to French Canadian diplomat and development expert Andre Gingras and settling down to a comfortable life in Canada, she could not shake off the feeling of wanting to do more for her brethren back home.

In the late 70s, while visiting Reddypalem, when some locals sought her support to build a water tank system that could supply water to few villages, Singareddy readily chipped in for its construction. However, realising that stop-gap efforts would be inadequate, in 1977 she started the Society for Partnership in Development in Canada.

14 years later, she created another entity in India called Bala Vikasa, and its offshoot Bala Vikasa Center for Social and Responsible Business (CSRB). This community-driven development organisation undertook societal development initiatives at a micro level—be it women empowerment, school education, sustainable agriculture, water conservation and providing clean drinking water—working with several businesses and small entrepreneurs.

After incubating about 25 social startups in its previous cohorts, last year it launched the Promote and Incubate Social Enterprises (PrISE) cohort. This currently comprises seven social startups working in sectors like health, agriculture, waste management and disability inclusion. These social enterprises and their founders were selected only after they fulfilled various criteria including evaluating the scope for the cause’s scalability, marketability, stage of social enterprise as well as the founding team's willingness to stay invested in the long run.

This level kind of deep diving might seem incongruous for an entity trying to uplift founders eager to solve the larger issues facing the country. However, it is essential because funding is the biggest hurdle these entrepreneurs often encounter.

The National Stock Exchange-backed Social Stock Exchange (SSE), founded in 2019 to allow the nonprofit sector a chance to raise funds, saw its first listing last year, four years after its formation. SGBS Unnati Foundation mobilised Rs 1.8 crore through the listing, which it will use to train approximately 10,000 graduating youths from government colleges pan-India.

Though many other nonprofits are similarly engaged in development activities that can benefit the country’s socio-economic structure, raising funds remains the albatross around their neck, weighing them down. Hence, Bala Vikasa’s framework attempts to stitch alliances between the for-profit and nonprofit worlds.

Shoury Reddy, executive director said Bala Vikasa CSRB wishes to spearhead a new changemaker movement by contributing to the creation of high-impact social enterprise models by aligning business goals with social goals and leveraging corporate frameworks. “These include triple bottom line (people, planet, profit), environmental, social and governance (ESG) and corporate social responsibility (CSR) to link corporates with social entrepreneurs for community development while supporting the growth of promising social enterprises through incubation,” he noted.

Following The Money Trail

Zeroing down on revenue-generating activities not only helps Bala Vikasa to remain financially sustainable but also expands the scope and scale of the social enterprises it aligns with. For instance, its Social Startup Incubation Program helps founders create sustainable impact while generating revenues and progressing steadily towards long-term sustainability. This is by leveraging training programs on CSR compliances and CSR expenses management, incubation support and knowledge sharing alongside offering advisory and consulting services on impact design, impact assessment and training programs.

Such a prosaic approach is necessitated to help them build scalable and sustainable business models. After analysing the annual reports of several startups, impact consulting firm Sattva Consulting found that a mere 19 nonprofits had incomes of over Rs 100 crore in 2021-22. According to a Mint report, 34 of India’s largest companies had a CSR budget that exceeded Rs 100 crore in the same year.

While domestic philanthropy has been growing, the majority of the larger givers prefer earmarking their contributions to select impact startups, leaving social enterprises to explore other areas to regularly raise funds. Rahul Bhardwaj, senior director at Bala Vikasa CSRB notes that grant funding, crucial for social enterprises, faces limitations due to a scarcity of impact investors and grants in the market. Financial institutions' limited knowledge about social enterprises further complicates the funding landscape.

“Balancing profit with social impact is a perpetual struggle for social startups. Unlike traditional counterparts, they must showcase growth and impact comparable to conventional startups. Achieving this equilibrium is daunting, requiring founders to navigate between organic growth and adapting products to address dynamic social issues,” he added.

Thinking From The Heart Doesn’t Always Pay Off

Continued focus on fundraising, till there is stability, is the omnipresent reality of any start-up. The additional thrust on mission or impact may render the task more complex.

In Bharadwaj’s experience, social entrepreneurs are driven more by their emotional quotients (EQs) than by their IQs, and therefore decision-making is easier, and distraction limited. However, there are some implications as funding options are very limited in the SE ecosystem.

The perpetual need for fundraising places immense strain on the leadership of social startups in India, draining time and energy from mission-driven initiatives. This constant pursuit of funds can lead to a shift in focus from the core mission, disrupting day-to-day operations and risking a drift from the startup's original purpose. Moreover, finding dedicated and skilled individuals passionate about social causes, especially co-founders sharing a similar focus, proves to be a persistent challenge.

The toll of continuous fundraising results in stress and burnout among the leadership. To address these challenges, social startups must prioritize sustainable funding models, emphasize sales-driven investment, adopt a lean approach to expenses, explore diverse revenue streams, and leverage support systems like mentorship and incubation programs.

Hence, Bala Vikasa CSRB coaches its founders in areas like social business models, management, finance, and networking, especially with CSR implementers and funding institutions. Tailored training is crafted after identifying the specific needs of each startup and building their capacities in social business models, strategy, execution, leadership, soft skills, personal growth, and relationship building.

The entity’s rural presence in over 6000 villages helps these social enterprise startups accelerate their go-to-market strategies, test their ideas on the ground and establish their services among focused consumers. The not-for-profit has also extended its network of over 1000 NGOs, 40 CSR partners, and 30 institutions for social enterprises, connecting them with sector experts, impact investors, ecosystem enablers and like-minded individuals for better results. 

PrISE-ing Things Open

The current PrISE cohort is a non-funded incubation program and aims to provide support to social startups in areas of capacity building, mentoring, and network support. Two incubatees Karry Now and Jeevamrut were connected with large-impact investors to explore funding opportunities.

Talking about how his Elemantra, a social startup dedicated to providing pollution-free solution for sanitary waste disposal, has benefited from the program, the company’s founder Arun said, "Bala Vikasa, at a very basic level, has been procuring our waste disposal solutions and deploying them as part of their Menstrual Health and Management programs in Telangana and Karnataka. This gives us visibility, leading to increased enquiries. Additionally, they connect us with SHG women, institutions, and organizations to help build our customer base. They are also helping us in developing proposals to access grant funding from different development ecosystem stakeholders, thereby helping us in diversifying our revenue streams."

Karthik, founder of Animal Trading Application (ANITRA) stated that the startup was created to empower animal herders to directly sell to traders without intermediaries. “Bala Vikasa's presence and network in rural Telangana, Andhra Pradesh, Maharashtra, and Karnataka helps us connect with genuine herders, ensuring they get fair prices for their animals, conveniently through just their phones," he added.

Startups like these need to institutionalize themselves and become financially resilient through various support mechanisms; be it mentoring, facility-based services, customized training, networking opportunities, and periodic strategic reviews. This helps them create social impact while generating revenue and profits sustainably in the long run.

Financial resilience for PrISE startups involves managing unexpected financial events, experiencing limited financial stress, and having the confidence and capability to use financial products independently. This is addressed through its strategic reviews and customised mentoring. It also encourages social startups to generate 50 per cent of investments through sales rather than investors and other sources.

In February 2024, Hyderabad-based startup incubator T-Hub partnered with Bala Vikasa to offer specialized capacity-building programs and facilitate market access support to startups. The collaboration envisions the cross-utilization of their mutual infrastructure to maximize operational efficiency and foster innovation in India's social enterprise startup ecosystem.

Now, Bala Vikasa CSRB is working on incubating 10 social enterprises comprising more than 50% women-led social businesses in the next sector-agnostic cohort. According to Mass Challenge and BCG, women-led businesses show significantly higher revenues with better chances of doubling the return on investment. This soft power has not been harnessed effectively, and it is the next thing on Bala Vikasa’s agenda.

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