This post was originally published on the R4D Insights Blog
The most successful development interventions are not acts of charity, but acts of investment that help local change agents drive progress in their countries.
This is what social enterprise acceleration is all about—it seeks to promote positive impact by identifying and supporting promising young business ventures that aspire not only to make a profit, but a positive impact on people’s lives. As mission-oriented accelerators proliferate around the globe, there is more evidence than ever to answer key questions like, do accelerators actually accelerate? And if so, what kind of acceleration support is most effective?
Yes! Accelerators are working
The Global Accelerator Learning Initiative (GALI) just issued its second major report, written in collaboration with Deloitte, which compares acceleration in emerging markets versus high-income countries. The report, Accelerating Startups in Emerging Markets: Insights from 43 Programs, combines longitudinal data on 2,455 ventures with qualitative insights from entrepreneurs, program managers, and investors and looks at how enterprises who received accelerator support performed compared to enterprises that did not receive support—both in emerging markets and in high-income countries.
The study found that emerging market businesses working with accelerators grew their revenue by 14 percent more than businesses not accepted for acceleration. Participating ventures also saw significant gains compared to rejected ventures in number of employees (up 14 percent), equity (up 13 percent) and debt (up 43 percent), which, as an indicator of access to credit, is actually positive.
As evidence like this mounts, investors around the world may feel increasingly confident about the effectiveness of social enterprise acceleration. Now the question is: What acceleration strategies are making the biggest impact?
Strategies making a difference
At Results for Development (R4D), we are working with accelerators that are making remarkable progress, and their activities provide useful paths forward for investors, policymakers and implementers. Through R4D’s Center for Health Market Innovations and Center for Education innovations, we are seeing the results of effective social enterprise acceleration at the program level. Here, we look at three different approaches that are making an impact right now in emerging market contexts:
Intensive, rapid support: Take, for example, Y Combinator. This Silicon Valley-based start-up accelerator has launched major new businesses, such as Dropbox, Airbnb and Reddit, and now aims to further support entrepreneurs who are willing to tackle social challenges with the tools, creative approach and dynamism of the tech sector. The accelerator provides intensive support over a three-month period. Experts with proven entrepreneurial experience help founders pitch their startup to investors, incorporate their businesses properly, navigate staffing and other human resources decisions, and more. At the same time, YC provides direct investments and introduces young ventures to a rich network of carefully selected investors.
We’ve seen the effects of Y Combinator’s rapid yet comprehensive approach through their incubation of Noora Health, a nonprofit organization in India that trains patient families with the medical skills they need to improve health outcomes and save lives.
Since their incubation with Y Combinator, Noora Health has trained nearly 90,000 family members and partnered with more than 25 hospitals. This program led to a 24 percent drop in 30 day readmissions and reduced post-surgical complications by 36 percent. Support from Y Combinator was instrumental in this ongoing success, with Edith Elliott, one of Noora Health’s founders, explained in a recent interview, “Nowhere else in the world could we have accelerated our growth and development in such a way.”
Weekly monitoring and mentoring from business leaders: GE’s healthymagination Mother and Child Program and Santa Clara University’s Miller Center for Social Entrepreneurship formed a partnership that blends Silicon Valley entrepreneurial acumen with venture impact investing to tackle one of the world’s most pressing problems: maternal and child health.
After a rigorous evaluation process, the GE and Santa Clara University partnership selects social entrepreneurs to receive provides weekly comprehensive monitoring from Silicon Valley-based executives and local GE business leaders that help with all aspects of their business, from communication to finance to service delivery. The teams also develop critical business fundamentals, such as creating a business plan that includes projections of measurable impact, business growth and financial sustainability.
Several social entrepreneurs in the CHMI network of innovators were selected to participate in the GE-Miller Center healthymagination accelerator. One such program in Kenya, Hewa Tele, is a pioneering social enterprise focused on saving lives through the provision of affordable and accessible medical oxygen solutions to rural healthcare service organizations throughout East Africa.
The GE-Miller Center partnership helped Hewa Tele establish itself as a private limited company, better understand the pricing landscape for medical oxygen equipment, and develop additional skills training activities in a financially sustainable manner. In less than a year of operations, the program has grown to serve 30 facilities while leading to an increase of 2500 percent in oxygen use and lower rates of mortality in centers of operation.
Student business clubs: Excitingly, acceleration activities are not just targeting young businesses, but developing young people into new entrepreneurs through experiential learning, mentoring support, network development and direct funding.
The Educate! program for example, implements a variety of mentorship and practical learning experiences to help adolescent girls and boys not only develop valuable skills, such as public speaking, grit and creativity, but create their own enterprises in the process. Educate!’s Student Business Clubs aim to help young scholars develop critical skills for employability, but do so through actual firsthand experiences. These clubs, which operate in Uganda, Rwanda and Kenya, are driving impact while also resulting in many profitable new businesses. In 2016 alone, Educate! facilitated 393 new Student Business Clubs, with 55,020 student business club members. Perhaps most excitingly, 97 percent of these clubs had profitable projects.
Success stories like these are illustrative but not sufficient. At R4D, we are continuing to surface new strategies to promote socially impactful entrepreneurism, and sharing what’s working with our global network of implementers and local change-agents.
This is because, to use an old metaphor in international development, teaching a man or woman to fish is no longer enough. Our metaphorical fisherman needs new nets, connections to other fisherman, and the skills to sell their catch. This is the kind of deeper investment that accelerators are pursuing, and it is exciting to see evidence that such strategies are paying off. With evidence from the likes of GALI, as well as qualitative experiences of programs around the world, social enterprise accelerators are providing an increasingly clear map to guide us forward.
Photo Credits: YCombinator ; Noora Health ; Hewa TeleSee more Education Financing blogs