People first and profits to follow

The Foundation for Innovation and Social Entrepreneurship and its creation, Social Alpha, are blazing a brand new trail

Asmartwatch for the hearing-impaired that listens to emergency sounds, gives real-time notifications, speaks out pre-recorded sentences and enables users to dance in rhythm. A business model that integrates marginalised waste workers into the formal economy. A revolutionary MRI machine that is low on cost, high on quality and can be accessed by bottom-of-the-pyramid (BOP) sections of society.

These are just a few of the game-changing innovations being supported by the Foundation for Innovation and Social Entrepreneurship (FISE), a partnership initiative involving the Tata Trusts and the Indian government’s Department of Science and Technology.

Established in 2015, FISE has from its beginning been an end-to-end ecosystem that enables social entrepreneurs to provide products and services to underserved sections of the population, while also helping them navigate the different stages of their startup journey.

FISE has matured in the three years since it was launched to become an important platform for the infusion of resources and capital for social enterprises. And that platform has spawned Social Alpha, an initiative with a three-tier architectural structure that is plugging a variety of gaps — from identifying technologies in research laboratories and being an incubator for technology businesses to providing monetary resources for the growth and expansion of deserving enterprises. Social Alpha has thus far evaluated about 400 social sector enterprises and incubated more than 50 startups through its seed capital and sector-focused interventions.

“The entrepreneurial boom in India over the past decade has generated new employment opportunities, boosted trade and brought technology development to the fore,” says Manoj Kumar, Social Alpha’s chief executive and cofounder. “We are working to bring the benefits of this trend to a larger portion of India’s population at the grassroots level by harnessing the power of the market, and we are aiming to impact 500 social enterprises by 2022.”

Typically, asset managers are obliged to demonstrate success on financial or impact parameters to their governing bodies and investors. Consequently, impact-focused funds are often forced to prioritise their expected returns and exit timelines over the urgent and complex challenges of social development. Distinct from other players in the market, FISE concentrates on the generation of social impact rather than chasing after returns on capital employed.

“We have recognised that the need for ‘risk commensurate returns’ discourages the modern investor from investing in early-stage, high-risk social enterprises,” explains Mr Kumar. “This leaves a clear gap in the market, one that we at FISE seek to address with our unique ability to infuse capital into such enterprises. Our focus is on creating deep and irreversible social impact, and then ensuring that our enterprises continue to create enough revenue to sustain themselves and grow.”

A common thread that runs through each of FISE’s ‘incubatee’ companies is the use of innovative thinking and technology solutions. “Bringing effective and efficient products and services to the BOP market is the need of the hour,” adds Mr Kumar. “Science and technology-based innovations have the potential to bring about disruptive change in the lives of the community by creating high-quality yet affordable solutions that can address challenges in sectors such as healthcare, education, energy, and water and sanitation.”

Functioning with a deeper involvement than other incubators and investors, FISE undertakes a handholding approach and works closely with the entrepreneurs it seeks to support. With Social Alpha, the intent is to build sustainable and scalable enterprises. “We begin by identifying startup founders who are technologically aware, socially conscious and entrepreneurially confident,” says Mr Kumar. “Ensuring that they are motivated to adhere to our jointly determined milestones is pertinent. Through our engagement we provide them with all the knowledge, connections and resources — monetary and otherwise — that they require to have the best possible chance of succeeding.”

Committed to becoming an all-encompassing provider, FISE appoints mission-aligned portfolio managers in each of the startups it backs. Seed capital investments, which range from 3 million to 10 million, translate into small equity stakes in the startups. Experienced professionals are often attached to startup teams to lend them a hand with various aspects of business. Workshops on fund-raising and finance, compliances, marketing and product life cycle management are regularly held to supplement the skills of startup founders with a conceptual understanding of business principles. The startups can also avail of expert assistance in prototyping and hardware design. Furthermore, a system to offer legal advisories and consulting services is currently being shaped.

“Over the next five years, we want Social Alpha to emerge as a national societal platform with replicable protocols across sectors and across geographies,” says Mr Kumar. “We are open to tying up with the government, the private sector and other philanthropic bodies to take this vision to scale. We plan to set up, in partnership, about 25 incubation centres and innovation labs across the country over the next three to four years.”

This plan has already been set in motion and is rapidly picking up pace. In the past year, Social Alpha has established two centres: an energy incubation centre in Delhi, set up in partnership with the Government of India and Tata Power, and a healthcare incubation centre at the Indian Institute of Technology Delhi, set up in partnership with PATH, an international nonprofit with allied goals. The coming year is set to start with an incubation centre for agriculture technology (this will be in collaboration with an international foundation and a state government).

“Our team at Social Alpha is committed to the purpose of our existence,” says Mr Kumar. “Each of our employees understands the criticality of the work we do; even our work culture embodies it. We take pride in this unique organisational culture. It has facilitated a spirit of collaboration between our internal teams and our external partners. In everything that we undertake, what rings true is our mission of providing solutions for India’s development challenges through a model of innovation and social entrepreneurship.”