Go to any social entrepreneur pitch event and you will see one graph over and over again, the “hockey stick” predicting exponential growth as the enterprise matures. Entrepreneurs feel pressure to project wildly ambitious growth curves in an effort to attract investment, but how realistic are these projections?
In reality, growing a social enterprise is hard, and the hockey stick growth curve is better left to the NHL or the world of Silicon Valley unicorns than the realm of social entrepreneurship. An analysis of Miller Center’s alumni social enterprises shows that while most of our graduates grow significantly in the three to five years after completing our accelerator, most of these enterprises then fall into periods of either moderate growth, stagnation, or even decline. More of an “S” curve than a hockey stick. Yet we need a few hockey sticks if the social enterprise movement is going to make meaningful progress toward the Sustainable Development Goals, or make a sizeable dent in the pressing social and environmental issues they seek to address.
What if social enterprises could break out of their growth plateaus or even preempt a slowing of growth to begin with? How could we as Miller Center, a social enterprise accelerator, accompany our social enterprise alumni to break through these plateaus and see them make tangible progress toward achieving these global goals?
This commitment to continued accompaniment was the impetus of the GSBI® Technology Entrepreneurship for Change (TECh) Cohort that culminates this Tuesday (today) at the GSBI TECh Showcase. The GSBI TECh accelerator engaged 14 social entrepreneurs who had previously graduated from either a GSBI accelerator program or were a Tech Awards Laureate run by our partner organization, The Tech Museum of Innovation. By connecting these entrepreneurs with some of our most seasoned mentors, and allowing them to engage in a flexible and customizable curriculum, we sought to support these diverse social entrepreneurs to break through to the next level of scale.
Each of these enterprises are pursuing unique strategies to reach scale, however some broad themes emerge.
Scaling by leveraging the existing “development” infrastructure
One effective mechanism to reach scale is to leverage existing infrastructure, such as governments and massive aid agencies, to take a product or service to market. This technique is being used by We Care Solar, who sells their innovative Solar Suitcase to provide emergency lighting to under-resourced health facilities throughout Africa. By partnering with Ministries of Health, NGOs, and UN agencies, they can reach far more people than they could through their own distribution channels.
Potential Energy is employing a similar strategy to get their clean cookstove into the hands of refugees in Northern Uganda, and Amplio Network is partnering with a number of NGOs and aid agencies who utilize their innovative Talking Book to create engaging and culturally relevant content to reach populations with low literacy skills.
Scaling through international replication or acquisition
Another strategy to scale is through replication and/or mergers and acquisitions (M&A), a strategy that seems to becoming more common as the social enterprise sector matures, and is essentially taking a validated business model from one geography and adapting it to work in new markets. This can significantly decrease the time and resources spent on getting a social enterprise up and running, and replicated enterprises may also present reduced risks for impact investors (see more on Miller Center’s Replication Initiative).
This strategy of replication is being pursued in part by both Nazava water filters, who is seeking to bring their low cost water filter to new markets throughout Asia and Africa, and by SAI Sustainable Agro who is expanding its work to connect smallholder farmers with corporate value chains from India to South Africa, Ghana, and Uganda. It is also being pursued in a slightly different form by Pollinate Energy, who builds distribution networks for socially beneficial household products (clean cookstoves, solar lanterns, etc.) in underserved markets, such as slums and remote villages. Pollinate is unique because they merged in 2018 with Empower Generation, a fellow GSBI social enterprise alumni with an aligned purpose in a different geographic market. By leveraging each organizations competitive advantages they are realizing record breaking sales, and critically, an increased ability to empower women in their value chain.
Scaling through spin-offs
The final theme we see is established organizations seeking to scale by spinning off focused and innovative portions of their work. This strategy allows a successful and established organization to protect and maintain its core work, while leveraging its track record of success to build innovative new lines of business or impact.
For example, Solar Ear is pioneer in the hearing loss ecosystem and manufactures an affordable solar powered hearing aid that seeks to serve the 95% of people with hearing loss who cannot afford a traditional hearing aid. While this business is established and scaling, they are now looking to spin off a new service that seeks to identify and prevent hearing loss before it happens, and develop new technology that turns the ubiquitous cell phone, into a hearing aid device.
A similar strategy is being used by AREWA24 for profit Nigerian media platform that educates, inspires and empowers millions of marginalized youth, women and communities across northern Nigeria. AREWA24 spun off from the more well NGO Equal Access so that it can more nimbly serve its market, and attract the type of capital that will allow it to scale rapidly.
While this is analysis is a drastic oversimplification of the complex scaling strategies being used by the social enterprises in this cohort, we are excited to see some broad themes emerging. We hope to continue to support our alumni in the future to understand their best path toward scale and accompany them in addressing any roadblocks on that path. We hope that this model of accompaniment might help some of the hockey sticks you will see on Tuesday actually come true and that we will see social enterprises making sizeable contributions toward meeting the sustainable development goals.
About the Author
Alex Pan is a Senior Program Manager, GSBI at Miller Center for Social Entrepreneurship. Supporting our network of over 1,000 social entrepreneurs, he is responsible for monitoring and evaluation of programs and delivering alumni accompaniment programs. Alex is an experienced program manager with a background in building the ecosystem that supports social enterprises in emerging markets. Before joining Miller Center, Pan worked for the Aspen Network of Development Entrepreneurs (ANDE) where he coordinated ANDE’s global network of regional chapters, facilitated collaboration and knowledge sharing among ANDE’s 240+ members and led ANDE’s efforts around talent and invention-based businesses. Before joining ANDE, Alex worked for several international development NGOs in China, India, and Uganda. Pan has also worked for the White House Office of Science and Technology Policy where he assisted in the development of their impact investing policy. He holds an M.A. in International Science and Technology Policy from George Washington University and earned his B.A. from Colby College where he studied International Development and East Asian Studies.