FIP 107: Last mile distribution 2/3 – How to manage a merger of like-minded social enterprises, with Sita Adhikari and Alexie Seller of Pollinate Group

This is part two of a 3-part mini-series on last mile distribution. This series is a collaboration between the Finding Impact Podcast and the Global Distributors Collective (or the GDC). The GDC is a collective of last mile distributors around the world, with over 140 members in over 40 countries, who cumulatively have sold more than 8 million life-changing products to last mile households.

The GDC is dedicated to supporting and representing last mile distribution companies to help them reach underserved customers with life-changing products like solar lights, clean cookstoves, water filters and nutrition products. The purpose of the GDC is to make last mile distribution the first priority so that life-changing products can be made affordable and available to all.

This episode with Pollinate Energy in India and Empower Generation in Nepal is on how partnerships between distributors can leverage economies of scale and maximise impact.

On this episode you’ll learn:

  • Before the merger, Pollinate Energy was working primarily in urban areas serving families in slums with no access to electricity or other services. Empower Generation would work with women entrepreneurs in rural areas and train them to sell solar lanterns.
  • Empower could see huge potential for their model to reach all rural areas in Nepal, but needed funding and technology to help them scale, and partnership was a possible option for this. Likewise, Pollinate were looking for funding, but also recognised there were many new entrants to the last mile distribution sector who were competing for the same funding, which felt counter-productive.
  • An added challenge faced by Pollinate was the difficulty in growing their ‘pollinators’- the people who sold the products – due to the stigma of working in slums and engaging effectively with women as potential pollinators.
  • A group of four women-led organisations at the Miller Centre engaged and found out more about each other’s organisations, recognising there was an opportunity for greater collaboration. They all declared an interest in greater impact over preservation of their brand or unique knowledge.
  • They held regular phone calls, and shared a spreadsheet around to collect details on each others’ organisations, such as type of technology systems, extent of fundraising capacity, etc. They also sought board approval to continue with the exploration. An external facilitator was involved at this stage.
  • The process comprised of two parts, each with a decision point to move ahead: one to develop a joint business deck to figure out how the company would look in the future, and second to go deeper into due diligence and take site visits to each organisation. There was also the significance of have a strong gut feeling when visiting each others teams and offices, since many mergers fail because of an incompatible culture.
  • There were man fears faced by both parties, including whether the company cultures would fit, whether internal teams would get behind the merger. This included whether both boards would come together.
  • A sticking point was when the lawyers got involved, who wanted an MoU but which management didn’t, and how the board would merge with a clear path forward to good governance and compliance.
  • The whole merger process was split into 90 day phases. First there were legal and compliance issues to overcome, which were relatively simple and straightforward once a commitment to merge was made.
    Merging systems and finance between India and Nepal was the next issue to overcome, which they set themselves 90 days to do.
  • Then the next 90 days was focused on people and culture, where they took the opportunity to amplify Nepal’s training of women entrepreneurs, which Pollinate saw as valuable to India operations.
  • The final 90 day phase was spent in tying up loose ends.
  • They made the conscious decision to move the question of ‘which brand’ to the end, rather than let it hold things up – since it’s the most emotional aspect of a merger.
  • Pollinate Energy and Empower Generation is now Pollinate Group, and they re-named their Indian local brand. The Nepal arm retained their local brand.
  • Both feel the merger has breathed life into the organisations. For Sita, the merger has meant she can focus more on scaling the model across Nepal, with a stronger proposition for funding. For Alexi, the merger has forced them to open up to changes in their model, rather than focusing solely on the model they grew up with.
  • Alexi’s advice to others is for trust and authenticity to be key for the leaders going through the merger. Also, to run as fast as you can rather than getting paralysed over every decision.
  • Sita’s advice is to say your concerns up front, as it helps you come up with a solution. Also to engage with all of the team, to help you understand the company culture and how to proceed in the future.

Links to further resources:

Connect with guests:

Image of philip wilson for finding impact

FIP 106: Last mile distribution 1/3 – How to pivot a distribution model from door-to-door to retail, with Philip Wilson of EcoFiltro

This is part one of a 3-part mini-series on last mile distribution. This series is a collaboration between the Finding Impact Podcast and the Global Distributors Collective (GDC). The GDC is a collective of last mile distributors around the world, with over 140 members in over 40 countries, who cumulatively have sold more than 8 million life-changing products to last mile households.

The GDC is dedicated to supporting and representing last mile distribution companies to help them reach underserved customers with life-changing products like solar lights, clean cookstoves, water filters and nutrition products. The purpose of the GDC is to make last mile distribution the first priority so that life-changing products can be made affordable and available to all.

This episode with EcoFiltro, a distributor of water filters in Guatemala, focuses on how distributors can improve their sales efficiency by pivoting their distribution model.

On this episode you’ll learn:

  • EcoFiltro started with a micro-consignment model in which they’d give hundreds of community entrepreneurs across Guatemala five filters to sell in their community, and they’d earn 10% on each sale.
  • The model proved unsustainable due to the cost of pre-financing the filters which would often be paid back over two years, the cost of collecting the money from customers, and the low sales volumes achieved by community entrepreneurs.
  • They tried a number of different things to try and improve sales, such as training, offering incentives and encouraging referrals, but all their efforts only yielded a few extra filters sold per month.
  • They spent 18 months designing a new model, which involved speaking to retailers all across the country, and ultimately selected a few to be key distributors of the filter.
  • Retailers were happy to sell it because the filter had a strong brand, since it had been sold for a long time in big shops in urban areas and received good PR from a school donation programme.
  • Retailers were required to invest in 20 filters at a time for a $500 investment, so were motivated to recoup their investment.
  • The school donation programme, where filters were donated to local schools, was channelled through the local retailers, so they received the attention and drove customers to buy from them locally.
  • They now have around 100 local distributors and they’re targeting 270 by June 1st, 2019, which will be about 20-25 distributors per sales agent.
  • They’ve strengthened the brand by investing in their sales and marketing collateral, so all retailers are giving the same message to customers. This enables them to more easily measure sales of each distributor every month

Links to resources from this episode:

Connect with Philip:

Fhiwa Finding Impact

FIP 105: The view from inside an accelerator, with Fhiwa Ndou, formerly with MassChallenge

This week on the Finding Impact Podcast, we will be looking at the insider’s view of accelerators with Fhiwa Ndou, formerly of MassChallenge, well known venture accelerator in Boston, US. Fhiwa previously also helped setup the MassChallenge (MC) accelerator in London and is currently Growth Manager at Lambda School. This is episode #3 in the 4-part series about accelerators for early stage social enterprises. In this episode, we look at various aspects of choosing accelerators such as: the role of accelerator alumni network in attracting social enterprises, and non-profit versus the for-profit (equity-based) models.

On this podcast, you will learn:

  • About the MC accelerator and its ethos and non-profit business model. MC does not take any equity from its start-ups and rather focuses on community as one of the best levers for helping start-ups grow and succeed. MC accepts around 100-120 start-ups in every cohort across various industries that makes it very different from most start-up accelerators.
  • How MC selects and operates start-ups as franchise model in different regions and leverages the local business community while starting and operating a start-up accelerator at scale, through funding and other resources.
  • Examples of successful MC alum such as Flywire in Boston and Handy in UK, that went on to raise lots of funding for scaling and built successful businesses.
  • How the no-equity, non-profit model and wide alumni network of MC presents a very powerful proposition and is a big consideration for very early stage start-ups while choosing accelerators. MC also helps entrepreneurs unlock opportunities by helping them “ask for stuff” they need and providing support to access resources such credits for Amazon Web Services, other free tools, office space, introductions to experts such as patent lawyers, investors, etc.
  • Finally, Fhiwa shares his views on future models of accelerators, such as corporate style accelerators and other accelerator models that support entrepreneurs through their journey – from teaching entrepreneurs to code early on (coding schools) to teaching entrepreneurship and what it’s like to be an entrepreneur, through summer internships.

Links to Resources:

Connect with Fhiwa:

 

FIP 104: What I learnt from attending my first accelerator, with Nava Osembo of Enda

This week on the Finding Impact Podcast, we have part 2 of a new 3-part series about accelerators for early stage social enterprises. We are talking with Navalayo (Nava) Osembo-Ombati who is Co-founder and CEO of Enda Athletics, a Nairobi based running shoes manufacturer designing footwear to inspire customers to run like a Kenyan. Enda Athletics recently attended the SHONA accelerator program based in Kampala and just recently finished their second and final residential bootcamp. So we’re looking forward to digging into that with Nava.

On this podcast you will learn:

  • How Nava used her management consulting background in putting this business together even though her and the co-founder had no prior experience in making shoes.
  • Her initial impression of accelerators (she initially got a lot of feedback from entrepreneurs), and the guiding factor as to why she joined one, (primarily to get the skills).
  • Her selection process for selecting an accelerator: looking at the skill sets that they needed, which accelerator had the most positive feedback from entrepreneurs, and the cost (monetary and time).
    • Cost considerations: finders fees, and equity.
  • How she shortlisted accelerators: quality of mentors/expertise, and the cost (whether they were asking for equity and if so, how much).
  • Her experience participating in SHONA, which has a residential component: taking three weeks off / away from her company in order to participate was worth it and she came out having a birds eye view.
  • Nava’s top key things in order to get to an accelerator that is right for you: know yourself (as in what you want), really understand the costs, and read the contract! (especially if you can’t hire a lawyer).

Links to resources:

Connect with guest:

FIP 103: Do accelerators actually work? A look into the evidence, with Emily Eastman of GALI

This week on the Finding Impact Podcast, we are kicking off a new 3-part series about accelerators for early stage social enterprises. We are talking with Emily Eastman, Global Partnerships Manager at Global Accelerator Learning Initiative (GALI), who has been working on the leading edge of accelerators for social impact. In this episode, we look at the overall evidence on the effectiveness of accelerators in helping entrepreneurs grow early stage companies – what makes for a great accelerator, how entrepreneurs can choose the right accelerator and the pros and cons of accelerators.

On this podcast, you will learn:

  • How GALI was formed as a collaboration between the Aspen Network of Development Entrepreneurs (ANDE) and Emory University, to do research on the effectiveness or true impact of accelerators across the globe. GALI works with individual accelerators to track their specific programmatic impact as well as study the larger research questions on how accelerators are working and how can they be made better.
  • How accelerators help in the growth of start-up businesses by running programs for early stage ventures through a selection process and providing support in areas such as finance, marketing, raising investments, business model, etc.
  • GALI collects standardized baseline data on accelerator applicants and performs analysis on accelerator cohorts versus the un-selected applicants to figure out the progress of the each of these groups – do cohort ventures grow faster and quicker than their un-selected counterparts. GALI publishes insights and reports from such research periodically as well as the full anonymized data set from over 19000 applicants to accelerator programs across the world.
  • Why it’s important for social enterprises to choose accelerator programs aligned to their needs and goals, such as: business growth focus, or social impact focus such as creating jobs, or environmental impact, etc. Online tools such Conveners.org provide an accelerator selection tool for social enterprises to filter accelerator programs based on sector, geography, and focus areas.
  • GALI’s research points out that accelerators grow ventures much faster than their un-selected counterparts. The best accelerator programs have a perfect combination of 3 things – knowledge, networks, and capital and the greatest benefit that accelerators bring to ventures is their ability to challenge business models and help ventures fail or pivot faster.
  • A study conducted by GALI with Village Capital found out that high performing accelerator programs emphasized quality over quantity and had the following similar characteristics: smaller applicant pools, more targeted in recruitment, more practical and hands-on guidance than mere lectures, thus leading to stronger cohorts compared with the lower performing accelerator programs.
  • How accelerators such as Echoing Green have been able to recruit and build stronger cohorts because of a blind selection process, that removes biases in selection, such as gender, ethnicity, etc. Similarly, YGAP, a development accelerator based in Australia considers various aspects of gender biases across their applicant pools, mentor pools and actively looks out to recruit women across all program areas. Another example is that of SheEO that builds women-only cohorts as part of their accelerator programs.
  • Finally, accelerators themselves are constantly pivoting and changing their programs just like startups to address different focus areas or emerging markets, while providing pre- and post-acceleration services tailored to their markets. A healthy dose of competitiveness and collaboration is thus extremely important within accelerator programs to improve their overall effectiveness.

Links to Resources:

Connect with Emily:

FIP 102: Why donor money is distorting the entrepreneurship ecosystem in East Africa, with Fiona Mungai of Endeavor

Fiona Mungai joined endeavour with six years of experience working in Private Equity and Asset Management in East Africa. Fiona started her career at British American Asset Managers and then at Actis — a leading pan emerging markets private equity fund, She he been a founding member and Board Director of the East Africa Venture Capital and Private Equity Association that has 100+ members.

On this episode you’ll learn:

  • Endeavour supports high impact entrepreneurs. Why? Because high impact entrepreneurs are able to create thousands of jobs, can come up with a business model that is scalable, and can create millions of dollars of revenues.
  • High impact entrepreneurs will also support the entrepreneurship ecosystem, by creating an entrepreneurship culture within their organisations, empowering their employees to think about spinning off to create their own businesses, are willing to mentor the next generation of entrepreneurs and re-invest capital back into the ecosystem.
  • There are very few venture capital or early stage funds operating in East Africa. Even those that do label themselves as venture capital, have the risk profile of private equity funds. Which means they do less hand holding and have a lower risk tolerance.
  • As a result, many entrepreneurs in East Africa have to look for investors aboard, for example in the US or Europe, and growing their networks and relationships with these investors from afar can be a challenge.
  • Endeavour connects businesses with international investors, by organising roadshows for entrepreneurs and networking events with investors in the Middle East, Asia, Europe and the US.
  • International investors have a certain expectation for how companies should be packaged, which companies in East Africa need to know about. This includes things like governance structures, leadership and HR structures, business model optimisation, and business model valuation.
  • There is alot of soft money (grants) supporting entrepreneurship in the East Africa ecosystem. Those providing the soft money may also be advising the entrepreneurs, but don’t necessarily have experience running a business that has scaled. The prevalence of grants to scale businesses can create a dependency, that hinders the ability of the business to scale.
  • Endeavour also advocates for entrepreneurs to pay it forward in (a) investing money back into the ecosystem after an exit / liquidity event, and (b) mentorship, by supporting up and coming entrepreneurs with advice and access to networks.
  • Relationships takes time, so you need to be on the road meeting potential investors at least 12 months before you need the funds. The feedback you receive from investor conversations can feed back into your business and will serve you well as you go back on the road.

Links to resources:

Connect with guest:

FIP 101: Experience from a recent investment raise with Dr. Christie Peacock of Sidai Africa

This week on the Finding Impact Podcast, we are talking to Dr. Christie Peacock, founder of Sidai. We’re going to do an interview about her recent experience of raising a round for her social enterprise Sidai Africa. Sidai offers farmers solutions to the challenges they face growing crops and livestock productively and profitably. So Sidai trains farmers to help them farm more profitably, and provides support to franchisees, stockists and suppliers to help them grow their business. And they manufacture and sell a wide range of quality crop and livestock products.

On this episode you’ll learn:

  • Christie’s experience in trying to raise a round of equity investment, especially when not selling the latest “cool” app but selling a very practical and fundamental product for farmers which is a low margin business.
    • How many funders she spoke to, and the timeline.
  • Selling SIDAI to investors: the original business plan projection was that SUDIE was not going to be profitable for at least eight years although investors want to see profitability sooner.
  • Her advice to investors:
    • Perhaps the cost of impact capital is sort of going up because of early failures.
    • Instruments being used from the commercial sector are not so appropriate for social business which typically take longer to make money.
    • Similar to sophisticated grant makers, investors should have clear deadlines, milestones, timetables, etc., and make those steps as short as possible.
  • Her advice to social entrepreneurs about hiring a very good and experienced transaction advisor with a good track record:
    • They can really help you in structuring the investment and getting as good an evaluation as you can get, and
    • Can help in having the capital structured that’s helpful for the business and not just structured in the way the investor wants it.
  • So many impact investors that are new and are start-up’s themselves.
  • The “good no,” which only took six weeks, versus the “bad no” after 12 to 18 months of engagement.
    • It should only take one to two months if you’ve got all your documents in order, and people can come and visit.
  • Open Road Alliance and their report called Roadblocks which talks about some of the challenges that they funded:
    • The issue of investors stringing along social enterprises and then dropping them because the decision making is so far away from the people on the ground.
    • The specialty of Open Road Alliance is emergency bridge funding to fill a gap for entrepreneurs who have hit a roadblock for whatever reason, but there has to be a genuine external factor blocking the flow of investments that will be ultimately removed.
  • Communicating the challenges you’re facing as an entrepreneur in the East African market can be difficult because most of these investment firms originate their capital from overseas (not local Kenyan capital) and often these foreigners don’t come to manage the firms and it’s unlikely they have hands-on direct business experience.
    • The way to get around this structural issue is to have at least a local advisory board of local entrepreneurs who really know the sector that the funders are investing in and ideally you’d have a local investment committee to look at things quite independently.
  • The global investment network needs a code of good practice on investor / investee behavior, such as:
    • The clarity around the steps in the process,
    • The time required and when,
    • Level playing field,
    • Open communication,
    • Mutual respect, and
    • Good conduct.
  • Shout out to Christie’s excellent impact investor: AHL venture partners

Links to Resources:

Connect with Christie:

FIP 100: What I’ve learnt building my social enterprise after 100 episodes, interview by Andrew Foote of Sanivation

This is an interview to mark the 100th episode. Andrew Foote is the host. He’s the co-founder of Sanivation – a social enterprise in Kenya that takes human waste from cities and converts it into fuel. Andrew is interviewing Andy Narracott, founder of Finding Impact.

On this episode you’ll learn:

  • It’s important to stop and celebrate in any social enterprise, to mark milestones and recognise how far you’ve traveled on your journey. It’s good for your mental health, and it’s good for building a positive culture in your team.
  • Finding Impact is process driven. Andy created a process to uncover insights for social entrepreneurs through interviews. Then improved that process via feedback (from listeners and himself), and once all the kinks were ironed out, he trained other people to follow the process. Andy claims this to be the most basic form of creating an enterprise.
  • Andy recognises the incredible help he’s received from volunteers, and the power of creating win-win partnerships. Andy offers new skills training and an opportunity to learn and build experience, and in return he gets help with the creating content procedures.
  • People naturally want to share their knowledge. The goal of the podcast is the make that as easy as possible – to remove friction to knowledge sharing.
  • Andy shares a couple of books that taught him the importance of a repeatable process for continuous improvement. The first is Black Box Thinking by Matthew Syed, then Work the System by Sam Carpenter, and The Checklist Manifesto by Atul Gawande. All are instructive on procedures, experimentation and feedback.
  • On how to determine what procedures are important, it depends on what the goal is, and this will probably change over time. For Andy, the goal of the first episode was to record a half-decent interview, develop the basic process of getting it onto the web and hoping a few people listen and share feedback. Nowadays, his goal is to create content that is relevant and has some urgency in need, and he’s moving onto measuring impact in the traditional sense, with a a theory of change and an M&E plan.
  • On what he’s learnt about himself, Andy says he needs structure and process in his life, as the alternative seems to be chaos and continuous reinventing the wheel. This dovetails into his interest in efficiency.
  • Journalling can help us monitor ourselves so we get better at understanding our strengths and weaknesses, and help us be the best version of ourselves.
  • Andy plans his week on a Sunday night using Google Calendar. He sees what phone calls and meetings have been scheduled, what pieces of work he has to do, and then puts chunks of work into this calendar, so when he starts his day, he doesn’t waste time by thinking about what he has to do. He also puts in family time and exercise time.
    Streaks is a google chrome add on that sits within Gmail, which Andy uses to track projects, processes and initiatives.
  • Andy’s vision for Finding Impact is to continue providing content for social entrepreneurs in emerging markets, as he believes they’re pushing the boundaries of creating systemic change in these markets. Meanwhile, he wants to scale knowledge sharing to build local podcasts for local markets.

Links to resources:

Connect with Andrew Foote

Connect with Andy Narracott

FIP 99: How local founders can attract foreign impact capital, with Andreas Zeller

This episode shines a light on why local founders, who have excellent businesses, struggle to attract foreign impact capital. Open Capital Advisors has been advising in Africa for 9 years now, helping entrepreneurs grow, and helping advance economies, whilst also helping build a generation of business leaders in Africa. Based in Kenya, Uganda and Zambia, covering 20 countries in Africa and have worked on 450 engagements to date.

On this episode you’ll learn:

  • Village Capital studied the amount of impact investment money going to local founders, which showed less going to local founders. Some of the reasons is the lack of understanding by local founders about what is needed to raise capital, not being active in the networks that foreign investors are active, and knowing how to communicate effectively. Alot of OCA’s work goes towards bridging this gap.
  • Many impact investors from North America or Europe don’t have local offices and are not familiar with cultural norms or business practices in country. When they do, local staff are not part of the decision making process, so when they take deals to their investment committee, made up of members who are not familiar with the context, they’re often rejected.
  • Founders need to get good at how they describe themselves to foreign funders, how they articulate their value prop, how much info they need to share.
  • Another challenge is that local founders might expect to build a relationship over several interactions, whereas foreign impact investors might expect to develop a relationship over one meeting, because their time is limited in country.
  • Local founders might not have international brand names on their CVs like international founders. They may still have very good CVs with experience at reputable local companies or universities, but are not known about by international investors.
  • The due diligence process can be more effective by helping local founders understand what is necessary, what information needs to be shared and when.
  • Local events can be organised to allow for more touch points between local founders and investors.
  • One of the biggest frustrations of all the local founders that OCA works with is for an investor to quickly say No, if its a No, instead of wasting their time for 3-6 months on a lengthy process process.
  • A greater understanding of the language used by investors would help the whole process. But investors should not expect Founders to be finance specialists to enter into these conversations.
  • A primary reason why investors might give a No to local founders is lack of documentation and record-keeping. Also, a simple inability to communicate with local founders effectively. Also lack of trust, that local founders might not be willing to give a share of their business to international investors.
  • Local founders should also be clear about what they mean by impact, including how it will be measured – which is much harder than financial indicators.
  • Local founders should do their due diligence on investors, who you really trust, who believes in you and your company, and what they fund.
  • Funders who fund broadly, either early stage or later stage, who’re open to any stage of business, often, in fact, do have a sweet spot.
  • Getting support can help local founders, be it a mentor, an accelerator, or a business support provider, who are plugged into the investor community.
  • Andreas has seen a shortage of qualified Chief Financial Officer type human capital, who are people who can run analyses, help businesses make decisions, or form strategies. They created Arcadia to fill this gap.

Links to resources:

Connect with guest

FIP 98: Lessons From Bedriye Hulya Who Was Able to Prevent a Burnout

This week on the Finding Impact Podcast, we are talking about burnout in the social sector, the third in our interview series, and we talk about Bedriye Hulya’s own experience, and how it took a very unique project that aims to promote the inner wellbeing for changemakers to help her get unstuck and make drastic changes in her life. Bedriye is founder of b-fit, which is a chain of women-only sport and health centers in Turkey, and uses a unique franchising model which empowers women.

On this podcast, you will learn:

  • More about her b-fit model.
  • Profit versus social good: how Bedriye maintained the thin line / keeping the balance between focusing on maintaining a profit so you’re sustainable, but also keeping in mind that the social good is more important than the profit.
  • When Bedriye started to feel symptoms of burnout:
    • She felt trapped, started getting angry at people, started to resent the company and her work, and started to feel an injustice of trying to do social good, but not feeling good herself.
  • About her experience with the Wellbeing Project, an intensive 18-month program for creating and supporting a culture of inner wellbeing for changemakers.
    • Bedriye particularly benefited from Gestalt Practice which made her realize she lost touch with herself and her feelings by burying things that she should have lived through.
  • How Bedriye loved founding the company but hated management and felt like she was forcing herself to fit into the role.
  • Her advice to other social entrepreneurs stuck in the hamster wheel: take a sabbatical (if possible), do inner work (ie. Gestalt Practice, going to therapy, etc.) – anything looking into yourself to understand what processes are manifesting in your altered behaviors or thoughts or feelings. Afterwards you will learn your strengths and weaknesses and I recommend that people do their inner work.

Links to Resources:

Connect with Bedriye:

  • E-mail: BedriyeHulya@b-fit.com.tr