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
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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:
- Miller Centre, Santa Clara University
- Pollinate Group
- Adversary to Ally: Why My Social Enterprise Joined Forces with a Competitor on NextBillion
- Pulling Back the Curtain on a Social Enterprise Merger: Practicalities and Surprises as Two Companies Become One on NextBillion
Connect with guests: