Instead of eating home-cooked food, people in these neighborhoods buy the cheapest meals they can: food from street vendors.  The equivalent of 20 cents in Jakarta can buy a meal of rice fried with soy sauce and a little chicken, or deep fried fish cakes.  Ten cents will buy a snack.   Overcrowded, kitchenless housing has given rise to a culture of street food that has done wonders for tourism in Asian cities — the most crowded parts of the planet.  But it has also condemned tens or hundreds of millions of people to an almost nutrition-free diet.

Mercy Corps couldn’t think of anything traditional that a nongovernmental group could do about this.  So it did something very untraditional:  in April, 2009, it started a healthy street food business called Kedai Balitaku, or My Child’s Café, that has since spun off into a for-profit company.  “The idea was to provide access while raising awareness about healthy food and creating economic opportunity,” said Sean Granville-Ross, Mercy Corps’ Indonesia country director.

Here's a social business that's been using the market mechanism to their advantage in order to crack the tough problem of healthy nutrition in slums in Jakarta. Not replacing existing efforts to change behavior long-term through education, but rather complementing it with the necessary 'infrastructure' for healthy eating, they are creating a chain of street food vendors who sell healthy, but at the same time cheap food.

However, as the article points out - this business (as many others) are facing the challenge posed when playing by the 'market rules' - how to price your product appropriately when profits is not the motive? How to compete on quality when the consumer's choice necessarily is constrained by price (and usually based on a perception of 'quantity')?

Read the full article at NYTimes: http://opinionator.blogs.nytimes.com/2011/05/23/in-food-deserts-oases-of-nutr...

The cover story in our recent issue about education looked at investment opportunities in affordable public schools—schools that charge less than US$12 (INR600) per month. In response to that article, Bongu Bharat posted an article to his blog that garnered the following comment from Dr Vibhu Pal:

Our Society runs two A P S near Delhi. Although the schools are doing good, we are facing some tough problems:
Since the fees is low, the schools have been branded of low brand value in spite of the fact that education wise our Schools are fully equipped – trained staff, infra structure on par with branded schools, every year 100% result of our Board classes etc. Good schools are measured with the fees being charged.

When having conversations with investors while researching the story, it became clear to me that the only true way to win over the public is by improving—and tracking—student learning levels. Investors running the gamut from Grey Ghost Ventures, Omidyar Network to the Michael and Susan Dell Foundation all agreed.

Interesting read for our fellows in the affordable private schools!

http://beyondprofit.com/changing-the-public-view-of-affordable-private-schools/

Can market-based solutions help the poor? The growing crop of impact investment firms across the globe point to “yes.”

Gray Ghost Ventures

The Atlanta-based Gray Ghost Ventures (GGV) is an impact investment firm that has committed more than US$100m to entrepreneurs tackling the needs of low-income communities in emerging markets, with significant focus on India. The firm wears many hats from investor to partner to funder to manager. The focus of GGV’s work is on microfinance, social venture investment, and affordable private schools. Examples of successful investments are D. Light, United Villages, and 2i Capital. Since 2003, GGV has established the Gray Ghost Microfinance Fund, the Gray Ghost DOEN Cooperatief, First Light Ventures, and Gray Matters Capital.

E+Co

There is substantial need for affordable, clean energy solutions in developing countries. E+Co believes that demand can be met by local entrepreneurs. Through its innovative approaches to capital investment, business development and carbon finance, energy businesses can be created, and can alleviate the effects of climate change and poverty. The company has invested US$40m of its own money and mobilized US$253m for businesses located in over 20 countries in Africa, Asia, and Latin America. E+Co makes investments in the range of US$25,000 to US$1m in business projects. Their impact so far is telling: 6.2 million people have clean energy, 160 businesses are owned by women, and 1,200 entrepreneurs receive services from the company.

Grassroots Business Fund

After four years of operating as the International Finance Corporation’s (IFC) Grassroots Business Initiative (GBI), the Grassroots Business Fund (GBF) has struck out on its own with the mission of supporting sustainable business opportunities for the bottom of the pyramid (BoP) space. GBF provides investment capital to high impact businesses in Africa, India, Latin America, and Southeast Asia. Through debt, equity or “quasi-equity” investments in the range of US$250,000 and US$1m, with an average commitment of five years, the company targets businesses in sectors such as agriculture, artisanal enterprises, energy, finance, and IT. To date, GBF has provided access to finance to 45,000 entrepreneurs, and helped 13,000 farmers and 20,000 artisans generate income of US$6m.

Omidyar

eBay maintains that the principles of access, connection, and ownership are cornerstones of sustainable business. That is why the company’s founders formed the Omidyar Network, a philanthropic investment firm committed to scaling up innovative organizations serving the BoP. The firm makes initial investments of more than US$1m in companies providing access to capital, and working towards stronger media, markets, and transparency. It operates globally, but focuses on India and Sub-Saharan Africa. Companies in their portfolio include BRAC, Kiva, Ashoka, and the Rural Development Institute.

Aavishkaar

Aavishkaar deploys commercial equity capital to nurture enterprises that seek to generate multiple bottom lines. Through its various initiatives in micro equity and micro finance space, it has pioneered the approach of building a financial ecosystem that would nurture entrepreneurs by providing risk capital for scalable rural focused enterprises. Since 2001, Aavishkaar has invested in 26 such ventures across diverse sectors including Healthcare, Water & Sanitation, Education, Technology for Development, Handicrafts, and Microfinance. Along with the provision of risk capital, it believes in promoting participative business practices, introducing efficiency and sound governance, and empowerment by creating widespread ownership.

It currently advises two funds with total assets under management of USD 35mn and is raising two new funds worth USD 180mn  to continue its work on a larger scale in these sectors. Aavishkaar’s innovative approach was also recently acknowledged by the G20 SME Finance Challenge Award 2010. Some of its portfolio companies include Vaatsalya Healthcare, Vortex Engg., Waterlife, Basix and Equitas.

In the last few years the field of social impact investment has certainly been growing. Many of the traditional foundations, as well as a range of new ones, have started focusing on not only traditional philanthropy but also on providing investment capital for social ventures.

This is, of course, a necessary component for social businesses to grow and is a crucial step in the creation of this as a fully viable sector.

Recently, Beyond Profit listed five venture funds focused completely on market-based solutions. Reading up on these provides a good introduction to what the space is starting to look at and what are some of the best practices.