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Be! fund
Be! fundHow it works.
How you can be a part of it.
Questions & Answers
Be! fund
A: Be! Fund is a not-for-profit venture fund that invests in young entrepreneurs from low-income groups in India to create businesses that solve the social,
economic & environmental problems they face in their lives.
Be! Fund’s mission: To prove the viability – both social and financial – of investing in young entrepreneurs from low-income groups to pioneer businesses for social change.
Be!’s Goal: Beginning with the rollout of Be! Media in October 2009, Be! Fund aims to inspire millions of young people to pursue their enterprise ideas for social change - by submitting their enterprise ideas to the Be! Fund.
Investment sizes: Investments of US$ 1,000 to US$ 20,000 will be made in each entrepreneur over three years.
Capital: Philanthropic capital/grants will be structured as equity, debt & guarantees depending on the requirements of the social business.
Entity: Be! Fund will be registered in the USA as a 501C3 not-for-profit (donations are 100% tax deductible) with a charter for investments in India.
Q: What is the Be! Fund?
Be! fund
Q: Why does India need the Be! Fund? And why now?
A: In India, in the year 2020, there will be over 210 million unemployed people & 50% will be below the age of 30.
Current job creation trends cannot create sufficient employment opportunities.
50% of children currently enrolled in school are dropping out – so the next generation workforce will be largely unskilled.
Natural resources are already in crisis & present infrastructure cannot accommodate the growing needs of over 1 billion people.
Entrepreneurship, inspiring young people to choose to become entrepreneurs for social change, is one solution.
Entrepreneurship is a decentralised, problem-specific approach that pioneered locally can have a massive national impact.
Be! fund
Q: What social issues will Be! businesses solve?
A: Be! Enterprise sectors:Education
Health Housing Water
Sanitation Waste Management
Renewable Energy / Fuel Bio-Diversity & Conservation
Agriculture Rural Economy Transportation Communication
Livelihood Support
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Q: Okay, so what is a Be! Enterprise?
A: Starting a waste-management-recycling business. Using solar energy to provide light to street vendors. Pioneering a ‘seed bank’ to replenish soil for organic farming.
Piloting sustainable & profitable businesses with social impact.
Led, run, pioneered by a young entrepreneur from a low-income group.
Be! fund
Problem > Millions of street vendors use polluting Kerosene lanterns- Heat/fumes harmful to food for sale & vendors- Expensive initial cost, daily expense of Kerosene- Requires frequent servicing/replacement
Why it is important > There are 10 million street vendors in India with US$ 20 billion/year turn over - a great example of India’s entrepreneurial potential.Street vendors provide low-cost, fast food to millions of people who go to work everyday.
Solution > Affordable, renewable energy for lighting for street vendors in India through solar-powered batteries.
How the business works > Rent batteries to run CFL solar lights on a daily basis.Batteries charged during the day at a centralized station, delivered to street vendors at night who use them for 4-6 hours, after which batteries are returned for charging. To be sustainable, entrepreneur needs to rent batteries to a minimum of 50 street vendors in an urban area for the business model to work, in a rural area only 20-30 vendor-clients are required.
Q: What is an example of a Be! enterprise?A:
Be! fund
Finances for solar lighting for street vendors:Urban: costs US$ 6,500 (RS 260,000) to set up, includes light points, charger, batteries for grid + solar panelsEntrepreneur contribution: 15%, US$ 975 (RS 39,000)Investment/loan amount dispersed through a bank: US$ 5,525 (RS 221,000)Interest rate/month: 13% from bankLoan tenure: 3 yearsMonthly repayment: US$ 192 (RS 7,661)
Based on an estimate of 50 street vendors, and loan repayment, monthly surplus for entrepreneur is US$ 105 (RS 4,189).
In this case, Be! Fund would invest by providing a guarantee for the bank to issue a loan to the entrepreneur. The money returned to Be! Fund in 3 years would be between US$ 2,800 to US$ 4,500.
Q: What investment is required?
A:
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1. Be! Media will drive a pipeline of entrepreneurs with new business ideas for social change to the Be! Fund.
Be! Media is a project that will produce 13 movies + 50 books + 30 radio episodes + an online portal that will go live across India on national TV in 2009, reaching an estimated 100 million young people over the next five years.
2. Over a 100,000 business ideas are forecasted to be submitted to the Be! Fund through the online portal & postcards.
3. Be! Fund will create a network of partners across India who will review & enable business plan submissions from our target audience.
Q: How will the Be! Fund find young entrepreneurs?
Be! Media is being created by Going to School www.goingtoschool.comBe! Media is supported by the Nike Foundation.
A:
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1. Submission: Young person age 18 - 35, from low-income group, submits business idea to the Be! Fund.
2. Selection: Criteria confirmation
(a) Enterprise idea confirmation - Must have clear social impact & be financially sustainable. The enterprise
proposed must be in a Be! sector & directly address the social issue (to be evaluated on a case-by-case basis).
- ‘Needs’ confirmation - must not currently have access to finance.(b) Entrepreneurs, through an in-depth interview, display a commitment to theirideas, passion, business acumen, inclination/ability to experiment & learn, work inuncertain situations & have leadership abilities to recruit talent to execute their plans.
3. Special considerations:• 50% of investments will be in women.• 50% of investments will be in young people in rural areas.
Q: How will young entrepreneurs be selected?
A:
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Q: Who are we?
A: Be! fund is a partnership between Going to School, SELCO INDIA & S3IDF.
Media: Going to School is creating Be! an Entrepreneur, a multimedia project that will inspire millions of young people to submit their business ideas to the Be! Fund. Three years later, Going to School will tell the stories of the Be! Fund supported entrepreneurs & enterprises.
Be! Fund: SELCO INDIA is responsible for running & managing the Be! Fund nationally. Monitoring entrepreneurs through its own network & partner networks.
1st Phase partner: S3IDF will make & monitor investments in four southern states.
Be! fund
Q: Who is SELCO INDIA?
A: SELCO INDIA is a social enterprise providing sustainable energy services to the poor in the rural areas of India. Today via 23 branches in
Karnataka & Gujarat, SELCO INDIA caters to over 85,000 customers using a two step approach: doorstep service and doorstep finance.
SELCO INDIA promotes sustainable energy services in the underserved &
un-served areas of India, building a strong service network in rural areas for solar energy systems & services.
SELCO INDIA builds sustainable linkages between modern energy services & income generating activities.
www.selco-india.com
Be! fund
Q: Who is S3IDF?
A: In round one, in South India, S3IDF is the fund manager.S3IDF (Small Scale Sustainable Infrastructure Development Fund) is a non-profit
infrastructure investment fund headquartered in Bangalore, Karnataka.
S3IDF’s mission is to facilitate local private small-scale infrastructure needed for poverty alleviation and overall economic advancement in the developing world.
Since its inception S3IDF has 130 + projects in its portfolio. S3IDF will make and manage Be! Fund investments in four southern states: Karnataka, Tamil Nadu,
Kerala & Andhra Pradesh
S3IDF’s area of focus: a) energy b) water c) transportation, d) communication e) productive end-use (e.g. flour mill).
Be! Fund + S3IDF will, with additional monitoring partners, manage investments in sectors other than S3IDF’s focus sectors in the four southern states.
http://www.s3idf.org
Be! fund
Be! Fund fills the gap between micro-finance & small & medium enterprise investment (which begins at US$ 50,000), adding additional social impact by directly investing in
young entrepreneurs from low-income groups.
While source of the Be! Fund will be philanthropic capital/grants – investments will be made to guarantee loans, and in some cases, equity.
Only grant capital can demonstrate the viability of investing in first-time entrepreneurs & their businesses for social change.
Q: How is the Be! Fund different from micro-finance in India?
A: Micro-finance Be! Fund
Size of loan < US$ 1,000 > US$ 2,000 (up to US$ 10,000)
Term/Duration <18 months > 2 years
Selection criteria Low risk, established enterprise, livelihood
High risk, new enterprise in social sector, social + economic impact
Investment source Investment capital Grant/Philanthropic capital
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A: No, we will invest in three stages, across three years, in geographical regions according to partners & entrepreneurs identified.
2009-10: South India20 entrepreneurs in Karnataka, Tamil Nadu, Andhra Pradesh & Kerala with S3IDF
2010-11: North, East, West India45 entrepreneurs Delhi/Haryana/Punjab, UP, Bihar, Maharashtra & Gujarat
2011-12: Nationwide10 entrepreneurs – all India
Q: Will you invest in 75 entrepreneurs in one go?
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Q: How will you monitor 75 entrepreneurs across India? How often will progress reports be submitted?
A: Monthly - we will monitor on a monthly basis, plus three visits a yearBe! Fund managers in each geographical region will monitor entrepreneurs & investments on a monthly basis to ensure healthy performance indicators; they will visit three times a year. At the same time, Fund managers will also work with entrepreneurs to learn to monitor themselves.
Quarterly progress reports - Mentors will create progress reports with the entrepreneur.
Independent evaluators will assess the social & economic impact of each investment & evolve social impact indicators, through discussions with the entrepreneur, customers & community. Semi annual reports - All stakeholders, especially investors, will receive a semi-annual report about the progress of each entrepreneur.
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Q: What specific skill development package/ mentor support will you provide each entrepreneur?
Step 1: Assess the needs of the entrepreneur & the enterprise by visiting, interviewing the entrepreneur in-depth & creating a business plan with the entrepreneur.
Step 2: Provide Business Development Services (BDS) - skill specific tool kit, problem resolution, managerial support, basic accountancy practices, technology & finance advice. These services will help young entrepreneurs set up enterprises & will also allow them an opportunity to ‘self-monitor’ & ‘report’ so that corrective actions can be swiftly taken.
Mentors: Additionally, fund managers will identify local mentors to advise the entrepreneurs to ensure social impact of businesses is maintained/nurtured while providing problem-solving support. These mentors will work closely with S3IDF.
Guidance: Accounting methodology, business progress & social impact will be reviewed regularly to ensure real-time advice to the young entrepreneurs.
A:
Be! fund
Q: How will Be! Fund investments be made?A: In the first year, Be! Fund will create 20 viable enterprises, capital contributions
will be structured as follows:
a) Entrepreneur: 5% to 15% of total investment amount. Such participation, even though a small percentage, ensures entrepreneur accountability.
b) Be! Fund: 75-85% of total investment amount, in the form of equity, debt or guarantee depending on the requirement of the business.
Mobilizing loans will require S3IDF to provide partial loan guarantee (up to 85% of loan amount). As these loans are for first-time entrepreneurs & new businesses in social sectors, they do not fall under banks’ ‘business-as-usual’ practice. As a result, S3IDF might have to put in greater effort to convince banks - so strategies include providing higher percentage guarantee than S3IDF’s usual 50%.
S3IDF will leverage finances from local banks (such as Syndicate Bank, Canara Bank State Bank of India, Punjab National Bank, Vijaya Bank, HDFC) & entrepreneurs for the investment. *Financing gaps will be covered by the Be! Fund through either debt or equity participation in the enterprise.
Be! fund
Q: Will the entrepreneurs need to setup a formal business to be able to receive an investment from the Be! Fund?
A: In most cases, NO. (a) Setting up a ‘proprietorship’ at a cost of US$ 15 will suffice (in urban areas this means getting a municipal license, in rural areas a panchayat license)
(b) If a business has annual sales over US$ 5,000 then registering with VAT costs US$ 250.
In some cases, YES. For larger investments, that require a formal business to be created, entrepreneurs in a given region will be brought together to share the set-up costs of a formal business.
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Q: What are your social impact indicators?A: Quantitative: number of lives impacted by enterprise; jobs created; profit generated Qualitative: marked reduction in social problem in pilot enterprise’s community; multiple social sector impact (i.e. water enterprise impacts education, health, rural employment)
Social impact metrics will be developed for each enterprise -1. Marked reduction in social problem (i.e. reduced water-borne diseases from access to
clean drinking water improves health of community, increased family income from enterprise & provision of drinking water at school encourages girls to attend school & is linked to additional enterprise of installing toilets for girls in school).
2. Number of people provided with enterprise service/product/access & therefore a measurable reduction in social problem i.e. provision of improved lighting from renewable energy & energy efficient smokeless stoves, lead to reduced health problems.
3. Creation of wealth for entrepreneur, community at large.4. Replications – number of entrepreneurs who create similar enterprises in other villages;
number of enterprises that are created as a result of this intervention (i.e. providing renewable energy – means women are now free from collecting firewood for cooking & use the additional two hours a day to pioneer a new social enterprise).
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Q: What is the cost of investing in one entrepreneur & one enterprise?
A: US$ 20,000 (RS 800,000)
US$ 2,000 to a maximum of US$ 10,000 investment to guarantee loan In the case of S3IDF, investment is used to guarantee 75%-85% of loan made to entrepreneur, institutionalizing the investment.
Be! Fund management: US$ 2,500 pre-investment cost (travel to meet entrepreneur)US$ 5,000 skill development support, monitoring, reporting over 3 yearsUS$ 2,500 coordination with Going to School for Be! Media
US$ 20,000 creates one pilot enterprise.Directly addressing a social problem.
Impacts the lives of 500 people in a slum/village.Be! Entrepreneurs will lead by example in their communities & will motivate,
inspire a thousand more entrepreneurs across India, when their stories are told.
Be! fund
Q: What is the cost of investing in five entrepreneurs?
A: US$ 20,000 x 5 = US$ 100,000 (RS 40,00,000)
Creates five pilot enterprises.Directly addresses five social problems.
Impacts the lives of 2,500 people in a slum/village& tells their stories, inspiring thousands to become entrepreneurs across India.
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Q: How much do we need to invest to have a seat on the investment committee?
A: US$ 250,000 (RS 10,000,000)
Be! Fund investment committee will consist of five investors(+ Going to School, SELCO INDIA & S3IDF).
As an investmet committee member, you create 12 pilot enterprisesDirectly address 12 social problems & impact the lives of 6,000 people in a slum/village.
Members will be given quarterly reports on their investments.Be! Fund manager will coordinate visits once a year to all entrepreneurs.
Be! fund
Q: What is the total amount required for the Be! Fund?
A: US$ 1,500,000 (RS 60,000,000)
Year 1 US$ 400,000* 20 enterprises (10 women) Year 2 US$ 900,000 45 enterprises (23 women)Year 3 US$ 200,000 10 enterprises (5 women) + US$ 500,000 to tell their stories (movies, books)
Total US$ 1,500,000 + US$ 500,000 media fund
50% of all investments will be made in women
* If US$ 400,000 is secured then administration & monitoring costs would not exceed 20%
Q: Why invest?A: To give a young person from a low-income group a chance to pilot a business
for social change - a chance they have never been given before.
To be first. Be part of the first fund in India that invests in young entrepreneurs creating solutions for social change.
To create a success story. Be part of their story over the next three years.
To create a role model entrepreneur. Directly invest in an entrepreneur who will inspire another 10 entrepreneurs to give it a try.
To prove a point. Young people from low-income groups in India are worth investing in to create high impact social change.
To inspire investment by Government, new venture funds & organizations that multiplies your original investment by 20 times.
To invest in India. Where the global issues of climate change, environment, natural resources & population, will be decided by our generation for the next one.
Be! fund
Be! fund
Q: What are the risks?
A: 50% of the businesses may fail. But the incredible lessons learned will be communicated through a mass media initiative.
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Q: What is your definition of success?
A: Making 75 investments in young entrepreneurs from low-income groups & their viable businesses for social change.
Specifically - A clear, demonstrated social impact of businesses.Ability of entrepreneurs to take their businesses to scale.Number of new entrepreneurs who replicate the new enterprises.Success rate of investments.Cumulative social impact of each, & all, investments.Number of entrepreneur’s that replicate the Be! enterprises without the support of the Be! Fund. 50 stories are told across India three years later - with lessons learned. Going to School media multiplies the demonstration effect by communicating success stories across India encouraging more young entrepreneurs to create similar enterprises.Leveraging the initial Be! Fund investment to create new vehicles for investment in young entrepreneurs - from new philanthropic venture capital to Government investments.
••••••
•
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Q: Is there a tax benefit to investing in the Be! Fund?
A: Yes, the investment entity is registered in the USA as a 501C3 not-for-profit where 100% of the donation is tax deductible.
The investment vehicle will raise philanthropic capital/grants which will then be invested into Be! businesses in India as equity & debt instruments.
In India, Be! Fund partners are registered as non-profits where 50% of the donation is tax deductible.
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Q: What happens to the investment/loan returned from successful enterprises?
A: Reflow capital to the fund will be recycled to invest in more enterprises.
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Q: So, what’s the exit strategy?
A: Capital re-flows from loans will be used to tell the entrepreneur’s success stories.
For equity instruments, the exit strategy would be decided on a case by case basis i.e. it could be that an entrepreneur is bought out or that a new investor comes on board.
Be! Fund will use the first phase of investments to develop strategies.
Q: Is that the end?A: NO. The goal is not simply to impact 75 entrepreneurs & the people in their communities. Our true objective is to use 75 examples to show a new generation of
entrepreneurs, investors, governments, & the public, the viability of investing in young people & their businesses for social change. To inspire society to replicate these success
stories on a nationwide scale, causing a ripple effect that could go global.
Going to School will tell stories about the entrepreneurs & their enterprises through movies & books, targeting potential young entrepreneurs,
new investment funds & Government.
The original investment of US$ 1.5 million & the proven success case that investing in young people from low-income groups solves social problems will be
communicated through success stories across India.
This visibility & the proven business case of Be! investments will have a snowball affect - leveraging the original investment by an estimated 10 times - compelling government
& foundations to make available new sources of venture funding for young people & institutionalizing Be! investments so that one day, it becomes standard practice
for banks to give loans for social enterprises.
Be! fund
Be! fund
Q: What is the timeline?
A: March 2009: Be! investment for Year 1 secured, US$ 400,000 October 2009: Be! Media goes live across India
October 2009-10: Be! Fund makes investments
January 2010: Year 2 investment secured, US$ 900,000
July 2010: Year 3 investment secured, US$ 200,000
Be! fund
Q: Any more questions?
A: Believe in the potential of young people to transform India. And, please contact:
H Harish Hande PhD, SELCO INDIA [email protected]: + 91 9845448488
Krishna Rao, COO, S3IDF, [email protected]: + 91 9448145819
Lisa Heydlauff, Director, Going to School, [email protected]: + 91 9810621876
