Newsweek/The Daily Beast Hosts ‘Scaling Up Social Enterprise’

For social entrepreneurs—whose business plans revolve around both turning a profit and helping humanity—a world-changing idea doesn’t mean much unless you can put it to work. When trying to break new ground in some of the planet’s most challenging locations, though, this task can be especially monumental. So, to offer up-and-coming social entrepreneurs a little help, a group of respected veterans in the field came together last night to share words of wisdom and guidance.

Inside the London headquarters of Coutts, a private bank so exclusive that some guests seemed surprised they were allowed past security, the event—“Scaling Up Social Enterprise,” jointly hosted by Newsweek/The Daily Beast, the BBC, and Shell—had a speed-dating feel. Executives from four fledgling companies each took a few minutes to pitch a panel of seasoned judges, who hit back with questions and advice. The audience then chose one company that they believed most sustainable. This Down To Business program will be shown on the BBC on 26/27 November.

Host Leo Johnson, a sustainable business expert, kicked things off by welcoming the crowd to the jungle-themed set, which he called an “unexpected semi-moist tropical rain forest here in the middle of London.” (Johnson’s rhetorical flair is a family trait—his brother, Boris, is London’s famously quotable mayor.) Then he implored the judges to be brutally honest. “The worst thing that could happen to these people is that they persevere with a business that is doomed,” Johnson said.

Here’s a breakdown of each of the enterprises on hand:

• Microfinance site MYC4.com lets users lend directly to small businesses in Africa, starting with loans as small as 5 euros. The company’s CEO, Mads Kjær, broke down his business model: lending only to established businesses, and funneling funds through local “gatekeepers” who have “skin in the game.” The formula has led 18,756 investors to channel more than 14 million euros to more than 7,000 small businesses on the continent—and Kjær said the average investor saw a 50 percent return on his money. “The biggest risk is in the currency exchange,” he said. Kjær was hoping to expand his business by allowing Africans to lend to each other. “You’re a pioneer,” said judge Rodney Schwartz, CEO of ClearlySo, which works to connect social enterprises with funders. A former investment banker with a long history on what he calls “the dark side” of finance, however, Schwartz left Kjær with a sober warning: don’t stray too far from what you know.

• The inventors of the Jompy drew some buzz when they passed around a tennis-racquet-like gadget that promises to revolutionize water purification in parts of the developing world. In poor communities in Kenya, for instance, people spend a great deal of time collecting fuel to cook food, as well as boiling their drinking water to make it safe, often taking time off school or work. But the Jompy boils the water while you cook, immediately reducing fuel usage by 60 percent, according to Jompy’s Kevin Wight. The gadget is a great idea, but Jompy needs to find ways to make it both affordable and available to potential users. On the former point, Wight outlined plans to market it as a luxury camping accessory in the West, with a considerable markup there, driving down prices in the developing world. On the distribution end, he hoped to piggyback on existing networks in Africa, plus work with governments and aid groups. The sheer magnitude of that task made the judges cautious. As Johnson put it: “Without distribution, we got a problem.”

• Martin Burt, the former mayor of Asunción, runs a self-supporting farming school in stubbornly poor rural Paraguay. Students spend time in the classroom as well as in the field, where the enterprises they run make the school self-sufficient—and even turn a profit for the kids. Combined with the practical business skills students are taught in the classroom, Burt’s program has made his graduates highly employable, and more than a dozen projects internationally are trying to replicate the school’s success. In his presentation, though, Burt displayed an even grander ambition, belting out—over Johnson’s attempts to interrupt—a long speech vowing to alter the very way we think about education. “What if education did not rely on government subsidies?” he asked. “What if education did not rely on charity? What if education relied on enterprise?” Andrew Haigh, who leads the Entrepreneurs Group at Coutts, advised Burt to adopt a more grounded tone. “It has the feel to me of a campaign rather than a business,” he said.

• The talk that won the audience—by overwhelming show of hands—came from the unassuming Puneet Rustagi of Husk Power Systems. Rustagi explained that some 1.4 billion people spend their nights in total darkness—that is, without electricity. His company has managed to bring power to 50,000 villagers in rural India simply by burning trash. Husk Power uses an innovative technology to turn rice husks, which are normally thrown away as garbage, into the fuel that runs an off-the-grid power station, making electricity simultaneously available, affordable, and clean.With the ability to be powered by everything from bamboo to sawdust, Husk’s model seems poised for successful expansion—and Rustagi noted that the company had recently won commendation in Africa. But Rustagi won over the judges by saying Husk wanted to focus first on plowing ahead on its existing turf—noting that there was room for 15,000 more plants within a radius of just 100 square kilometers. “That warms the cockles of my heart,” Schwartz said.

To Johnson, Husk fits the bill for a successful social enterprise, providing a crucial service that mainstream business has decided is not worth pursuing, and finding a way to make it profitable. “There’s a very clear need in the market. They’ve got a proven technology. And they’ve got a scalable business model,” he says.

But Husk is also running up against what Johnson sees as the main obstacle for social enterprise—having what it takes, but being out on one’s own—which he hoped to address with last night’s event. “So they’ve got a business model that works,” he says. “But even with that, these innovators are isolated.”

To learn more about, and vote on this year’s World Challenge nominees just go to: www.theworldchallenge.co.uk.