Update from Unitus family on activities and progress in 2011 towards our poverty impact mission
2011 has been an exciting year for the Unitus family. Thanks to your help over the years we have been able to continue our tradition of high impact innovation.
A few highlights from 2011:
- Birthed two new initiatives: Unitus Impact and Unitus Seed Fund
- Published results for our 3-year ultra poor self-reliance program
- Raised significant growth capital for exciting high impact social enterprises
- Supported innovations for improved financial inclusion in India
The growing Unitus family
We thought it would be helpful to recap our growing family. The Unitus family consists of multiple social enterprises with a common mission to reduce global poverty through economic self-empowerment.
Unitus Labs was launched in 2001 as a non-profit called Unitus, Inc. In 2011, we decided to change the name to Unitus Labs to reflect its focus on researching and developing new innovative programs which by nature require high-risk, patient, philanthropic funding. Over the past decade, Unitus Labs has incubated and launched the other Unitus social enterprises.
In 2005, we launched Unitus Equity Fund (UEF), the first private, social investment fund investing in early-stage microfinance institutions. To date, UEF has invested in 6 MFIs in India and Latin America.
In 2008, we launched Unitus Capital, a financial advisory firm based in Bangalore focused on raising growth capital for social enterprises seeking to impact poverty through financially sustainable business models. To date, Unitus Capital has raised more than USD$650,000,000 in capital for businesses seeking to impact poverty.
In mid 2011, we launched Unitus Impact, an investment company focused on providing growth capital to early-stage social enterprises which have potential to bring improved livelihoods to millions of people battling poverty.
Last week we announced the launch of Unitus Seed Fund, a new investment fund providing seed-stage equity capital to startup businesses which have potential for improving the lives of significant numbers of people living at the base of the economic pyramid.
Our theme: Impacting poverty through market-based solutions. We believe that for-profit businesses which have poverty impact inherent in their strategy and mission have the greatest potential to sustainably reduce poverty at significant scale.
While the Unitus family has been working for only ten years, much has been accomplished. The past year was no different. Here are a few more details on our efforts from 2011.
Unitus Labs: Ultra Poor Initiative
What are the best ways to help those earning less than $1.25 per day?
In spite of the rapid growth of access to microfinance, a considerable number of “ultra poor” (who live on less than $1.25 per day) still do not benefit from these services. In India alone, 1 out of 3 people or about 400 million people are ultra poor.
Unfortunately, most efforts at helping ultra poor people result in temporarily relieving suffering through handouts rather than providing an opportunity for self-reliance. As a result, there are many well-intentioned programs, but not much scalable or sustainable impact.
Starting in 2008, Unitus Labs and the Sorenson Legacy Foundation have tested new methodologies for solving this problem. We have researched methods that promise greater sustainability by focusing on helping ultra poor adults to earn more income and then from that income contribute to the program costs. Our hope was that if clients could benefit while covering some or all of the costs of the service the potential outreach would be far greater than expensive donor-funded models.
The results so far are very encouraging—suggesting, for example, that there may be methods that not only work better, but can be delivered for 25% of the cost of previous programs. We’re in the process of publishing our research in the form of case studies available from our website. We’ve already seen great interest from the experts as well as mainstream publications like the Wall Street Journal.
Launch of Unitus Impact
Until now, investors and entrepreneurs have focused largely on selling things to the poor, but have focused less on income-generation. Unitus Impact is taking the road less traveled.
You’ve probably been as amazed, as have we, at the dizzying number of “ultra affordable” products that are being developed for people living on incomes of less than $2 per day. There is a stream of products such as cleaner, safer and higher-efficiency cook stoves, new low-cost water purifiers, solar lights, cheap mobile phones and services, tablet computers, better crop seeds and even reading glasses coming to market continuously.
These products and services are incredibly important, but if the buyer doesn’t have extra money, they cannot buy these life-improving products – even if financing options are provided.
What low-income populations universally need is more income. They can then decide which of these life-improving products and services they want to buy.
This is the concept behind the newly formed, Unitus Impact. Unitus Impact operates from the premise that much of the reason the poor stay poor is not due to a lack of hard work—it’s because markets and supply chains are stacked against them. For example, one pound of tuna might sell for $6 at market, while the fisherman who did most of the work catching, carrying and cleaning the fish gets about 25 cents of the $6 – while middlemen and wholesalers take all the rest.
Unitus Impact believes that while life isn’t always fair, it doesn’t need to be so unfair. Unitus Impact invests in companies that make markets and supply chains work better for those at the base of the economic pyramid—ensuring low-income populations receive more just rewards for their tireless work. Unitus Impact finds entrepreneurs with disruptive business models, which can lead to improved income-generating livelihoods for millions living at the poverty line and below.
Ruma, a startup business based in Indonesia, recruits and empowers sales agents (mostly low-income women) in villages in Indonesia to generate additional income using their mobile phone to provide valuable services to fellow villagers. Services include “topping up” customers’ mobile phone credits, providing local access to prepaid utility bill payments, and a job matching service for local jobs. Ruma also leverages its network to conduct survey projects for large consumer goods companies targeting the low-income segment.
On average, micro-sales agents have earned commissions from mobile minute sales that add nearly 40% to their annual income. Going forward, Ruma believes that incomes will increase even further and their low-income customers will save more time and money by having convenient local access to new services. Prior to the establishment of Ruma’s platform, small shopkeepers were limited to selling physical goods to their clients, but they now have the opportunity to market and sell goods that were previously only available to higher-level distributors in larger towns. With the growth capital invested by Unitus Impact, Ruma is hoping to provide improved livelihoods to 90,000 village sales agents over the next 3 years.
Unitus Capital scales up social impact
Building a safety net through affordable micro-insurance
Unitus Capital has been active raising growth debt and equity capital for social enterprises (businesses with goals of impacting poverty and being profitable) in India, China and Southeast Asia.
In addition to microfinance, health care and renewable energy, one of the areas Unitus Capital has focused on is bringing more capital to businesses seeking to provide micro-insurance services to poor populations. Unfortunately, there are few affordable and well-designed insurance options for the poor in India as most insurance companies have focused on the more profitable, growing middle class populations. The poor are often the most vulnerable to calamities as they have fewer backup resources.
Earlier this year, Unitus Capital successfully raised USD$15 million in equity capital for Shriram CCL. This capital will enable Shriram to protect 10 million people in India, most who have never had any type of insurance. The investment appears to be unprecedented in the scale of protection it will deliver, empowering people to build savings and make choices as they climb out of poverty and into the middle class.
Launch of Unitus Seed Fund
Addressing the missing seed capital for poverty impact businesses
There are an increasing number of social impact “change makers” who believe that the best way to realize the most poverty impact is through starting a new business (vs. a non-profit or something else.) These social entrepreneurs view profit-making as a way for them to keep a focus on customer needs and achieve more scale and sustainability by being able to re-invest their surplus to grow their outreach. Unfortunately, even with an abundance of strong entrepreneurial talent, there is a dearth of seed-stage capital to help them achieve the first stage of growth with tested and promising ideas.
Unitus Labs has developed and launched the Unitus Seed Fund to provide this seed-stage equity capital … typically about $50,000 to $100,00 … to businesses which have potential for improving the lives of 100,000’s of people who live at the base of the economic pyramid (income of less than $2 per day.)
One of Unitus Seed Fund’s first investments is a startup called Bodhicrew Services based in New Delhi, India. Bodhicrew provides a “safe migration” program for very poor, unskilled young people (mostly women) in impoverished rural areas to better paying jobs in cities. They provide education, skills training, job placement with pre-screened employers and follow-up support services to help these workers adapt and thrive in their new urban environment. Bodhicrew hopes to help provide an improved future for more than 100,000 poor young people in the next few years.
Unitus Labs supports microfinance innovation
Improving microfinance through financial literacy training
You may have heard about the microfinance crisis that started in India in late 2010 and is only just recently starting to improve. There is a lot of finger pointing between the government officials and the microfinance organizations as to whose fault it was, but the people who have suffered the most (as always) are the many poor in India who no longer have access to reasonably priced credit.
In order to improve the quality of microfinance services going forward in India, Unitus Labs selected and funded four innovation projects with MFI partners in 2011 requiring that all results and tools would be published as open source.
One of the projects was financial literacy training for microfinance clients developed by our partner, Ujjivan based in Bangalore. Ujjivan developed a high-quality edutainment video describing the pitfalls of taking microloans under false pretenses (one of the issues in India.) They combined this with an in-person training program on how to manage finances including savings, when to take a loan and how much, and other practical helps. The program has been very well received and they are in the process of rolling it out to their 1 million members. There is also considerable interest to use these resources from the Indian government and other Indian MFIs.
We appreciate your support and encouragement as we seek to make an impact on poverty through the Unitus family. We’re excited about the incredible entrepreneurs we’re finding who are literally changing their worlds and giving opportunities to millions of people who’ve lived in poverty for untold generations.
Like what we’re doing?
If what we are doing resonates with you, we’d love your help to accelerate and expand our impact. Please let us know if you’re interested and in what ways you’d like to consider becoming more involved.
Unitus Labs Board
Joseph Grenny, Board Chair
Dave Richards, CEO
Mike Murray, Director
Bob Gay, Director
Tim Stay, Director