The Development Marketplace Program (DM) is now ten years old. It started at a time when the power and promise of Social Entrepreneurship was only barely considered by the Development Community. A movement was just starting to take shape. This movement is founded on the belief that  social entrepreneurs, with their passion for equitable growth, with their “out of the box” thinking, with their business skills and with their deep connections with the community could partner and complement public sector efforts to deliver products and services needed by the poor and improve livelihood opportunities.  

Early Stage Testing

The Development Marketplace goal was to help translate this vision into reality. The first task was to give social entrepreneurs a platform and forum to showcase their vision. The second task was to support social entrepreneurs’ transit their vision into a sustainable organization that could efficiently and innovatively delivered public goods and services to poor communities.  

Thus, DM focused on surfacing innovative ideas and solutions. And because new ideas and innovations needed to be patiently nurtured, DM focused on providing early stage grant support to entrepreneurs selected through a competitive process.

DM has succeeded in achieving these goals in partnership with institutions such as Gates Foundation, Lemelson-MIT Program, the International Fund for Agriculture Development (IFAD),  Ashoka Foundation, Global Environmental Facility and many others. 

Development Agenda Redux

Social entrepreneurs are now seen as essential components of a social and economic development strategy that combines growth with equity. The ability of social entrepreneurs to deliver affordable essential goods and services to the poor, while integrating the poor into the broader organized economy is now being harnessed by policy makers and governments.

DM has contributed by supporting more than 1,200 social entrepreneurs with about US$60 million of grant funds. DM is proud to have supported in the early stages successful organizations such as Vision Spring (formerly Scojo Foundation), Drishtee, Village Reach, Akash Ganga and many others. DM has also established a community of passionate and informed supporters from all social and income strata. 

New Challenges

As the DM program enters its second decade it faces a new set of challenges. While a thousand ideas are blooming the numbers of ideas that go to scale are still limited, and the numbers that go on to have systemic impact are even less. We need many more institutions such as Aravinda Eye Hospital that serve an ever increasing number of poor at scale with declining unit costs. 

Going to scale involves many things. First a proof of concept must be established and a viable business model defined. Then these have to be tested and rolled out. Inevitably it is an iterative process that needs patient capital.  The entrepreneur feels less lonely and the challenges appear less daunting if she has access to mentoring and advise. And finally scaling requires access to finance at all stages of the roll-out and growth process.

Expanded Investment Opportunities

The good news is that the “for profit” private sector is showing strong interest in partnering with and supporting social enterprises in ways that go beyond Corporate Social Responsibility. Large pools of private individual and institutional capital are now available as growth finance. Large foundations are taking the lead and small and medium sized foundations are also looking for mechanisms whereby collectively they could channel a significant portion of their annual giving into social entrepreneurs. Investment funds mangers and investment advisors are considering debt and equity financing instruments targeted at this sector could become a new asset class attractive to socially conscious individual and institutional investors. 

But surfacing well-conceived projects, identifying the best business models and then structuring a pathway to predictable and readily available finance is not easy. The intermediation infrastructure to access growth finance is not yet fully established. As the emphasis shifts from supporting new ideas to supporting existing projects with track record and potential for scalability, issues of search and due diligence costs become important. Costs tend to be high because of lacking financial data, enterprise remoteness and absence of standardized metrics. And most importantly low cost support systems are required to help entrepreneurs think through their growth strategies, tackle implementation bottlenecks, and connect with funders. 

Next Generation Development Marketplace

These are the challenges that DM is now addressing.  We want to tackle these in partnership with the community of social entrepreneurs, with funders, with technical assistance providers, with governments and with the private sector. Our goal is to go beyond retail grant support to by helping establish a permanent intermediary structure for delivery of financial and non-financial services to projects ready to go to scale.

Specifically the DM will work towards programmatically addressing the following questions:

a) How do we scale up provision of low cost customized technical assistance and mentoring services?
b) How do we construct simple and robust measures of social impact, scalability, and financial sustainability?
c) How do we construct a coalition of funders that collectively provide social entrepreneurs with a predictable pathway to growth finance that enable projects to go to scale.

This is our call to action and our appeal to the community for ideas and support.