We are in the final stages of creating an IDG alpha version. The launch date for this has been pushed back once because of illnesses on the team.

We’re now set for an INTERNAL alpha launch in the coming week, releasing to a slightly wider audience of invited individuals towards week 3 or 4 of April.

A wider beta release open to the public is not yet planned but should be part of our efforts to launch competitions in the near future. Stay tuned to the blog to find out more.

Apologies for the silence at our end. We’ve been busy working towards Alpha… which takes more effort than anybody thought. More on that another time, i’m sure!

For the moment, i just wanted to comment on the image above, found on the xigi.net website. It shows the funding options open to social ventures. Obviously most of us take a mix of the above, but that is not what struck me. Instead the graph shows me again (as though I needed reminding) how recklessness the venture really is! I mean, we are aiming here for the second most agressive method of finance, international equity. If you follow the equation aggressiveness = risk = less people willing to go in for it, you have to follow that IDG will have a very small customer base.

One conclusion, of many, is that we remain reliant on philanthropic capital, or at least philanthropic “patience” as it is being called these days. That helps us take some of the bite out of the aggressiveness-equation for potential investors. But is it sustainable in the way we advocate?

As Hammond and Kramer point out in a follow up piece published Value Magazine, also the victim of cot-death, “Small enterprises have been the dominant job creation in virtually every economy, advanced or developing, and entrepreneurship has been the path to wealth-creation, at the individual and nation-state level alike.” The International Labour Organisation (ILO) estimates that more than 70% of the workforce in developing countries operates in the informal or underground economy. These are enterprises that operate at ground level with a keen eye towards applicable technology. They know their market best, crucial particularly in developing countries. And yet it is particularly in developing countries that they lack the support network they need to overcome managerial, talent and financial barriers.

In the West a diverse but tight web of supporters made up of Angels, friends, family, government agencies, foundations and the Crowd help enterprises with a capital requirement of under $1m with their struggles. In places like India, where there are only 2 known Angel networks even less people able or willing to support their peers in an innovative venture, this system does not find an equal. The government and foundations help in some ways, most notably by forcing banks to lend a considerable percentage of their total Small & Medium Enterprises (SME’s). But debt, as Vineet pointed out in a report for the International Fund for Agriculture Development (IFAD) is not enough for start-ups in a cash crunch, and may even lead to an even more dramatic situation for the entrepreneurs. Instead they need long-term, committed equity partners to bear part of the risk with them. Solutions for this are thin on the ground.

India Development Gateway is one of them. By reducing the transaction cost of investing in such small deals, enabling a new class of investors, and ensuring smooth and successful transactions along the life of the company, IDG brings some solutions to the table. If entrepreneurs can’t find help in their immediate vicinity, why shouldn’t they benefit from technology to sharpen their ideas and reach out to others? Good question not often asked! Although some answers are emerging, and have done for a while, they are not nearly an adequate response to the size of the problem. In fact, so small is the number of voices that speak eloquently about the problem that one might be forgiven for seeing a conspiracy - The Small Cap Blackout!

Describing New Ventures‘ approach to this dilemma he writes,

“we get past the nearly paralyzing complexity of the poverty-environment nexus by focusing our efforts where environmental and social goals meet, essentially working to promote the Zhenghong oven-type models of the world rather than the Nano models.

Some might think this is a cop-out – I would disagree”

He continues by making a case for New Ventures’ focus on combining these hybrid, eco-social innovations with sustainable business models to effectively distribute them. Whether or not this is the best way forward he argues, New Ventures,

“aim(s) to discuss transparently and honestly the prospects and realities for sustainable and social entrepreneurship, about how realistically scalable companies like Hao’s are and the tensions between environmental and social impacts in the private sector.”

This discussion is absolutely necessary and IDG’s approach is to offer the most options, information and the clearest metrics about various the impacts of these businesses. Furthermore, the IDG platform will facilitate dialogue on several different levels so those achieving and supporting these new model businesses can work together on these issues.

So is this a cop out? No, it’s a bid to create buy-in (pun intended) from those who maybe aren’t involved as they should be, and even those who are. We agree with New Ventures that the best way we can achieve fully sustainable development is by supporting true hybrid value/multi-bottom line businesses. Furthermore, IDG’s biggest contribution is to give others enough information to make and act on these decisions for themselves.

The first post I read was on Bill Gate’s recent “creative capitalism” speech on the blog. It’s been creating quite a stir especially since William Easterly wrote his op-ed “Why Bill Gates hates my book” in the Wall Street Journal responding to Gate’s recent speech.

The second post “On Corporate Altruism” contained perhaps the wisest sentence I read and perhaps the most self evident one too. While considering the need for creative capitalism, whether it’s practical, possible or perhaps even a bad idea, Becker writes,

“The real test is how viable such motives are in a competitive market environment where the competition also includes companies motivated only by profits.”

In a nutshell, this is IDG’s operating philosophy towards the social impact and multiple bottom-line businesses. Social and environmental impacts are terrifically important and should be defined by both entrepreneurs and investors. Using IDG to communicate impacts , both desired and offered, will drive this growing market for competitive social enterprise in India.

http://www.livemint.com/2008/02/20142507/Google-Soros-Omidyar-plan-1.html

They were also kind enough to share a good part of their day with IDG last week. We met with the whole bright team who shared their thoughtful questions and constructive feedback. NVI is very familiar with our process, market and customers, as well as startups in similar stages of planning and execution as we are, so they had great advice and a genuine interest in seeing us succeed.

Our goal, as a platform, is to build the most inclusive process possible, both to insure we avoid duplicating the work of others and more importantly, to make sure we’re working with the best in the business, all sectors bar none.

The willingness of NVI to lend their professional ear speaks volumes about the potential collaborations in the future. As Emily points out the challenge moving forward for IDG is delivering the precise services needed by partners while maintaining IDG’s momentum as “an open, sector-less market-place for investment in all social businesses?”

This trend is particularly worrying amongst business advisors supporting social enterprises. Not only are the most innovative and challenging grassroot entities ignored, but by moving blindly up the value chain consultants lead by example. This is a clear failure of the advisers, charged with finding creative and workable solutions to systematic problems. In doing so they may well be turning a genuine opportunity into overpaid hype.

Of course all businesses worthy of their name should strive to make a profit. Planning, budgeting, billability and other best practices belong to the social enterprise space the same way they belong to mainstream consultancies. There are advantages for the enterprise to; they gain a reliable, accountable, quality, lasting advisor.

But it is a dangerous misconception to say that these things cannot be delivered without the high prices that go with typical consultancies. IDG is one example of how we can find sustainable business models to serve people who could most benefit, but there must be others. It may require 180 degree thinking, but of multinationals targeting the BOP space we demand no less.

Being online, we can offer like-minded organizations unique tools to streamline their similar processes. Each organization can choose whatever tool they need, from converting their entrepreneurs’ ideas automatically into business plans to making their mentoring services more efficient and long-lasting to using every tool we offer on the platform.

And it seems like most ‘other players’ in the space have a huge amount to offer in return. A trade off of our online tools for specialized knowledge, state-based outreach networks, service provider contacts, investor understanding.

The value of collaborating is undeniable, but the question is how far should or could we pander to these organizations? Should we find ways to cater specifically to certain styles and needs?

Do we need to change our strategy to maximize on the benefits offered or should we stick to the value we give as an open, sector-less market-place for investment in all social businesses?