MappingtheSocial / Inclusive Business fieldin Brazil€¦ · social/inclusive business field in Brazil: Social/inclusive businesses Developers • Incubators • Accelerators •

Mapping the Social / Inclusive

Business field in Brazil

Complete Report

1. Objectives, partners, methodology and target group (p.3)

2. Mapping size & scope (p.7)

3. Identifying profiles (p.16)

4. Additional observations (p.88)

5. Contact information (p.92)

Contents

OBJECTIVES OF THE STUDY

• Identify actors in the area of businesses that aim to reduce poverty, specifically:

– Businesses

– Incubators

– Accelerators

– Investment Funds

• Collect and analyze data relating to:

– Operations, performance and impact

– Relationships with other actors and role in the ecosystem

• Promote results to people/organizations interested understanding the field in

Brazil

• Improve decision-making of actors in the field

• Attract more people/organizations to engage with the ecosystem in Brazil

EXPECTED IMPACT

3

PARTNERS

CoordinationANDE Brazil Chapter, AVINA Foundation & Potencia Ventures

Financial supportAVINA Foundation & Potencia Ventures

Execution of the researchPlano CDE

Other supportArtemisia Social Business & Vox Capital

For more detailed partner information, see Appendix I4

METHODOLOGY

1

MAPPING SIZE & SCOPE

• Identification of actors

• Desk research

• Systemization of basicinformation

IDENTIFYING PROFILES

• Definition of samples & list ofindicators for deeper research

• Compilation of data relating tooperational model, performance and social impact

• Anlaysis of data

2

5

Target groups

The research focused on three categories of organizations within the social/inclusive business field in Brazil:

Social/inclusive businesses

Developers

• Incubators

• Accelerators

• NGOs thatpromote income-generationactivities or areasof structuralimpact

• Incubators

• Accelerators

• NGOs thatpromote income-generationactivities or areasof structuralimpact

Investors

• Funds

• Donors with theintention to supportsocial/inclusive businesses

• Funds

• Donors with theintention to supportsocial/inclusive businesses

6

Phase 1 Results :Mapping size & scope

Businesses

Capacity Development Providers

Investors

METHODOLOGY

1



• Desk research






2

8

9

PHASE 1

Actors identified

884 organizations

� 140 Social/Inclusive Businesses� 60 Incubators� 24 Accelerators� 15 Investors

� 645 Income generation initiatives (not considered for Phase 2)

For more detailed results, see Appendix II

By sectorOther*

(9)

TourismTourism (7)

Distribution (8)

Technology/IT/Energy(8)

Agriculture/Food (9)

Fashion/Decoration (10)

Health / Education / Culture (14)

Artisanal products (13)

Financial Services (62)

Phase I:Social / Inclusive Businesses (140)

* Including Housing10

Regions:

North

Northeast

Centre-West

Southeast

South

33

55

10

6

36

By Region

Phase I:Social / Inclusive Businesses (140)

11

Incubators:

Have as their objective the creation of new businesses, supporting them in their first steps. They help to put an idea into practice and turn it into a reality.

To achieve this they provide an environment conducive to business development, offering management, accounting, financial and legal support, allowing businesses to establish themselves. Generally overhead costs are shared between various incubated businesses.

In Brazil, they often support innovative projects resulting from R&D initiatives.

Accelerators:

Facilitate and accelerate the consolidation of businesses that are already operating by making connections and offering support services, including:

- Connecting entrepreneurs with executives, investors & others- Help with identifying and contracting human resources- Training for entrepreneurs- Consulting in various areas of management

Capacity development providers:

Definitions used

12

Regiões:

Norte

Nordeste

Centro Oeste

Sudeste

Sul

17

21

6

8

8

1320 Technological Incubators were consulted in relation to incubation of social/inclusive businesses, even though this is not their focus

Regions:

North

Northeast

Centre-West

Southeast

South

By Region

Phase I:Incubators (60)

Regiões:

Norte

Nordeste

Centro Oeste

Sudeste

Sul

4

19

1

-

-

14

By Region

Phase I:Accelerators (24)

Regions:

North

Northeast

Centre-West

Southeast

South

Regiões:

Norte

Nordeste

Centro Oeste

Sudeste

Sul

2

11

1

15

* 1 in New York

Regions:

North

Northeast

Centre-West

Southeast

South

By Region

Phase I:Investors (15*)

Phase 2 Results:Identification of profiles

Businesses


Investors

METHODOLOGY

1



• Desk research






2

17

18

Sample Definition

50 SOCIAL / INCLUSIVE BUSINESSES

• Focus on micro and small enterprises

• Annual revenue below $10Million*, when declared

• Directly serves the base of the pyramid:

• Offer products or services; and/or

• Includes people from the BoP in the value chain (excluding those that generateonly employment)

• Economically viable, or structured to achieve viability

• Excludes those that depend mostly on donations

• May or not intend to cause positive social impact

• Preference for areas of structural necessity:

• Education / health / housing / finances

Respondants’ profile:

• Founder, shareholder or qualified manager/director

* Nominal exchange rate: $1= 1.6BRL

Phase 2 - METHODOLOGY

• Quantitative research

• Questionnaire applied by telephone (CATI), based on the list created in

Phase 1 � intentional sample

• Interviews of approximately 30 minutes

• Questionnaires composed of the following types of questions:

– Closed: the interviewee chooses and or ranks responses from within a pre-defined

list of possibilities

– Semi-open: the interviewee chooses and or ranks responses from within a pre-

defined list of possibilities, and also has the possibility to declare a non-listed

response

– Open: the interviewee declares his/her response freely, without needing to choose

from a pre-defined list

• Where possible, indicators were taken from the Impact Reporting &

Investment Standards framework - IRIS

(http://iris.thegiin.org – see Appendix III for more details)

19

Social / Inclusive Businesses (50 interviews)

Annual revenue in USD* (excluding donations) – Classification according to BNDES criteria**

Micro enterprise

64%Small enterprise

10%Medium enterprise

(not mapped)

< 125,000 22%

125,000 to 219,000 14%

219,000 to 312,500 6%

312,500 to 625,000 12%

625,000 to 1.5 million 10%

3.125 to 6.25 million 8%

6.25 to 10 million 2%

16 to 90 million -

Did not respond: 26%

Phase 2

4%Donations

10%Loans

86%Own resources

How do they finance day-to-day operations?

Base: 50 interviews

Businesses with declared revenueabove 16 million did not enter intothe study at this stage.

* Nominal exchange rate of $1 = 1.6 BRL; ** BNDES is the National Bank for Economic & Social Development, a Brazilian public-sector organization

Social / Inclusive BusinessesGeographic distribution of sample – absolute numbers

Regiões:

North

Northeast

Centre West

Southeast

South

13

25

3

2

7

Description

Origin per region

21

NE SE SN CW

AM 1 BA 4 DF 2 SP 21 RS 2

PA 2 PE 5 Total: 2 RJ 1 SC 2

Total: 3 CE 2 MG 3 PR 3

SE 1 Total: 25 Total: 7

PB 1

Total: 13

Social / Inclusive BusinessesGeographic distribution of sample – absolute numbers

Origin per State

Description

22

Profile of founders – entrepreneurship experience and education Founder

Base: 50 interviews

78%

20%2%

Already set-up otherbusinesses

First business

N/a

1 enterprise 38%

2 enterprises 16%

3 enterprises 14%

4 enterprises 10%

How many? Primary SecondaryUnder-

graduatePost-

graduate

2% 12% 40% 38%

Did not respond: 4%N/a: 4%

Social / Inclusive Businesses

23

* Absolute numbers

28%

50%

22%

Scope of operations

Regional

In various regions of Brazil

International

Scope of operations

Base: 50 interviews

Profile

Of those that operate regionally*, 9 are in the Southeast, 4 in the Northeast and 1 in the North

Of those that operate in various regions of Brasil*, 12 are based in the Southeast, 6 in the Northeast and 6 in the South

Of those that have international reach*, 4 are based in the Southeastand 3 in the Northeast

Sectors:Culture, Education, Housing, Environment, Health, Financial services/microcredit, Transport/logistics, Tourism and Food industry

Sectors:Water & sanitation , Agriculture, Artesanals, IT/Communication, Culture, Education, Housing, Infrastructure, Environment, Health, Distribution, Technical assistance, Financial services/microcredit, Transport/logistics, Tourism, Commerce, Training, Agro- industrial, Consultancy

Sectors:Agriculture, Artesanals, IT/Communication, Culture, Education, Energy, Housing, Environment, Distribution, Technical assistance, Financial services/microcredit, Transport/logistics, Tourism, Vocational training, Food industry


24

The 13 businesses based in the

NORTHEAST sell to, on average, 8 states,

reaching all regions

The 25 businesses based in the

SOUTHEAST sell to, on average, 6 states,

reaching all regions

The 7 businesses based in the SOUTH

sell to, on average, 11 states, reaching all

regions

The 3 businesses based in the NORTH

sell to, on average, 13 states, reaching all

regions

The 2 businesses based in the CENTER-

WEST sell to, on average, 4 states, reaching

the North and Southeast) in addition to the

Center-West itself

Geographic reach of sales

Social / Inclusive BusinessesProfile

25

Founding year – in absolute numbers

Base: 50 interviews

1990s 2010s1980s 2000s

1980 1 1990 1 2000 3 2010 3

1983 1 1992 1 2001 3 Total: 3

Total: 2 1993 1 2002 2

1994 2 2003 1

1996 1 2004 1

1997 2 2005 3

1998 2 2006 7

1999 2 2007 4

Total: 12 2008 6

2009 3

Total: 33

Social / Inclusive BusinessesDescription

26

Mechanism for impact

Offer acess to productsor services for low-income people

Work in partnership with low-income people , who are suppliers, distributors,

or owners of the business

Do both

18% 14%

68%


Base: 50 interviews

Description

27

Social Impact

Were created with the intention of causing social impact

Were not created with the intention of causing social impact

96%

4%


Base: 50 interviews

Description

28

Are operating as conventional businesses, and do not rely on donations

Depend partially on donations (< 90%), but intend to become independent and operate fully with their own

resources

64%

36%

Financial self-sufficiency

Base: 50 interviews

ProfileSocial / Inclusive Businesses

29

Sector

2%

2%

2%

2%

2%

2%

2%

2%

2%

4%

4%

4%

4%

6%

8%

8%

10%

10%

12%

14%

16%

16%

18%

24%

24%

34%

Energy

Commerce

Consultancy in export of handicrafts

Food services

Training / management

Vocational training

Food manufacturing

Sustainability Consulting

Service provision

Water and sanitation

Infrastructure

Livestock

Agro-industry

Technical Assistance

Health

Transport/Logistics

Housing

Tourism

Information / Communication Technology

Agriculture

Artisanal

Environment

Distribution

Culture

Financial Services / Microcredit

Education

Multiple Responses

Multiplicity index: 2.34

IRIS IndicatorOD 7481 / PD 3017

Base: 50 interviews; 117 mentions


30

ServicesProduction/

ManufacturingDistribution

Wholesale / Retail

Processing/ packaging

72% 28% 26% 22% 16%

Operational Model

IRIS IndicatorOD 6306

Multiple Responses




31

Product / Service offered(Open question )

Microcredit & entrepreneur

training

18%

Education & training

12%

Artisanal & clothing

12%

Agriculture & environmental

services

8%

Food

8%

Architecture, construction &

landregularization

6%

Travel & tourism

8%

Art & culture

6%

Intermediationbetween

communities & distributors

6%

Health

6%

Technology

4%

Others: 6%

IRIS IndicatorPD 7899

Base: 50 interviews

Social / Inclusive BusinessesProduct

32

Client type

Individuals / Households

Small & Medium

Enterprises

LargeOrganizations

Non-profit / NGOs

GovernmentalOrganizations

74% 60% 48% 26% 18%

IRIS standardPD 7993

Multiple Responses



ProductSocial / Inclusive Businesses

33

Strategies for cost-reduction / increasing access(Semi-open question)

Commercialstrategy / payment

conditions

40%

Innovation in production

process(reducing

production costs)

32%

Economies ofscale

30%

Distributionstrategy

26%

• Client visits

• Partnershipswith suppliers

4%(each)

* Diverse responses with few mentions

Others*: 38%

Multiple Responses



Social / Inclusive BusinessesProduct

34

Client option if the business did not exist

Would buy athigher price fromanother supplier

49%

No option, wouldnot buy

22%

Don’t know

6%

Others*: 23%


* Diverse responses with few mentionsBase: 50 interviews;

Product

35

Primary Social-Impact Objective Impact

Income / productivity growth 36%

Access to education 16%

Affordable housing 8%

Capacity-building 8%

Community development 8%

Access to financial services 6%

Employment generation 6%

Health improvement 4%

Agricultural productivity 2%

Access to consumer goods 2%

Access to information 2%

Disease prevention & mitigation 2%

Primary Social-Impact Objective

IRIS StandardOD 6247


Base: 50 interviews;36

Beneficiaries(Open question, without pre-determined groupings)

1 to 999 211992 / 1994 / 1996 / 1997 / 1998 / 1999 / 2000 / 2001 / 2003 / 2005 / 2006 / 2007 / 2008 /

2009 / 2010

1,000 to 9,999 121983 / 1993 / 1994 / 1997 / 1998 / 2000 / 2001

/ 2002 / 2005 / 2006 / 2007 / 2010

10,000 to 99,999 91980 / 1999 / 2001 / 2004 / 2005 / 2006 /

2007 / 2009

100,000 to 999,999 3 1990 / 2006 / 2008

> 1,000,000 1 2006

No response 4 2002 / 2006 / 2008 / 2010

Nº of beneficiaries in 2010* vs year of founding

* Absolute numbers

ImpactSocial / Inclusive Businesses

Base: 50 interviews;37

General population 76%

Women 38%

Children & Adolescents 30%

Disabled 16%

Minorities / Previouslyexcluded populations

16%

Multiplicity Index 1.76

Demographic Groups– multiple response

< 0.5 min. salary (<$170 / month) 60%

0.5 to 2 min. salaries ($171-680) 72%

2 to 5 min. salaries ($681-1700) 38%

5 to 10 min. salaries ($1701-3400 ) 24%

> 10 min. salaries ($3400 ) 16%

No response 2%


Socioeconomic Groups*– multiple response

IRIS StandardPD 5752

IRIS standardPD 2541

BeneficiariesImpact

Base: 50 interviews;


* Nominal Exchange Rate: $1 = 1.60BRL1 minimum salary in Brazil = 545BRL / month

38

Do not research or collect data about social impact generated

50%

Internal 38%

External 8%

ISO 26000 4%

Measurement of Social Impact

Research or collect data about social impact generated

50% Methodologies used

Impact

Base: 50 interviews;


39

Technological Products/Services

Used other sources to develop the technology for their product or service

1/3

Developed the technology for their product or service in-house

2/3

University 7

International model 6

Technology incubator 3

Large company 2

Investor / individual 2

Multiplicity index 1.82

Technology Source – multiple response

Product

Base: 32 interviews (those who declared offering a technology-based product or service )


40

NGO 22

Consultancy 18

SEBRAE (Government SME Agency) 13

Universities 12

Other government agencies 9

Business incubator 5

Sectorial organization 3

Bank 2


Advisory

Base: 50 interviews

Do not make use of external advice or guidance in day-to-day operations

26%

74%From whom receive advice – multiple

responses, absolute numbersMake use of external advice or guidance in day-to-day operations

Description

Base: 37 interviews , 84 mentions


41

Boards

Have an advisory board

Have a decision-making board

Have both

34% 38%16%

Do not have a board – 10%No response – 2%

Yes 29%

No 4%

No response 1%

Boards with independentmembers

(advisory boards)

Yes 22%

No 16%

Boards with independentmembers

(decision-making boards)

Base: 50 interviews

DescriptionSocial / Inclusive Businesses

42

External Investors(who do not participate in operations; not including donations)

Financial

Resources

Base: 48 interviews (excludes those that rely on donations to fund daily operations)

Do not have external investors

46%

Have external investors

54%


43

Growth expectations – 3 years Growth

0 to 25% 4

26 to 50% 10

51 to 100% 7

> 100% 9

No response 5

Expected growth (%) -absolute numbers, open question

Base: 35 interview (Growth %), 15 interviews (growth factor)

x2 4

x3 5

x4 1

x5 5

Expected growth (factor) -absolute numbers, closed question


44

Expected growth in financing – 3 years

Base: 50 interviews (volume to be raised) / Base: 38 interviews (from donations) / *Base: 21 interviews (from loans) / Base: 31 interviews (equity investment)

< 625k 14

625k - 3.125M 14

3.125M – 7.5M 7

> 7.5M 3

No response 12

Expected volume to be raised ($)*– absolute numbers, open question

0 to 25% 19

26 to 50% 4

> 50% 2

Don’t know 3

No response 10

Proporation from donations

– absolute numbers

0 to 25% 12

26 to 50% 4

> 50% 5

Proporation from loans*– absolute numbers

0 to 25% 3

26 to 50% 5

51 to 75% 4

76 to 100% 19

Proporation from equityinvestment

– absolute numbers

GrowthSocial / Inclusive Businesses

* Nominal Exchange Rate: $1 = 1.60BRL

45


Businesses


Investors

47

40 CAPACITY DEVELOPMENT PROVIDERS

• Support the growth and development of businesses

• Deliberately seek to support social impact businesses, even if this is not their main or exclusive focus

• Support businesses over a period of time, rather than making one-off interventions

• Have frequent interactions with the businesses

• Offer a portfolio of support services to businesses and/or entrepreneurs

• Focus on businesses with annual revenues of less than $56million*

Sample Definition




Regiões:

Norte

Nordeste

Centro Oeste

Sudeste

Sul

4

30

1

2

3

Capacity Development ProvidersDistribution by geographic region

Regions:

North

Northeast

Centre West

Southeast

South

Asbolute numbers

Description

48

NE SE SN CW

PA 1 BA 2 DF 1 SP 18 RS 1

Total: 1 MA 1 MT 1 RJ 7 PR 2

CE 1 Total: 2 MG 5 Total: 3

Total: 4 Total: 30

Capacity Development ProvidersDistribution by state

Regions:

North

Northeast

Centre West

Southeast

South

Asbolute numbers

Description

49

1990s 2010s1980s 2000s

1961 1 1970 1 1986 1 1993 2 2000 5 2010 1

1968 2 Total: 1 1987 1 1994 1 2001 2 Total: 1

Total: 3 Total: 2 1995 3 2002 2

1996 2 2004 4

1997 1 2005 2

Total: 9 2006 2

2007 3

2008 3

2009 1

Total: 24

Base: 40 interviews

1970s1960s

Capacity Development ProvidersFounding year

Asbolute numbers

Description

50

Base: 40 interviews

Perfil

Civil Associations

68%

Private companies

15%

Foundations

12%

• Public companies• Universities

2,5%(each)

Accelerator Incubator NGO

50% 25% 25%

By Category

• Non-profit organization (13)• Private Company (5)• Foundation (1)• Public company (1)

• Non-profit organization (6)• Foundation (2)• Private Company (1)• University (1)

• Non-profit organization (9)• Foundation (1)

Capacity Development ProvidersLegal registration type

Description

51

Businesses supported

Base: 40 interviews

Up to 20 28%

21 – 50 12%

51 – 200 25%

� 200 20%

Don’t know 15%

Nº of businesses supported up to 2011* The capacity development providers that have supported

the most businesses are not necessarilty those that have been operating the longest

Looking more closely at those that have supported the most:

Nº of businesses supported up to 2011

Year of founding

7000 1968

2000 1996

1550 2004

425 2002

325 1986

300 1970

250 2000 / 2006

200 2000 / 2006 / 2007

* Open question, without pre-determined ranges

Capacity Development ProvidersPerformance

52

< 10 45%

11 to 50 25%

> 50 30%

Number of businesses focused onBoP supported in 2010

Only companiesNGOs &

companies

32%68%

Principal type of

organization supported

* Open question, without pre-determined rangesBase: 40 interviews

Capacity Development ProvidersBusinesses supported

Description

53

Base: 40 interviews / 274 mentions

Multiple responses


Education

75%

Artisanal

63%

Environ-ment

63%

Culture

60%

Agriculture

50%

ICT

50%

Health

48%

Distribitionchannels

40%

Tourism

40%

Technicalsupportservices

38%

Fin. Services /

micro-credit

38%

Housing

35%

Energy

28%

Transport / logistics

23%

Infra-structure

20%

Water & sanitation

18%

Capacity Development ProvidersBusinesses supported in 2010 by sector

Description

54

Services offered to businesses

Courses, workshops,

training

93%

Strategicadvice /

consulting

78%

Management advice /

consulting

73%

Inclusion in contact

networks

73%

Technologicaladvice /

consulting

60%

Marketingsupport

55%

Financial management

support

53%

Connection to investors

50%

Connection to mentors

45%

Accounting / legal support

35%

Entrepreneur Coaching

35%

Support in HR / recruitment /

selection

30%

Socialinclusion

3%


Multiple responses



Description

55

The 4 organizations from the

NORTHEAST operate, on average, in 2

states, concentrated in the Northeast

itself (BA, CE & MA)

The 30 organizations from the

SOUTHEAST operate, on average, in 7

states, reaching all regions of Brazil

The 3 organizations from the SOUTH

operate, on average, in 5 states,

reaching the North (PA & RR), Northeast

(CE, MA & PE), Southeast (RJ & SP) and

South (PR, RS e SC)

The 1 organization from the NORTH

operates in 3 states across 2 regions: AM

& PA (North) and CE (Northeast )

The 2 organizations from the CENTER-WEST

operate, on average, in 2 states, reaching

only the Center-West region itself (DF e MT)

Base: N (1 interview / 4 mentions); NE (4 interview s / 8 mentions); CW (2 interview s / 4 mentions); SE (30 interview s / 224 mentions); S (3 interviews / 15 mentions)

Multiple responses

Multiplicity indices:

• North – 3.00

• Nordeste – 2.00

• Centro Oeste – 2.00

• Sudeste – 7.47

• Sul – 5.00

Geographical reach(including locations of businesses supported)

Capacity Development ProvidersDescription

56

Payment for services offered

Base: 40 interviews

Always free Always paid

Some are free, others paid

58% 2%40%

Yes 30%

No 12%

Have you on occasion decided not tocharge for a service that is normally

paid?

Capacity Development Providers Support

model

57

Support

modelDevelopment focus & search strategy

Base: 40 interviews

Developing the business

Developing the entrepreneur

Both

8% 20%72%

Businesses look for us

We look for businesses

Both

18% 2%80%

Main focus for development: the business or the entrepreneur?

Mechanism for finding businesses to support


58

Criteria for selecting iniciatives to support

Sector

63%

Social impact

58%

Entrepreneur profile

53%

Size or stage ofdevelopment

33%

Revenuetarget

8%

No criteria

5%



Multiple responses


Support

model

59

Lack of intentto cause

social impact

55%

Entrepreneur profile

48%

Sector

35%

Low growthpotential

20%

No criteria

5%

Criteria for rejecting requests for support



Multiple responses


Support

model

60

Base: 40 interviews

6 months 2%

12 months 5%

18 months 5%

24 months 20%

36 months 18%

Variable, not standard 50%

Duration of relationship withsupported business

After the contracted / formal support has ended

6 months 2.5%

12 months 2.5%

36 months 2.5%

60 months 2.5%

Variable, not standard 82%

How long does this contact last?

Relationship with supported businesses



Support

model

61

Base: 40 interviews / 116 mentions (barriers) / 40 interviews / 114 mentions (solutions)

• Lack of start-up capital• Bureaucracy• Lack of working capital

Lack of capacity of entrepreneur / team

Legislation/ legalization / publicpolicy

Lack of technical structure

Business plan underdeveloped

Barriers / difficulties

48%(each)

45%

38%

33%

28%

Solutions / iniciatives

More dialogue with the public sector to create more enabling public policy

Invest in training of entrepreneurs

Identify sources of financing

Share solutions and challengesbetween organizations

83%

73%

63%

60%

Barriers faced, and possible solutions


Multiple responses


Multiple responses


Support

model

62

• International NGOs• Service provision• UNICEF/ UNESCO• Corporate support

3% (each)

Financial

Resources

Corporate Foundations /

Institutes

63%

Ownresources

58%

PublicFoundations /

Institutes

48%

Private individuals

40%

OtherFoundations /

Institutes

35%

Internationalgrants

5%

Stability of revenue sources

Revenue sources


Multiple responses


Base: 40 interviews / 111 mentions (sources) / 40 interviews (stability)

63

• Investmentfunds

• Universities

10% (each)

Base: 40 interviews

Up to 150k 20%

150k to 300k 20%

300k to 1.2M 28%

1.2M to 3M 15%

3M to 6M 5%

> 6M 7%

No response 5%

Annual budget (US $*)

Financial

ResourcesBudget


64* Nominal exchange rate: $1= 1.6BRL

Base: 40 interviews

Impact

Up to 10 30%

11 – 50 28%

51 – 150 22%

> 150 18%

No response 2%

Mean 252

0 17%

1 – 10 35%

11 – 50 22%

> 50 13%

No response 13%

Mean 140

0 28%

1 – 10 25%

11 – 50 20%

> 50 10%

No response 17%

Mean 98

How manybusinesses haveyou supported in the past 3 years*?

Of these, howmany are self sufficient*?

Of these, how manysurvived one year

after supportended*?

56% 70%

Cascade of impact



65

Impact

Base: 40 interviews / Base: 30 interviews / 33 mentions (methodologies uesd)

Do not collect data about the social impact of businesses supported

25%

Directly with entrepreneurs 27%

Periodical research / evaluation 20%

Case-by-case basis 13%

Internal evaluation / audit 13%

Directly with beneficiaries 10%

Market research (quali / quanti) 7%

External evaluation / audit 7%

Informally 3%

No response 3%

Collect data about the social impact of businesses supported

75% Methodologies used – multiple responses

Measuring social impact of businesses supported


66


Businesses


Investors

68

14 INVESTORS

• Deliberately seek to support social impact businesses, even if this is not their main or exclusive focus

• Provide equity, loans and/or grants

Sample Definition



Investors

Regiões:

Norte

Nordeste

Centro Oeste

Sudeste

Sul

1

12

1

Distribution by geographic region

Asbolute numbers

Regions:

North

Northeast

Centre West

Southeast

South

Description

69

NE SE S

Pernam-

buco

1 São

Paulo

6 Santa

Catarina

1

Rio de

Janeiro

6

Total: 1 Total: 12 Total: 1

DescriptionDistribution by state

Asbolute numbers

Regions:

North

Northeast

Centre West

Southeast

South

Investors

70

1955 1 1966 1 1986 1 2001 1 2010 1

Total: 1 1967 1 Total: 1 2007 4 Total: 1

Total: 2 2008 2

2009 2

Total: 9

1980s 2010s1960s 2000s1950s

Founding yearAsbolute numbers

Description

Investors

71

Civil Association

5

Private company

4

International / multilateral organization

2

• Foundation

• Public company

• Fund

1(each)

Closed fund / investment company with own

resources

Absolute numbers(low basis – 14 responses)

InvestorsLegal registration type Description

72

Donations

7

Equity(seed capital)

6

Equity(venture capital)

5

• Loans

• Equity(private equity)

3(each)

Multiple responses


Others

3

InvestorsType of investment realized


Investment

model

73

Investiments in social/inclusive businesses

Have previouslyinvested in this kind

of business

10

Currently invest in this kind of business

12The majority already have

experience investing in social / inclusive businesses Sectors in which these

businesses operate:(most cited, absolute nºs)

• Education (4)• IT (3)• Water & sanitation (2)• Music (2)• Housing (2)• Energy (2)• Distribution (2)

Base: 10 interviews / 33 mentions (Multiplicity: 3.30)

InvestorsInvestment

model

Absolute numbers(low basis – 14 responses) 74

Life-cycle stage and investment size

Em números absolutos(base baixa – 14 casos)

Start-up

9

Consolidation

9

Growth

11

Up to 60k 2

60k – 150k 4

300k – 600k 3

6M – 3M 1

> 3M 2

No response 2

Average ticket size(US$*)

Investment

model

Investors

Multiple responses




Total volume of investments

State that 100% of total available funds will be invested in social / inclusive businesses

6

Did not reveal the total number of investments that they expect to make

11

Even so...

Investment

model

Investors

Up to 600k 1

600k – 1.2M 3

1.2M – 2.4M 1

2.4M – 6M 4

> 6M 4

No response 1

Total funds available for investment (US$*)



Preferred investment sectors

Education

9

Agriculture

7

ICT

7

Financial Services /

Micro-credit

7

Energy

6

Environ-ment

6

Health

6

Water & sanitation

5

Housing

5

Technicalsupport

5

Artisanal

4

Culture

3

Infra-structure

3

Distribution

3

Transport/ logístics

3

Tourism

3

Investment

model

Multiple responses



Investors

77

Expected returns

20 - 30% 2

50 - 60% 3

100% 3

No response 6

Average return expectedover the next 5 years*

Investors

No return 4

Market rate 4

Return of initial investment 3

Below market rate 3

Expected return oninvestment of the portfolio

Investment

model

Absolute numbers(low basis – 14 responses) * Open question, without pre-determined ranges 78

OperationsEmployees and overheads of investors

Up to 15 10

80 - 100 2

> 100 2

Nº of paid employees*

Up to 15% 6

> 15% 3

No response 5

% of total costs spent onoverheads*

Investors

Absolute numbers(low basis – 14 responses) * Open question, without pre-determined ranges 79

Private individual(s) Organization(s)

3 65

National International

Both(mixed)

8 24

Fund-

raisingOrigin of funds & fundraising strategy

Based on social impact 7

Based on social impact & financial return

6

Other aspects 1

Strategy used to raise funds

Investors

Origin of resources

Both(mixed)


80

Investment

selectionCriteria for evaluating investment proposals

Suitability ofthe

entrepreneur

14

Most cited:

Relevant social impact

13

Well developedbusiness model

9

Consolidatedmanagement

team

9

Experience ofthe

entrepreneur

8

Due Dilligence

6

Regulatory risk

6

Starting capital of the

entrepreneur

4

Of these, which is the most difficult to find?

• Well developed business model (3)

• Consolidated management team (3)

• Suitability of the entrepreneur (2)

Investors

Multiple responses



81

Most important decision criteria

Social impact 6

Entrepreneur profile 4

1st place – most cited

Team 3

Social impact 3

Market potential 2

Predicted profitability 2

Assets brought by entrepreneur 2

2nd place – most cited

Entrepreneur profile 3

Business plan 3

Market potential 2

Predicted profitability 2

3rd place – most cited

Investment

selection

Investors


82

Search strategy & market opportunities

Businesses look for investors

Investors lookfor businesses

Both

1 49

During the next 2 years the market will offer:

Pipeline

Investors


83

Portfolio

managementEngagement & involvement with investees

Very engaged, close relationship 12

Engaged, but less closely 2

Level of engagement with investeecompanies

Advisorymeetings

12

Type of involvement between investor and investee(most cited)

Monitoringfinancial

indicators

11

Indicating peoplefor key roles

10

Regular Boardmeetings

9

Multiple responses



Investors

84

Knowledge transfer 8

Introduction to new markets 5

Budget creation 4

Introduction to other investors 2

Services offered (most cited)

Developed internally 9

Available on the market 1

Standard used to analyze investmentperformance

Portfolio

management

InvestorsNon-financial services and performance analysis

Multiple responses


Of the 10 investors that use a standard method to analyze investment performance, the majority developed this method internally


Yes 10

No 4

Do you offer non-financial servicesto your investees?

85

Exit timeline: IDEAL vs ACTUAL

5

declared that theideal exit timeline

happens in practice

3

declared that thetimeline wouldideally be LESS

than it is in practice

1

declared that thetimeline would

ideally beGREATER than it

is in practice

1

declared that theideal timeline varies for each business, and that in practice

it is 1 year

2

declared that theideal timeline is 5 years, but don’t

know how long it isin practice

2

did not declare anideal timeline, nor

how long it takes in practice

InvestorsPortfolio

management


86

EcosystemExclusivity / co-investment

The majority of businesses are alsosupported by other organizations

7

Only some businesses are supported byother organizations

3

None of the businesses are supported byother organizations

4

Exclusivity of investments

Prefer to invest together with otherinvestors

8

No clear preference, as long as theopportunity is good

6

Preference for co-investment

Investors


87

Additional Observations

Conclusões

• Social Business / Inclusive Business is a relatively new phenomenon in Brazil. It is

therefore not surprising that there is not concensus around theories or concepts,

nor even around what this means in practice.

• We identified many initiatives that are hybrid, trying various approaches and

organziational models for social impact, and that do not fit neatly into any

conceptual framework

• The legal nature of an organization does not necessarily define the driving factor

for it becoming a social/inclusive business

• This creates challenges in classification, but also offers a great opportunity to

innovate and experiment

The reality shows us that there is an opportunity to refine concepts and thus

perhaps include other businesses that act within the social impact area but do

not identify themselves as such.

We suggest not creating a rigid definition of social/inclusive business, given that

the field is still in an early stage of development.

Concepts & Terminology

89

• The businesses analyzed generally have a clear intention to generate

social impact, reaching the BoP as consumers and through inclusion in

the value chain.

• There is an important gap, and a significant opportunity, in businesses

that are able to meet the unmet needs of the BoP in healthcare,

education, housing and technology.

Among existing businesses, there is an opportunity to reinforce the

importance of effectively measuring social impact.

Social Impact

90

Conclusões

• There is significant scope for communicating a more consistent

concept of social/inclusive business, and for showcasing successful

initiatives from the field.

• This would help to :

– Widen the discussion

– Increase the maturity of the field

– Stimulate exchange of experiences between actors in the field

– Promote better structuring of initiatives

– Increase awareness of opportunities for investment and suppport

services

– Stimulate entrepreneurs to look for financing to increase the scale of

their businesses

– Structure common metrics for measuring social impact (those in this

survey that do measure mostly use in-house methods, and many do not

measure at all)

– Develop management models capable of meeting the specific needs of

businesses that aim to cause social impact as well as being profitable

Developing the field

91

For more information, please contact:

Rob ParkinsonANDE Brazil Chapter, CoordinatorEmail: [email protected]

About ANDE Brazil Chapter (www.andepolobrasil.org)The Aspen Network of Development Entrepreneurs (ANDE) is a global network of organizations that invest money and expertise to propel entrepreneurship in emerging markets. ANDE members are the vanguard of a movement that is focused on small and growing businesses (SGBs) that create economic, environmental, and social benefits for developing countries. ANDE’s Brazil Chapter brings together member organizations across the country to generate and share knowledge around businesses focused on the base of the pyramid, facilitate dialogue with other players in the entrepreneurship ecosystem, and build connections with the international movement for SGBs.

About AVINA Foundation (www.avina.net)AVINA Foundation contributes to sustainable development in Latin America by encouraging productive alliances based on trust among social and business leaders and by brokering consensus around agendas for action. AVINA works in almost all of the continent, implementing national and regional strategies.

About Potencia Ventures (http://www.potenciaventures.net/)Potencia Ventures backs system-changing new business models, businesses, and institutions to help create the entrepreneurial ecosystem that improves opportunity for the base of the pyramid. Potencia has been the first investor and principal strategic partner for a half-dozen key initiatives for business serving the base of the pyramid in Brazil. This includes a venture capital fund (VOX Capital), an organization that develops high performance teams for businesses that reduce poverty (Artemisia), and Brazil's premier source for information about the field (NextBillion Brasil). Potencia Ventures has also supported other initiatives in Latin America, Asia, West Africa and Europe.

Appendix I

93

About Plano CDE (www.planocde.com.br)Specializing in understanding socioeconomic classes C, D & E, Plano CDE is a consultancy firm that helps organizations from all sectors to develop new activities and inclusive businesses involving the base of the pyramid population. Plano CDE also carries out qualitative and quantitative research to better address its clients concerns, as well as providing executive

training and guidance on working classes C, D & E in Brazil and with emerging markets.

Appendix I

94

95

Initial List

Indications resulting

from initial

interviews

Indications sent later

by email

164 indications130 invalid (80%)11 repetitions (already in initial list)23 valid (new names) (14%)

145 indications109 invalid(75%)20 repetitions (already in initial list)16 valid (new names) (11%)

174 contacts= 143 organizations (excluding duplications)- 12 discarded for difficulties entering in contact= 131 for contact104 successfully contacted = 80%

Other

organizations

contacted, beyond

the initial list

25 organizations or people13 of these offered further indications275 indications210 invalid (76%)17 repetitions (already in initial list)48 valid (new names) (17%)

Desk-research

Research online Access to other lisst/sources (702 indications)

�140 Social/Inclusive Businesses�60 Incubators�24 Accelerators�15 Investors�645 Incomegeneration

884organizations

Appendix II:PHASE 1 DETAILED RESULTS

Appendix III:IRIS STANDARDS USED IN THIS STUDY

• Sector of activity• (OD 7481 / PD 3017).......................................................................................slide 30

• Organizational model• (OD 6306)........................................................................................................slide 31

• Product or service offered• (PD 7899)........................................................................................................slide 32

• Client type• (PD 7993)........................................................................................................slide 33

• Primary social-impact objective• (OD 6247)........................................................................................................slide 36

• Beneficiary demographic groups • (PD 5752)........................................................................................................slide 38

• Beneficiary socioeconomic groups• (PD 2541)........................................................................................................slide 38

96

Documents

MappingtheSocial / Inclusive Business fieldin Brazil€¦ · social/inclusive business field in Brazil: Social/inclusive businesses Developers • Incubators • Accelerators •