“The 8th annual Harvard Social Enterprise Conference last Sunday (March 6) at the Harvard Business School drew a sellout crowd of 1,000 people. Cheryl Dorsey, president of Echoing Green, and Victoria Hale, founder and ceo of the Institute for One World Health, gave morning keynotes.
Echoing Green acts as an “angel for emerging social enterprises,†and has awarded $25 million to more than 400 entrepreneurs since 1987. Dorsey noted that when she graduated from medical school, she intended to practice medicine, but saw a Boston Globe story on the high incidence of infant mortality in Boston’s black neighborhoods. It was this “ZIP code as destiny†epiphany that led her in 1992 to start The Family Van, a community-based mobile-health unit that provides basic medical services to at-risk residents in Boston’s inner city neighborhoods, and earned her an Echoing Green fellowship.
Dr. Hale is an Ashoka Fellow festooned with awards from The Economist, Skoll Foundation, and Schwab Foundation, not to mention a MacArthur Fellowship. She is founder of the America’s first non-profit pharmaceutical company, which recently received Indian government approval (FDA approval in 2005) for a low-cost drug to combat Visceral Leishmaniasis, a deadly disease of the spleen and liver that occurs primarily in the Indian state of Bihar (as well as Nepal and Bangladesh). More “geography as destiny,†for in this state alone a sand fly bite injects the deadly parasite. She showed slides of children with inflated bellies trying to fight off infection, slides of Indian women and girls with red hair due to malnutrition. Because the disease is confined to a poor and remote region, it has not been on the radar screen for big pharma, but Hale has corralled industry to develop a low cost drug.
One World Health now has a $10, 21-day cure, but still has to deal with the issue of distribution and education. Hale notes that of all the big pharma companies who have tried to develop effective drugs to combat diseases in poor countries (Glaxo Smith Kline, Merck, Pfizer, Novartis, Eli Lilly), only Merck has succeeded—with its cure for river blindness in Africa. Hale is out to change that lamentable track record, and noted that “industry doesn’t know the world’s poorest people, doesn’t know what need doing, but they want to do well and do good. We need to ask, she says, ‘What do you need to engage? What are you afraid of?’â€
The “Private Capital in Development†panel, moderated by HBS’s Michael Chu, former CEO of ACCION International, was superb. Sarah Alexander, executive director of EMPEA (Emerging Markets Private Equity Association), noted that $33 billion in private equity flowed into emerging markets in 2006, compared to $26 billion in 2005, $6.4 billion in 2004, and $3.5 billion in 2003. She also noted that the “barbarians at the gate†(Carlyle and Blackstone?) mentality was widespread in Europe and emerging markets, and that private equity’s image in developing countries was an issue for governments. They want the money; they don’t want the buyouts, the cut-and-run.
Yasminda Zaidman, a director at Acumen Fund a non-profit venture capital fund (one of my favorite oxymorons), says they use “philanthropic capital to show private capital the path.†She also mentioned the “lost year†that many social entrepreneurs face when they try to start a business and spin regulatory and financing wheels for 365 days. Acumen prefers loans to equity, as “it’s hard to see exits.†Milton Namude of the IFC split the difference, saying the IFC took a long-term horizon, using debt and equity when needed, that private equity and venture capital were a small piece of the puzzle. He urged students to “join the IFC and have it all!â€
The “Past, Present and Future of Microfinance†panel, also moderated by Michael Chu, hit the many fissures in the microfinance industry. Nancy Barry, president of Women’s World Banking, started out by saying that Grameen Bank was a huge success but had not innovated on its original models, and that MFIs should not be “loan dispensers†but “financial intermediaries†that provided insurance, savings, and consumer finance. Jeffrey Ashe, manager of community finance for Oxfam America, noted that 6 of 7 borrowers come from a “handful of countries†and that his Saving for Change Initiative aims to promote savings (rather than lending) as a way of changing lives and mobilizing capital. Carlos Castello of ACCION International, spoke about the commercialization of microfinance. Of ACCION’s 33 partners, 28 are generating better than 20% returns. He pressed the idea that returns were key to sustainable success.
All panelists talked about the impact of commercialization, and saw a split in the industry between banks that moved further upstream (targeting the rich poor), and NGOs that moved further downstream (targeting the poor poor).
This conference moved the ball, however defined, forward.”
The stories of GrameenPhone in Bangladesh and
