UnLtd India Incubator & Hub evaluation summary findings

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This is the summary report of the impact evaluation conducted in Sept-Oct 2011 for UnLtd India by Dalberg.

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UnLtd India Incubator & Hub evaluation summary findings

  1. 1. CONSULTING EXPERTISE | INNOVATION AND IMPACT | DEVELOPING MARKET INSIGHTUnLtd IndiaEvaluation of UnLtd India’s Incubator and The Bombay Hub - SummaryConducted: Sept-Oct 2011Published: March 2012
  2. 2. Scope and objectives of this report •  UnLtd India was set-up in late 2007 with a mission to support and foster the development of a “social entrepreneurship” movement, both by helping develop social entrepreneurs and publicising this approach to driving change Context •  Management have largely concluded the phase of setting up the organization and developing their model, and are now preparing for the next phase of growth, which will include geographic expansion •  UnLtd India’s management has commissioned an external evaluation to assess to what extent UnLtd India fulfils its mission, and identify areas for improvement •  Evaluating UnLtd India’s social incubator (“the incubator”) from origination and selection to incubation (financial and non-financial assistance) Scope •  Evaluating The Bombay Hub’s (“the Hub”) support for social entrepreneurs and how it aligns to UnLtd Indias mission and vision •  Evaluation of Social Mash-up, Bootcamp and other associated UnLtd India activities Out-of- •  Detailed review of strategies for geographic expansion and domestic fundraising, both Scope of which are currently under development by management •  Conduct an impact assessment of the incubator and the Hub •  Develop a Monitoring and Evaluation Framework using the outputs from the previous stage, and benchmarks from comparable incubators throughout the world. Objectives UnLtd India management can continue to use this framework to measure, manage and improve its effectiveness going forward. 1
  3. 3. We have evaluated UnLtd India against four key areas •  Is UnLtd India addressing important and genuinely unmet needs for its target Relevance users? •  Have Incubator investees and Hub members created impact? If so, to what extent can this impact be attributed to the Incubator and the Hub? Impact •  Has UnLtd India induced impact through broader demonstration and mobilization effects? •  Does the Incubator/Hub provide services that are useful to investees? Effectiveness •  Is the Incubator/Hub achieving desired outcomes? •  Are the Incubator and Hub efficient from a financial and operational Efficiency perspective? 2
  4. 4. Relevance: UnLtd India targets an underserved part of the ‘social entrepreneurship’landscape in a highly differentiated way The Incubator targets an important and underserved part of the ‘social entrepreneurship’ landscape in a highly differentiated way Is the Incubator •  UnLtd India has the only incubator in India with financial and non-financial support for all types of addressing social entrepreneurs from the very earliest stages of development important and •  The Incubator meets the key needs of early stage enterprises, including financing, which innovators genuinely unmet state is the most important and hardest to find needs for its target •  UnLtd India’s targeted mentorship and guidance appears to be stronger than other incubators, users? according to social entrepreneurs “Community-based” individuals from lower socioeconomic backgrounds are less likely to be selected by the Incubator to receive support – they are also least likely to be able to find support elsewhere Is the Hub The Bombay Hub provides a low cost serviced office for social entrepreneurs, and is a platform addressing for broader collaboration amongst them; there are few alternatives important and •  The Bombay Hub serves a critical need for social entrepreneurs, by offering flexible low-cost genuinely unmet packages, competition in Bombay is limited but increasing needs for its target users? 3
  5. 5. Impact: UnLtd Indias Incubator has created social impact by accelerating the growth ofsocial ventures and helping them make valuable connections The social entrepreneurs supported by the Incubator have created significant social impact. The Have Incubator incubator typically accelerates their growth investees created •  Current and former investees will have reached nearly 4.2 million end beneficiaries by end of 20111 impact? If so, to and have created 3,200 jobs1 what extent can •  91% of surveyed investees2 believe the incubator has positively impacted their organizations this impact be •  52% of investees2 raise additional finance and 48% receive additional non-financial support; attributed to the Incubator? additionally 68% of investees2 believe being an UnLtd India investee facilitates the sourcing of follow-on financing Has the Incubator The Incubator grows a pipeline of potential candidates for other impact investors. Furthermore, induced impact UnLtd India investees have successfully encouraged other entrepreneurs to start their own through broader ventures demonstration and •  Peers and later stage investors believe UnLtd India generates a pipeline of investable social mobilization initiatives; UnLtd India acts as an intermediary by letting others know about these investees effects? •  50% of UnLtd Indias surveyed investees2 have actively encouraged others to become entrepreneurs 1 Analysisexcludes the following organizations due to insufficient data: Toy Bank; Eco Leadership Program for India; Milaap; SMV Wheels and Denny John 2 Based on UnLtd India current and former investee surveys – sample = 25; UnLtd additional data capture from current and former investees – sample = 64; Dalberg analysis 4
  6. 6. Impact: Current and former investees will have reached nearly 4.2 million endbeneficiaries by end of 2011 INDICATIVE 94% generated by 1 2011 year-end estimates investee (FUEL); 236k end beneficiaries otherwise End beneficiaries 4,197,000 reached Given that UnLtd Indias investees and UnLtd India itself are early stage Jobs created 3,200 to date enterprises, these figures are likely to grow1 Total funding raised from sources excl. Rs. 10,80,00,000; [US$ 2,160,000] UnLtd India Additional funding Average: Rs. 14.5; [US$ 0.29] raised per UnLtd India Average after excluding top 5 Rupee invested organizations: Rs. 5.5; [US$ 0.11] Source: UnLtd India current and former investee surveys – sample = 25; UnLtd additional data capture from current and former investees – sample = 64; Dalberg analysis 1 Analysis excludes the following organizations due to insufficient data: Toy Bank; Eco Leadership Program for India; Milaap; SMV Wheels and Denny John 5
  7. 7. Impact: The Bombay Hub has made significant social impact by accelerating the growthof social ventures and helping make valuable connections Have Hub Hub members generate impact through their social ventures. The Hub helps them make members created connections that advance their ventures’ growth impact? If so, to •  Hub members have generated economic activity employing over 300 individuals by the end of 2011 what extent can •  71% of members with initiatives report making connections through the Hub that this impact be have made a demonstrable difference to their organization, such as through making connections attributed to the Hub? with organizations which they can collaborate with, or finding clients Has the Hub On a broader scale, the Bombay Hub raises the profile of social entrepreneurship in Bombay, but induced impact to a limited extent through broader •  While 90% of surveyed members believe the Hub has accelerated the development of the social demonstration and enterpreneurship sector in Mumbai, most of these individuals believe this impact has only been mobilization slight effects? 6
  8. 8. Effectiveness: The Incubator’s personal development support is effective but investeesbelieve funding is insufficient. Sourcing of investees has improved, but some channelslack depth Of the Incubator’s activities and services, investees find the personal coaching and mentorship to be the most valuable. Investees believe that the Incubator provides a significant opportunity to develop important networks, but find its financial support insufficient •  UnLtd India offers a very broad menu of non-financial levers of support – all of which investees find to be Does the Incubator useful provide services that are useful to •  Investees have found the networks, going through the selection process, and moral support to be the investees? most useful services provided by UnLtd India •  UnLtd Indias personal coaching appears to be the most highly valued offering •  Investees believe that even though it meets a gap in the market, the total amount of financial assistance provided by the Incubator is insufficient – this reflects management’s intention to provide some financial support at an early stage of development, but not to provide a standalone level of financial support to every investee The Incubator has been particularly effective in developing the networks and leadership qualities of its investees, and has exceeded its targets in supporting investees graduate from ‘Level 1’ to ‘Level 2’ support •  At least 70% of respondents report progress in all aspects of personal and professional development •  57% of respondents have already derived a tangible benefit from UnLtd Indias network; over 90% of respondents believe there is opportunity to make such relationships Is the Incubator •  Graduation from Level 1 to Level 2 has risen significantly this year, resulting in cumulative rate of 12%, achieving desired surpassing Management’s 10% target outcomes? Learning from experience has resulted in the Incubator revising its investment targets and improving its sourcing strategy •  The current sourcing process is robust; one in five applicants is selected •  UnLtd India has decided to become more selective, based on what it has learnt on sourcing good quality investees at Level 1 and Level 2 •  However, there are still some concerns on generating a pipeline of candidates that has the diversity of backgrounds that UnLtd India is targeting 7
  9. 9. Effectiveness: The Hub’s office space effectively provides basic office space and anetwork to its members; however, members seek better facilitation of the network Does the Hub Members come to the Hub for an affordable, collaborative office space provide services •  100% of members believe the Hub offers reasonable or good value for money that are useful to •  Members report liking working in a collaborative office space with other entrepreneurs investees? The Hub effectively serves the basic needs of its members. The Hub does not help members collaborate effectively •  ~60% of respondents said the quality of the space is good / very good •  While members are satisfied with the quality of peers at the Hub, they believe the Hub Is the Hub could more actively facilitate networking achieving desired outcomes? The Hub is not operating at maximum capacity and is not effectively using all possible channels to grow. •  The Hub has a capacity of ~70 members, but average membership has only been around ~40 members •  Current members found out about the Hub through existing personal networks, not directly from the Hub or the media 8
  10. 10. Efficiency: While UnLtd Indias donor funding comfortably meets the needs of theincubator, overhead costs remain high and the Hub is currently not yet financiallysustainable UnLtd India has been able to comfortably meet its fundraising needs, but its sources of funds are largely dependent on four main donors •  UnLtd India spends about 60-70% of the income raised in a given year, allowing it to roll over significant amounts of funding for future years. The organization has enough funding to keep operations running through 2012 UnLtd India has spent 46% less than budgeted during FY10/11 largely due to slower than planned growth, however is on course to spend 10% less than budgeted in FY11/12 •  Lower quality of investees, large staff vacancies and decreases in event scope are the primary reasons for underspend in FY10/11 Are the Incubator and The high-touch and city-based nature of UnLtd Indias incubator results in relatively high overhead costs Hub efficient from a compared to other NGOs, which are often field-based financial and •  At 25% of total costs, administration and fundraising costs are higher than sector norms of ~21% operational •  UnLtd Indias salaries tend to be higher than local NGOs, which is partly explained by its relatively high- perspective? touch and city-based model •  Rent is the second largest non-grant component of expenses for UnLtd India; however the rate paid is competitive compared to alternate locations in Bandra and Downtown Mumbai From a financial standpoint, the Incubator is scalable as the marginal cost to UnLtd India of having an additional Investee is negligible Taken as a standalone entity, the Hub is currently not yet financially sustainable •  The Hub makes a loss of Rs. 18,00,000; [USD$ 36,000] and is unable even to cover direct costs, before allocating any of UnLtd Indias central overheads •  This is due to several factors, including underutilization, inefficiency in pricing, and high allocated overhead (rent and UnLtd India management) 9
  11. 11. Recommendations for the incubator (1/3) How it may improve the incubator Challenges and Risks •  Impact: The incubator’s impact is to a large degree dependent on its ability to source and 1 select candidates for whom it has great significant additionality. A Head of Outreach could directly source and develop the necessary relationships to bring such candidates, It may be difficult to find an individual who is capable of forming and Employ a particularly community-based entrepreneurs, into the pipeline. maintaining the relationships required Employ a dedicated •  Effectiveness: As UnLtd Indias outreach strategy becomes more targeted and results- to achieve the desired composition of dedicated Head head of driven, it will be helpful to have one person manage / track the sourcing and selection investees. Additionally, the cost outreach of Outreach process. Furthermore, this individual could be responsible for developing channels for burden may be difficult to justify effective community-based outreach. unless UnLtd India expands into •  Efficiency: One person managing / tracking the sourcing and selection process would also multiple regions. free up time and resources for the current Associates to focus on the growth and needs of current investees, and would streamline their responsibilities. •  Effectiveness: Entrepreneurs have identified developing sector-specific knowledge (and Difficult to find individuals with the 2 associated networking) as a key need; alignment of associates with certain sectors would combination of skills needed for more Assign allow them to offer more targeted advice to their investees. Additionally, there are substantial general coaching as well as a sector Assign associates to associates to benefits to the continuity of personal coaching relationships, which can get lost if an expertise. sectors, rather sectors, rather investee graduates to the next level. It may be difficult to find staff capable than levels than levels •  Efficiency: By developing sector expertise, Associates should be able to achieve faster of changing style to cater to level 1, turnaround of investee requests – such as for subject matter information or searching for versus Level 2 & 3 needs for a given specialist business support – leading to lower time investment for such requests. sector •  Relevance: Social entrepreneurs state business support and advisory services are key 3 needs. While UnLtd India already uses partners to deliver quality training at low/no cost, a Increase use larger pool of partners could be assembled to increase the range of technical and hard of partner Maintaining a large pool of high business skills training, in areas that may be highly relevant to specific thematic areas (e.g. organizations quality and dedicated partners will working with Teach for India on pedagogy) , or in particular skills (e.g. procurement) that to deliver require more resources. may be highly relevant for a subset of investees specialist training •  Effectiveness: A larger pool of partners could be assembled and better managed to increase the quality of technical and hard business skills training. 10
  12. 12. Recommendations for the incubator (2/3) How it may improve the incubator Challenges and Risks •  Effectiveness: UnLtd India investees that have been assigned a mentor or advisor state 4 May be difficult to recruit and manage that this is extremely effective in supporting skills development and broadening their several external advisors Link every networks. Management aim to create an environment where such relationships can occur investee to an based on mutual interest, independently of direct intervention. As a result, most of these Very early stage investees may not external relationships had been formed in an ad-hoc and opportunistic manner. Given their reported be able to fully benefit from advisor/mentor value from investees and other incubators, a greater focus on intervening to foster such mentoring, leading to challenges in relationships may improve outcomes for investees. maintaining mentor / advisor •  Efficiency: Greater use of advisors and mentors can reduce associate time spent, such as relationships in identifying experts. 5 •  Relevance: Social entrepreneurs report that learning from the experiences of their peers is beneficial, as investees often face similar challenges. While peer learning is already Facilitate more considered a key area of strength for UnLtd India, there is a general demand for greater Some investees might find it difficult learning frequency for this, given its ability to provide highly relevant advice to carve out time to advise other between •  Effectiveness: By increasing the frequency of peer learning events and mandating more entrepreneurs, given their own investees support from “senior” investees to more “junior” ones, investees are able to increase demanding responsibilities. benefits that they typically derive from each event, in the form of sharing best practices and lessons learned. Some UnLtd India investees have demonstrated a keen interest in “giving back” to UnLtd India in the form of advice and mentorship for newer entrepreneurs. 6 •  Relevance: Investees have widely varying requirements for financial assistance, with those that need to grow and develop typically needing the most funding. Building in flexibility over Offer more flexible the amount of financial assistance provided to investees would therefore better match the Can create significant management amounts of needs of growing enterprises. complexity and confusion for funding to •  Effectiveness: Since the financial support provided by the incubator is typically lower than investees and donors, making it investees investee needs, many investees seek additional financial support. While collaborating with harder to manage their expectations. other providers of support to obtain financing can spread the risk of exposure to a given investee for the incubator, it may also increase risk by creating an additional burden to raise further funding rather than developing their venture. 11
  13. 13. Recommendations for the incubator (3/3) How it may improve the incubator Challenges and Risks 7 Codify Codify internal internal •  Efficiency: Management and Incubator staff have accumulated a wealth of knowledge Can be difficult to get the team to buy knowledge on knowledge on about investees’ sectors, business support providers and networks. Associates frequently in and imbed new working practices, partners, partners, have to recreate or repeat research and assistance provided, due to a lack of organised as benefits from populating support support central knowledge management. Such tools will reduce time spent repeating work, and will knowledge management tools are not providers and providers and become critical as the organization grows and potentially expands to various locations. immediate, while the burden is key subject key subject immediate matter matter 8 Track Key Track Key • Efficiency: While Associates offer a wide range of services to all the investees in UnLtd Measuring and tracking KPIs are Performance Performance Indias portfolio, there is currently no formal system in place to measure and track their time time-consuming, and may distract Indicators Indicators allocation and performance. Instituting systems to monitor this can support more efficient day- from focusing efforts on the investees (KPIs) of (KPIs) of to-day management of the team. Associates Associates’ 9 Maintain Maintain separate • Efficiency: The Incubator and the Hub are effectively run as independent organizations. separate financial Maintaining separate P&Ls for the two entities will increase the clarity around the financial No major risks or challenges financial accounts for accounts for health of each of the respective arms of UnLtd India. identified the Incubator the Incubator and the Hub and the Hub 12
  14. 14. Recommendations for the Bombay Hub (1/2) How it may improve the Bombay Hub Challenges and Risks 1 Increase Unclear what the likely yield (or • Effectiveness: Most members and users heard about the Hub through cost per conversion rate) is for member personal networks. Reliance on word of mouth marketing fails to exploit signups by online marketing at this stage. potential for growth and greater diversity in members available from using developing a No evidence as yet that online alternative channels. A standalone website (versus the current Facebook standalone marketing would increase the website and page) is a potentially low cost member acquisition tool. diversity of members versus online ads today. 2 Increase Forming and maintaining awareness of additional partnerships will be the Hub • Effectiveness: Other social incubators can be a channel for potential time-consuming. Not clear through members; conferences focused on social enterprise are already used as a whether yield will justify partnerships means for driving member sign-ups. Focusing on these two channels can investment in developing with other provide targeted access to a significant base of potential members. additional partnerships, or incubators & at which partnerships to prioritise conferences at this stage 3 • Relevance & Effectiveness: The Hub offers a diverse set of events, largely Solicit regular chosen by the team without consultation on user or member preferences. feedback from May require managing the Incorporating feedback to better match user needs and preferences will expectations of groups of members and increase the relevance of the Hub to users. listserv users / members with divergent • Impact: Incorporating feedback to improve events and services can help needs and interests. increase the popularity of the Hub, thereby helping it to increase reach and better foster a social entrepreneurship movement. 13
  15. 15. Recommendations for the Bombay Hub (2/2) How it may improve the Bombay Hub Challenges and Risks 4 Directly • Impact: Connections made through the Hub significantly impact members’ Directly initiatives. Proactively encouraging interaction between members, such as facilitate facilitate Shifts attention of Hub hosts collaboration an online collaboration marketplace for members, a “photo wall” to introduce from their core membership collaboration between members, monthly member lunches and ice breakers could increase the between and event-related activities members frequency / likelihood of making these connections by directly promoting a members more collaborative environment. 5 Requires thought around the • Efficiency: The Hub generated a loss of c. Rs. 18,00,000; [USD$ 36,000] in future of the Hub and its role in Consider FY10/11. Even if various levers (e.g. increasing membership, pricing and Consider the growing UnLtd India alternative alternative more revenue-generating events) were improved simultaneously, it is organization. Implementing business unlikely that the Hub will be able to reach break-even profitability. UnLtd business structural changes will be time- models for the India could consider alternative business models for the Hub, including: models for consuming and potentially Hub aggressively pursuing financial sustainability by exploring more radical the Hub difficult, depending on the departures from the mission, such as increasing corporate memberships; to complexity of the strategy shifting to a donor-financed model. chosen. 6 Maintain Maintain • Efficiency: The Incubator and the Hub are effectively run as independent separate separate organizations. Maintaining separate P&Ls for the two entities will increase financial financial No major risks or challenges accounts forfor the clarity around the financial health of each of the respective arms of UnLtd accounts identified the Incubator India. the Incubator and the Hub and the Hub 14

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