3CF And Upaya Social Ventures Sign MoU
We are excited to announce that 3rd Creek Foundation and Upaya Social Ventures have established a collaboration through which both organizations will work together to identify, support the development of, and potentially co-invest in Small and Growing Businesses (SGBs) that can create employment for India’s poor.
This represents a monumental step for 3CF as we continue to implement our impact investing strategy. Through the collaboration, we will create a formal mechanism through which Upaya and 3CF can share best practices, develop tools and trainings to enhance entrepreneurs’ financial management capacity, structure co-investment opportunities, and disseminate tools and trainings for the benefit of India's wider SGB ecosystem.
We are looking forward to working more closely with Upaya Social Ventures over the coming years to help early stage social enterprises in India access the capital they need to expand their operations and create jobs for families living in extreme poverty.
About Upaya Social Ventures
Upaya Social Ventures (also referred to as “Upaya”) is building businesses that create jobs and improve the quality of life for the “ultra poor.” Upaya does this by providing seed funding and business development support to promising entrepreneurs that can create hundreds of jobs in India’s most impoverished communities. As these small businesses grow, they will generate sustainable, well-paying jobs for families living in extreme poverty. As of August 2014, this work has resulted in six financially healthy, scalable businesses that have created over 1,100 jobs in local communities. For more information about Upaya, please visit http://www.upayasv.org.
Background to the Collaboration
Situation: Nearly 400 million Indians live on less than $1.25 a day - more than all of Sub-Saharan Africa combined. The "ultra poor" lead lives marked by highly variable and volatile circumstances in which they struggle daily to find work, stable shelter, basic amenities, treatment for poor health, and adequate food and water. At the very heart of the problem is rampant unemployment, the single largest obstacle keeping the ultra poor from earning a decent wage and becoming self-reliant, able to address their critical needs.
Steady jobs, however, are created by employers, and throughout India the entrepreneurs who are ready to be those employers struggle to launch and grow their businesses to create such jobs. As evidence of this problem, small and growing businesses (SGBs) in India contribute only 17% of GDP, while in the U.S. they make up 45% of GDP. Ultra poor regions are particularly devoid of these employers, and as a result these communities struggle with persistent unemployment.
Given its experience in the past decade, Upaya’s founding team has observed that SGBs in marginalized communities do not have access to capital, and also lack the knowledge and awareness of sound financial management. These barriers severely restrict SGBs’ growth and choke off the potential for greater employment generation.
In order to promote entrepreneurship in India, the barriers to financial management skill development must be addressed and be paired with improved access to patient investment capital that best meets the entrepreneurs’ needs.
Solution: Upaya and 3CF have each found that when early stage entrepreneurs receive seed funding and have the resources to master basic financial management practices, their confidence greatly improves and they are far more likely to see a new venture through its tumultuous first year. By equipping entrepreneurs with financial management tools and a roadmap for their use, they have been able to reduce the risk and uncertainty inherent in a new venture and, in turn, attract follow-on debt and equity investment needed to grow the business. This business growth is critical to increase employment generation.
3CF and Upaya share a development philosophy that meaningful employment is key to achieving sustainable poverty alleviation. 3CF hopes that this collaboration will encourage other foundations and impact investors to take a closer look at the potential that SGBs in emerging markets have to create long-lasting, positive change for those living in poverty.