India’s social enterprise ecosystem: Recent developments and perspectives

Much is made around the bustling entrepreneurship of Silicon Valley and its flurry of start-ups. But Silicon Valley is not the only place where small, ambitious and innovative businesses are making a difference. In India, social enterprises have been flourishing over the past decade. Admittedly, their influence is great as they reach out to the almost 37% of Indians living below the poverty line. However, they are still largely under the radar of media coverage.

Fortunately, a new report by consulting firm Intellecap is shedding light on the recent developments in the sector. The study, On the Path to Sustainability and Scale: A Study of India’s Social Enterprise Landscape highlights key defining features of this type of entrepreneurship. First and foremost, the sector is still quite young, more than three-quarters of all social enterprises have existed for fewer than five years and 42% of all these entities were created within the past two years. Another important feature is that, unlike old-school businesses, these enterprises are extremely mobile. More than half have head offices in India’s main cities, while their operations network the country. Albeit small, they are already extremely powerful. They start with a limited pool of beneficiaries (17% have 500 or fewer beneficiaries) yet are able through the injection of venture capital to scale up very quickly. Twenty-eight percent already have 50,000 beneficiaries or more. Considering the young age of the sector, the immense public they reach and their proven capacity for growth, social enterprises are slated to carve out the features of the Indian business landscape.

While in some cases the growth of microfinance has had negative consequences in the past, the recent development of socially responsible enterprises seems to be on a different path. Not only because the lessons of the past have been learned but also because their heavy reliance on venture capital and crowd funding has made them more accountable than their predecessors. New social enterprises 2.0 are spearheading what promises to be a huge wave of developmental initiatives.