Selco Incubation Center aids social entrepreneurs

By Shonali Advani

Harish Hande, the Founder of SELCO, can be called the doyen of social entrepreneurship in India given his keen devotion to it since he started his enterprise in 1995, at a time when the word ‘venture’ was not associated with any activity that served the underserved. Eighteen years down the line, he’s ready to share his pool of knowledge with aspiring social entrepreneurs through the newly set up SELCO Incubation Centre.

The core cause
The Bengaluru-headquartered center was launched in August 2012 and is independent of SELCO, a sustainable energy enterprise. Its primary motive is to provide open-source information to new entrants in this space. “In our 18-year journey, we have faced many barriers and don’t want others to face the same problems. Instead, we will incubate youngsters to make sure that they learn from our successful processes and also the numerous mistakes we have made,” says Hande. However, a bigger cause for him to initiate this was driven by the lack of support in the ecosystem for the non-English speaking entrepreneur. “They aren’t primary grant receivers nor do we hear of equity been given out to this section. We need a better ecosystem for them,” he says.

Barring a broad agenda, the center has a definitive focus on incubating entrepreneurs in the energy sustainability space only, given their expertise here, and for the time-being, is looking at identifying suitable candidates in North-Eastern and Eastern India, both largely ‘un-electrified’ regions. Hande is looking at three basic criteria in a social entrepreneur: common sense, passion and sensitivity to rural conditions. “They shouldn’t have romantic notions, but be extremely passionate to take the idea forward and weather the frustrations of rejections and financial instability,” he explains in context to the hard-nosed selection criteria. “Seventy percent of the time it’s a gut feeling.”

When we reported the launch of the center on Entrepreneur in August 2012, the team was in the process of selecting candidates. It has since shortlisted seven entrepreneurs it seeks to incubate in its maiden batch of October 2012, of which only one is from Madhya Pradesh.

It plans to incubate 25-30 in the year, over two-three batches. “In special cases, we might incubate three or four enterprises or self-help groups separately if they need a specific type of incubation,” he says. Incubatee Rustam Sengupta, CEO of Delhi-based Boond, that distributes solar products in Rajasthan and Uttar Pradesh, is looking to replicate SELCO’s model in these two states. “SELCO’s incubation process is practical and operational and we hope to grow our capacity on the ground and build a sustainable model with their help,” he says.

The process
For regular batches, Hande has an in-depth incubation process lined up. Once selected, candidates will visit the field-SELCO’s areas of operation-and spend ample time with managers understanding processes, the SELCO philosophy, and dealing with day-to-day working life in rural India. “In a typical business, you oversell. However, customers here are very different. You are selling products to people earning less than you, so it is a trust-based strategy, not a marketing-driven one,” Hande explains.

Following the field visit, entrepreneurs will go back to their own regions to evaluate their ideas and present the same to the incubation team and various department heads of SELCO, those who have been part of the system for long. The hands-on incubation process aspires to help entrepreneurs in all aspects of running a social venture: from setting up offices, pitching to investors and even dealing with banks. “They are getting a de-facto management team,” he stresses.

Though not bound by timelines, Hande says the process will be intense for a year, after which they will continue to mentor the entrepreneurs and the engagement will remain fluid. “They will require hand-holding for at least five years,” he anticipates. Hande’s goal is to help entrepreneurs scale to SELCO’s level in one-third the time. The center will not be investing in any of its incubatees. However, its members will take board positions in energy-focused enterprises. They will also sit with them whilst negotiating with investors, or potential MNCs who want to loan them capital. “The investor should also feel comfortable with the fact that we are putting in 18 years of our experience,” Hande says.

Pilot points
The process has been designed after careful thought, made possible by a pilot they ran in 2010. They opened this to entrepreneurs and enterprises wanting to diversify into the energy space. The results were dismal. A majority of people dropped out, leaving only four of the total 40 candidates remaining-two entrepreneurs and enterprises each. The four were placed across SELCO’s 26 offices. “Our managers gave them a hard time, allotting them tough tasks to execute,” he recalls. They spent a good three months with them teaching them the finer nuances of business. They learnt that it is imperative for the head of an enterprise-and not a representative-to be incubated for it to have any serious impact.

“A representative might leave or the philosophy he’s learnt may not get transferred to the team,” Hande explains. Also, they realized some candidates would make for good employees across managerial levels but not as leaders. “We have kept them in the bank. As one of these enterprises blooms, we will match these guys,” he says.

2013 and beyond
Next year, the center’s hunt for social entrepreneurs will be on full steam and they will continue to source them through workshops, conferences, referrals, and Industrial Training Institutes. SELCO will be launching the Energy Axis Fund by the first quarter of 2013 that will invest in energy-based businesses, even outside its set of incubatees. It is currently working with existing investors and friends in the social space to invest in the fund. “We plan to invest $10 million over five years across ventures with a ticket size of each investment at $500,000-$750,000,” Hande says. The fund hopes to raise $3-4 million for the first round.

Hande feels young social entrepreneurs aren’t spending enough time developing own businesses and processes but on distractions like social media, workshops and conferences. “People need to go back to the basics and see the hard work involved in rural areas,” he says. Similarly, on the investment side of the spectrum, he feels investor interest is a result of the romanticism associated with the space. “We need to move away from this. The poor aren’t beneficiaries, they are partners. We must see this as fortune by the bottom-of-the-pyramid,” says Hande. “We must do this for our social system, not to be God.”

© Entrepreneur India December 2012
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