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India’s start-up businesses flourishing
Question of the Day
R.K. Jeyaram, a 19-year-old with a 10th-grade education, used to go door-to-door offering to repair stoves and washing machines. Then he heard about a company that manufactured lanterns rechargeable by solar power. It fired up his entrepreneurial spirit and he approached the manufacturer. The company saw potential in his work ethic, guaranteed a loan from a bank and started selling him the lanterns.
These days, Mr. Jeyaram, his brother and another partner are in business, renting the lanterns to more than 80 vendors in Mysore for about 30 cents a night, and in the process helping vendors and their customers do away with the soot and smell of kerosene lamps.
Mr. Jeyaram's story is characteristically Indian. People in this teeming nation of more than 1 billion seem to have a natural knack for entrepreneurship. For many, invention comes from necessity, with jobs and money scarce and social obstacles such as caste, making getting by all the more difficult.
Yet Mr. Jeyaram's success is in other ways atypical - finding a guarantor for financing is usually a challenge, and not many lenders are willing to risk loans to nonprofessionals with no assets for collateral.
Innovators in the development field have recently recognized that socially constructive enterprises like Mr. Jeyaram's are vital to India's future.
Among them is Lisa Heydlauff, a 33-year-old Briton who has lived for the past decade in New Delhi, India's capital. Ms. Heydlauff has launched a number of nonprofit projects in India, and she and her team are now in the early stages of an ambitious initiative called Be.
Be's aim is to empower low-income Indians to become social entrepreneurs - businesspeople who improve their own lots as well as those of their communities.
"In 2020, there will be 210 million unemployed people in India," Ms. Heydlauff says. "Ninety percent of them will be below the age of 30. The economy simply can't grow enough to provide jobs for everyone."
Be is a multiphase initiative. The first component is the creation and distribution of videos, illustrated books and other media to explain the fundamentals of entrepreneurship to young people from low-income backgrounds.
Ms. Heydlauff believes in both telling and showing, so narratives centering on real people like Mr. Jeyaram are the core of her approach. Be has begun production of an illustrated book describing his success.
Ms. Heydlauff feels that many development models focus on what the country's poor lack, rather than what they do have - in this case, the potential to be successful entrepreneurs.
One problem that Be is tackling is a paradox surrounding entrepreneurship in India.
Anyone who has walked down a single Mumbai block and been offered a rickshaw ride, a handful of cashews, an on-the-spot ear-cleaning, a hotel room, and a palm reading knows that Indians are innately entrepreneurial. But in India, starting one's own business is usually seen as a desperate last resort rather than an inspired, pro-active choice.
"Low-income Indians sometimes think, 'I'm not working, I have no money, and I don't have a roof over my head,' and only then do they start thinking of business ideas," says Mahamaya Navlakh, a development specialist with Be.
"But starting your own business is something you can do instead of medicine or law or teaching, not something you do because you can't do one of those things," she says.
Apart from private efforts such as Be, India's government has an entire ministry devoted to promoting entrepreneurship, the Micro, Small and Medium Enterprises Ministry.
The ministry sponsors training programs, credit facilities and networking opportunities. Moreover, government has also introduced entrepreneurship in the course curriculum from the secondary level onward to attract young minds to take up entrepreneurship as a career option, says Siddhartha Dash, chairman of the postgraduate program at the Entrepreneurial Development Institute of India.
Deval Sanghavi, founder of the Mumbai-based social entrepreneurship group called Dasra, credits the government with becoming increasingly proactive in promoting entrepreneurship.
"There has definitely been much greater opportunity for individuals to become entrepreneurs in India over the last 10 years. Twenty years ago, established businesses in this country were run by just five or 10 families. That's not at all the case anymore," he says.
Be's researchers have produced a list of skills the group thinks is critical to successful entrepreneurship. These include negotiation, communication and leadership.
"We'll also explore things that disable young Indians in their attempts to start businesses, such as caste and gender discrimination," explains Doel Trevady, a former journalist who is part of the Be team in New Delhi.
Ms. Heydlauff likes to focus on success stories, with only a nod to the subjects' circumstances.
"You don't say 'Santosh is from this low caste and was very poor,' " she explains. "You say 'Santosh has an amazing waste management business with a turnover of 200,000 rupees a month and 60 people who work for him.' Viewers may notice, 'Ah, he's also from a low-income group,' but that's not where you start your story."
Apart from Be's media initiative, the second, and riskier phase of the project is to set up a source of funding called the Be Fund.
Ms. Heydlauff is raising $1.5 million to invest in 75 social enterprises, to be identified after an open call for proposals later this year. Investments will be awarded to an even mix of young entrepreneurs - male and female, rural and urban.
The Be Fund differs from other development financing in several ways. Ms. Heydlauff emphasizes that the funds disbursed are investments, not gifts with no strings attached.
"The whole problem with grants is that they don't come with a high expectation of return," she says. "The idea of an investment is that it's a partnership between me and you."
Ms. Heydlauff notes that all profits from investment will be recycled into Be's ongoing operations, as well as later tranches of funding.
In addition to showing potential for income generation, funded business plans must also achieve advances in at least one of a dozen social categories, including sanitation, health, renewable energy and transportation.
Ms. Heydlauff concedes that her project is ambitious.
"But you have to be ambitious in India," she says. "It's the only way to meet the enormous challenges here."
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