UPAYA FUNDAMENTALS: Origins and Inspiration


In this blog series, members of the Upaya team dive into the what, why, and how of Upaya’s mission to lift people out of extreme poverty with dignified jobs.

Sachi Shenoy, Co-Founder and Chief Impact Officer

Sachi Shenoy, Co-Founder and Chief Impact Officer

Many people who hear about Upaya try to compare our work to that of microfinance. It is understandable. After all, the microfinance movement captivated the world and its power and spread convinced many that this was the silver bullet to fight poverty. And while the idea for Upaya’s model took shape while I was working in a microfinance institution, our model and our target demographic are quite different.

It’s been almost 15 years since I traded a career in financial services for one focused on fighting extreme poverty. If there is one thing I’ve learned, it is that poverty alleviation is messy and complicated. Globally we have made great strides in this battle, but it defies one single, straightforward solution. It’s been fascinating to witness the evolution of different interventions, all of which are necessary to lift people out of poverty into more dignified lives.

In 2005, when I immersed myself in field work in India, microfinance was all the rage. Dr. Muhammad Yunus’s experiment of making small loans available to groups of women scaled rapidly and his Grameen Bank model inspired thousands of replications around the world. I was lucky to have the opportunity to work as an operations manager in a large microfinance institution (MFI) in India, and I experienced firsthand the power of microfinance.

Women who had never had access to formal financial services were getting loans – around $200 – for the first time, and most were applying these loans to starting micro-businesses. Those who succeeded in getting these businesses off the ground started earning for the first time. One woman opened a small stall outside the slum and sold hot chai to those passing by; another woman sold fruits, another set up a tailoring service, and another made plastic bangles in her home and sold them on the street corner. Week after week, in my interactions with them I could see a growing excitement and optimism, and greater confidence to match.

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Microfinance, however, had its limitations. More and more I was confronted with both a ceiling and a floor.

The ceiling: the small loans that MFIs offered (which at the time maxed out at the equivalent of $1,000 or so) could not support the growth of larger businesses. The MFI clients were building sole proprietorships. But what about the Small and Growing Businesses [1] (SGBs) at the level just beyond the MFI clients? They were bigger and had the potential to grow into much larger enterprises and create jobs for others, well beyond the entrepreneur. These businesses needed funding more in the range of $25,000 - $100,000, surpassing the mandate of what an MFI could provide. As far as I could tell, no one was providing funding to the SGBs of India.

Microfinance also had a floor, which I found both understandable and frustrating: it screened out the poorest of the poor. The World Bank defines the “extreme poor” as those living on the equivalent of $1.90 or less per day. To paint a more vivid picture, they are the people who wake up each morning unsure of how they will earn money that day. They struggle to feed their families, and they live in makeshift housing, or no housing at all.

MFIs felt that lending to the extreme poor posed too much of a credit risk … given $200 in hand, a destitute individual may choose to spend that money on immediate consumption – food or health care – to alleviate a critical need. They are less likely to put it to productive use and be able to repay. Therefore, MFIs would assign a “poverty score” based on a quick survey to all prospective clients and would deny service to those with the lowest scores.


“Microfinance also had a floor, which I found both understandable and frustrating: it screened out the poorest of the poor.”


I understood the economics of why it was difficult to serve the poorest of the poor with a cookie cutter micro-loan model, but I also felt strongly that we could not claim to alleviate poverty if we were not serving the poorest of the poor! I also increasingly became convinced that if we could somehow support the SGB owners – those more affluent members of these marginalized communities with sound business ideas – then we could promote business growth and create jobs for the poorest of the poor.

I reasoned that dignified jobs, with stable and reliable income, would be far more effective in fighting extreme poverty than traditional handouts or access to loans.

The data supported my observations at the time. In 2011, India had an estimated 300+ million people [2] living in extreme poverty. This was arguably a larger population than those living between $2 - $4 a day, the segment that was better suited to microfinance. The extreme poor struggled to find stable jobs and steady salaries, further exacerbating their poverty. Outside of aid and safety net programs, few interventions served this segment.

At the same time, the small business sector in India contributed only 8% of India’s GDP [3]; compare that with a 48% GDP contribution in the US. SGBs are frequently cited as the lifeblood of a nation’s economy and a critical engine of job creation. India’s SGB sector was anemic due to a variety of reasons, but chief among them was a lack of funding.

In 2011, together with co-founders Sriram Gutta and Steve Schwartz, I established Upaya Social Ventures to focus on providing funding and support to small business entrepreneurs who had the potential to create jobs for the poorest of the poor. Our goal was to tackle those two gaps on either side of microfinance, to complement the benefits the movement had brought to the development space. Through an innovative venture philanthropy model, we put “pioneering capital” to work for early-stage ventures.

Fast forward to 2019: we have invested in 16 businesses that have cumulatively created over 13,000 jobs for the poor. Our routine impact studies demonstrate that not only are incomes increasing, but also that 86% of jobholders feel their incomes are more stable than before and are helping them achieve their goals.


“86% of jobholders feel their incomes are more stable than before”


We’ll never claim that pioneering capital is the silver bullet for poverty alleviation … rather it is a potent tool in a landscape that is also benefitting from microfinance and other innovative approaches in the quest to end poverty once and for all.