Upaya

Seattle Times: Upaya invests in helping India’s poorest of the poor get jobs

Upaya was profiled in the 12 December 2014 edition of the Seattle Times. In the article, Upaya co-founders Sachi Shenoy and Steve Schwartz talk about the organization's evolution, the challenges of the work, and how the Upaya model is changing lives.

 

Extreme poverty is an unavoidable reality in India. The first time I traveled in the country — as an inexperienced and idealistic 20-year-old backpacker — I was shocked by the families living on the street, the children begging for food, the old women breaking rocks on the side of the road.

I wondered what could be done to help these people — the poorest of the poor. Some travelers gave them money, others didn’t. One (loosely) quoted the Bible by saying “Sarah, the poor are always with us.”

Everyone seemed convinced that extreme poverty was an intractable problem beyond straightforward solutions.

But Sachi Shenoy disagrees. She says these “ultrapoor” just need jobs.

“In India we estimate that there are almost 400 million people living under the extreme poverty line. ... One of the root causes (is) unemployment and underemployment” explains Shenoy, executive director and a co-founder of Seattle-based nonprofit Upaya Social Ventures.

Upaya — which recently received a grant from The Seattle International Foundation, the foundation that funds this column — hopes to address that unemployment by investing in business ventures that have the potential to expand and employ those who otherwise have few, or no employment opportunities.

Shenoy says she was inspired to start Upaya while working for a microfinance organization in Delhi, India. Microfinance is a development approach that lends money to poor people, usually for small-business ventures. She says the microfinance approach tends to focus on the “midlevel poor” — people who made $2 to $4 a day — rather than the “ultrapoor” — those who make less than $1.25 a day.

“There was a cutoff for being too affluent and then there were people we would do surveys on and say, ‘These people are too poor; they’re too much of a credit risk,’ ” says Shenoy, describing the selection process for microfinance applicants. “That’s when my interest got piqued ... If we’re really trying to alleviate poverty, what do we do about the extreme poor?”

Her answer was Upaya, which focuses on entrepreneurs who have ideas with big business (and thus big employment) potential. They offer investment (not loans) with the hope of creating jobs for those often left behind by microfinance.

“You can think of us as the angel funders for small businesses in India,” says Shenoy, explaining that Upaya makes a point of working with entrepreneurs who may have trouble attracting traditional investors or securing bank loans. The investments (usually between $10,000 and $75,000) go to businesses from areas that have a large concentrations of “ultrapoor.”

The goal is to help grow promising businesses with capital as well as mentorship. In exchange, business owners promise to hire the poorest people in their region as jobs are created.

In the past three years, Upaya has invested in six businesses, ranging from a dairy collective to a company that makes “luxury paper” out of rhino and elephant dung, and an operation that turns fallen palm leaves into biodegradable plates. All told Upaya ventures now employ more than 1,100 people in jobs that pay, on average, between $2.25 and $4 a day.

It’s still a tiny paycheck for a tiny percentage of the millions living in desperate poverty. But it’s enough to move those few from that dangerous ultrapoor category to the more stable midlevel-poor group. At this level people can begin to secure housing, eat regularly, keep kids in school and even address chronic health problems — all developments that Shenoy says they’ve seen among workers employed by their Upaya ventures.

Creating stable, decent-pay jobs in some of India’s poorest (and often) rural communities is a difficult business. Shenoy says their first business (the dairy collective) endured religious unrest and droughts in the first year. It was an experience that taught them to think in “contingency plans” and to closely consult with entrepreneurs about specific needs (special accountants to help prevent corruption and bribery, for example).

But it’s worth it to reach those who might not otherwise be reached, says Steve Schwartz, a fellow co-founder of Upaya. For him, the mission boils down to one of simple belief.

“The best way to get someone out of extreme poverty,” says Schwartz, “is to pay them better than someone living in extreme poverty.”

Maybe the “ultrapoor” aren’t such an intractable problem after all.

Sarah Stuteville is a multimedia journalist and co-founder of The Seattle Globalist, www.seattleglobalist.com, a news site covering Seattle's international connections. Sarah Stuteville:sarah@seattleglobalist.com. Twitter @SeaStute

Upaya, Artha Initiative to Co-Invest, Expand Management Resources Available to Job Creating SGBs in India

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Upaya Social Ventures and the Artha Initiative are proud to announce that they have formalized a collaboration through which they will work together to develop a pipeline of and co-invest in India’s Small and Growing Business (SGB) sector.

Together the two organizations will deploy seed capital to help these SGBs scale and create employment for the poor, share best practices around sound financial management, and disseminate tools and training for the benefit of India's wider SGB ecosystem.

“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,” said Artha Initiative Director Audrey Selian. “This partnership does exactly that by improving the access to management resources and seed capital for the next great wave of Indian entrepreneurs,” said Selian.
 
Upaya and Artha 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.
 
Through this collaboration Upaya will share its tools and training materials for dissemination across Artha’s platforms and networks.
 
“Although a number of tools are already available, the uptake by entrepreneurs currently is minimal as most tools are geared towards later stage businesses,” said Upaya’s Executive Director Sachi Shenoy. “Entrepreneurs find the more general templates difficult to adapt to their specific business models,” said Shenoy.
 
In addition to sharing materials and best practices among the two organizations, Upaya will explore co-investments in job creating businesses that participate in the Artha Venture Challenge. Furthermore, Upaya will leverage the Artha Platform, an online community and website dedicated to building relationships between sector participants, to expand the pool of resources available to its partners as they continue to scale.
 
This is the second co-investment and tool-sharing partnership of its type for Upaya, following an announcement earlier this year of a similar collaboration with 3rd Creek Foundation.

Celebrating Upaya's Second Anniversary!

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Two years! 24 months of highs and lows unlike any I've ever experienced. 730 busy days and long nights spent working with Upaya's ambitious partners, building our team, and expanding a network of wonderful supporters.

Has it been worth it? Absolutely. Over the past two years we've discovered some great entrepreneurs doing remarkable work, and are excited by the opportunities that the next few years of their growth will open up. We have also had the opportunity to visit families whose lives can be transformed by something as simple as a job milking a cow or weaving a silk saree. My colleagues and I have sat in their homes and listened not just to stories of their struggles, but also to their hopes for a better future. These stories, more than any other factor, have given us the inspiration and the resilience to keep moving Upaya forward.

Going into our third year, we are doing everything we can to keep building on that momentum. I want to personally thank you for supporting Upaya through these early days - we never would have made it this far without you, and I sincerely hope you will continue on this journey with us.

With boundless gratitude,

Sachi Shenoy

Executive Director

Upaya Social Ventures