Entrepreneur and venture capitalist Gururaj Deshpande is a pioneer of social startups and rural entrepreneurship in India through the Deshpande Foundation, which he co-founded with Jaishree Deshpande. In a conversation with DH’s Anitha Pailoor, he says rural India will have large companies with a fantastic impact that will be profitable if people in the villages see value in them.
You say that innovation plus relevance equals impact. How do you decode this for social impact in India?
Out of the people who live in the world, about two billion of them have disposable income, and about five billion don’t. Making a difference in the lives of all seven billion people is what everything is about, entrepreneurship and social entrepreneurship included.
Now, most technologists and high-end entrepreneurs work on making a difference in the lives of two billion people. To do so, you have to bring something new. And that innovation has to solve some burning problem. So innovation plus relevance for people with disposable income is what creates new companies and impact.
But when you talk about the five billion people who do not have disposable income, the solutions that you bring to them do not have to be patentable or very competitive. But they have to be the most relevant. So you have to co-create the solution with them and build capacity within communities. As solutions scale, you will get an opportunity to be more and more innovative and use all the tools that you use in big businesses in the social sector.
Can you tell us about your experiments along these lines?
We started about 15 years ago to experiment with the equation of relevance, innovation, and impact. One of the programmes that we started in 2013 is the farm pond programme. The water it stores can irrigate five acres of land. Over the next five years, we built about 5,000 of these. They were actually funded mostly by the farmer, who would pay 75 per cent.
Now, we are extending this programme to 100,000 farmers, requiring them to pay 20 per cent and helping them get a bank loan for the rest. Once they have paid off the loan, the additional money they make from these farm ponds is theirs. This is a great way to develop products for the social sector, where the returns are guaranteed.
As a social entrepreneur, how important is it to understand a problem before arriving at solutions?
You have to understand the problem to solve it, but the solution can also come from different places. In the social sector, unfortunately, you do not have the power of the market feedback loop. In the for-profit domain, if you have a solution, a customer has to pay for it. The customer will not pay unless it solves his problem.
In the social sector, money comes from either the government or philanthropists. So you could be doing things that the beneficiaries do not really need. This is why in most of our programmes, we try to have skin in the game. Getting that feedback loop from the people you are trying to help actually works.
When it comes to startup ecosystems, where do you think India stands globally?
It is amazing what has happened in India. I left India in 1973, almost 50 years ago. In the first few decades after that, there was a lot of curiosity among people to know what was going on in the US. But now, it is the other way around. People in the US want to be in India because they see so many opportunities.
We have so many unicorns and entrepreneurs in technology. Entrepreneurs in India today are solving problems on a global scale, or for large businesses.
We are yet to see a revolution where the millions of entrepreneurs in India solve the problems of rural India and Tier II cities.
I am hoping that over the next decade, we will see that revolution.
When it comes to rural transformation, what key interventions are required?
First of all, people need more income to enable them to solve their own problems. One nice thing about India is that regardless of how poor people are, they give great importance to education. I have not seen that kind of commitment anywhere else in the world.
If India can find a way to educate the next generation of children, the country will move forward very quickly, because we have a lot of young people here.
Earlier, there was a notion that only those students who scored high became successful, but not so anymore. How do you see this changing?
In the old education system, you first went to school and college. After you learned everything, you practiced it for the next three, four, or five decades, and then you retired.
In the new education system, you first fall in love with a problem. People who have a deep insight into the problem itself are the ones who fall in love with it. They then learn whatever it takes to solve that particular problem.
People in rural India and Tier II cities know the problems of those places better than anybody else. So it is more likely that they will be the solution providers for those problems than people from big metros.
I think the future is very bright, and the opportunity is ours. We always talk about demographic dividends or demographic liabilities. But if we create opportunities for young people, I am sure they will take care of the country.