The World Poverty Clock records more than 597 million of the world’s population living in extreme poverty. The UN’s top Sustainable Development Goal, SDG1 is “Ending Extreme Poverty”.
And one social enterprise is shifting the paradigm of poverty reduction, offering the poor a self-help business model.
The Portsmouth, NH based nonprofit organization Social Ventures Foundation is all about doing “Business with a Purpose” which its Executive Director Marc Blumenthal explains means:
“Developing sustainable businesses that can rapidly scale and provide jobs for the poor to deliver essential products and services for the poor. And to provide the best solutions to address the myriad of problems facing 3 to 4 billion people in developing nations today.”
How does SVF build on this business model for success?
It identifies, promotes and facilitates investment in scalable startups that meet the unmet poverty reduction challenges. Then it promotes these vetted startups in its biweekly “Poverty Watch” newsletters and during its annual virtual “EndPoverty Virtual Summits.” This year’s summit is scheduled for November 22.
Ending Poverty with Berkshire Hathaway Investment Model
Blumenthal’s entrepreneurial endeavors started at age 19 with his first startup, the American Book Club at the University of Pennsylvania. As the first hire, he negotiated all publisher book deals and earned enough money to travel to Europe and Asia during his Junior year abroad. He later got involved in investment management, education, technology innovation and Medical Devices, Plasma Fusion, and Aerospace start-ups. In 2017 he established the Social Ventures Foundation.
SVF is establishing the EndPoverty Fund, a B-Corp investment holding company (under formation) to facilitate investment in scalable, sustainable startups it has identified. It’s what Blumenthal compares to a “Berkshire Hathaway investment model for ending poverty.” With projects identified in Haiti, Africa, India, and the U.S., SVF levels the playing field for startups focused on poverty-reduction by introducing investors an alternative to charitable giving. It offers to buy EPF shares or donate shares to the SVF to hold and retain in perpetuity. Once the startups are vetted to ensure social impact, global sustainability and scalability proof, an EPF independent fund manager will finalize an investment decision based on sound practices which include Return on Investment (ROI).
Sustainably Lifting the Livelihoods of the Poor
Partnering with NGO’s, universities, and businesses, SVF enables innovative programs to meet critical domestic and international poverty reduction challenges. It does this with “prepackaged, small-scale micro-franchise models in health, environmental sustainability, and agribusiness.” This unique micro-franchising business model meets the “unmet challenges of the poverty reduction space.”
SVF has set its “test bed” in the poorest nation in the Americas, Haiti.
Haiti is one of the “most challenging countries to conduct business, in the world.” The social impact in Haiti is more significant and impactful. Over 80% of Haiti’s population lives on less than $2/day and eat 1.5 meals per day. In 2017 the country had a 37%+ unemployment rate.
In December of 2018, SVF set up an office and a Hub in Port-au-Prince and established Vice® Haiti a for-profit company that offers entrepreneurial opportunities for the poor by underwriting micro-franchises with “micro-credit loans.” The self-help strategy employs the poor to “nutritionally lift the livelihoods of the poor” in their own communities.
Roughly 60% of Haiti’s population is undernourished and vitamin deficient. SVF is focused on elevating the vitamin and protein deficiency in Haiti caused by food insecurity which leaves 22% of Haiti’s population, 15-24 years of age, 1 in 5 children, stunted. More than half of the children and nearly half of all women of reproductive age are anemic.
Keeping it all Local
Vice Haiti markets two locally sourced products: “V’ice” shave iced cone with a Vitaminized topping, and “V’Bar” protein bars made from locally sourced peanuts and cornflakes. Both products meet the local populations’ vitamin needs of C, E, A, Iron, and zinc as identified by the Haitian Health Ministry. SVF’s office and Hub Facility in Port-au-Prince accommodate vehicle storage, ice/syrup production and pick-up, as well as franchisee training and deployment. V’ice sources clean water from Dlo Haiti, Haitian corn flakes from Caribbean Food, and toppings refined and enhanced by Griffith Foods. The project has been earning revenues.
Vice Haiti is the preferred choice to Haiti’s “Fresco” unsanitary ice and un-nutritional homemade toppings shaved ice offered in wooden carts. V’ice has branded its locally sourced, healthy ingredients and Vitamins, with custom-built trikes or V’ikes, designed by SVF and built locally in Haiti. With a capacity to hold 300lbs, V’ikes travel more than 30 MPH and herald their arrival with a jingle that was produced by a popular Haitian artist, Ricky Juste, which SVF commissioned. It’s similar to the familiar ice-cream truck jingles in the States, but with a Creole beat.
SVF localizes employment and profits to directly impact the local communities and entrepreneurs. SVF Micro-Franchisee owners are all residents of the communities where they sell V’ice cones and V’bars. They all complete training in sales and customer service and practice “taste tests” to lure potential customers while offering a menu of flavors and the nutritional benefits of the protein bars. Their local knowledge base and connections help sustain their start-ups. V’ike travel routes are strategically designed and timed to coincide with school schedules and public market times to optimize sales.
Future Repeat Customers
“We plan to eventually label the V’ice paper cones with lottery numbers that translate into awards for partial public school tuitions,” says Blumenthal. The profits are returned to the community, offering disadvantaged children educational opportunities, while building a base for future repeat customers.
Considering Haiti’s 20,000 or more inhabitants, the Haitian market can support over 100 V’ice hubs of 16 micro franchisees. Each franchisee can sell on average a daily quota of 50 shaved ice cones and 20 V’bars with a potential to impact 80,000 Haitian’s lives on a daily basis.
Blumenthal confirms the Vice Haiti project’s proof of concept operational success and is raising funds to start scaling the model first in Haiti and then in other developing countries. Last year he was invited to present the SVF business scaling model at the “Bottom of the Pyramid Summit” (BoP) in New Delhi, India.
Emaël Marc-Jerry Dimanche is 27-years-old and the first Micro Franchisee for V’ice Haiti. He started work in December of 2018. He has no High School education and lives with his mother, father, sisters, and nephews in a one-room house. He welcomed his first daughter this Spring, adding an additional member to the small dwelling.
“For the first time in a long time, I have been given the ability to make a living that not only helps me and my family but also supports the health of hundreds of Haitians. It is a dream job come true,” says Emael Dimanche (translated from Creole).