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Financing Social Entrepreneurship Efforts David Green.

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Presentation on theme: "Financing Social Entrepreneurship Efforts David Green."— Presentation transcript:

1 Financing Social Entrepreneurship Efforts David Green

2 Creating a Different Economic Paradigm Examples of sustainable eye care that serve all economic strata, where free is the lowest price The interplay of affordable technology combined with cost-effective and affordable eye care service delivery Social enterprise business models with the right control and governance to ensure fidelity to social mission Financing to bring about the revolution

3 Our “Calling Card” Over 300 eye care programs are self financing and serving low income Eye care, more than any other medical specialty, has proven that primary, secondary and tertiary care can be self financing and serving the poor Lessons learned in eye care need to be applied to other medical arenas

4 Aravind Statistics

5 Charity Pays: Aravind in Kerala Initial situationActivitiesResult Word of mouth generated by doing affordable care is sufficient to drive paying volumes; cannibalization doesn’t occur Only 2% of Aravind’s paying patient population was coming from Kerala Aravind held over 40 outreach camps in 12 months One year later, over 25% of Aravind’s paying patients came from Kerala Paying patients

6 Aravind Has Helped 285 Eye Hospitals Become Sustainable Other Countries: Bangladesh Bulgaria Bolivia Botswana Cambodia China Egypt Indonesia Kenya Malawi Maldives Nepal Zambia Zimbabwe Guatemala El Salvador Tanzania Tibet Nigeria Sri Lanka Lions (SF) Sight Savers- 53 CBM - 21 WHO,ORBIS,IEF,RTS Seva, others - 45 Total: 231 Participants: % of these eye care programs have become profitable while serving the poor

7 Grameen Eye Hospitals

8 Surgeries: 47,000 70% pay $33 20% pay $78 10% free Profit $222,222 Lumbini Eye Hospital, Nepal

9 AlNoor Magrabi Eye Hospital Egypt

10 Annual Data of Shenyang He Eye Hospital

11 Chitrakoot- Sadguru NC

12 Waiting room private Waiting room Social Operating theatre Visualiza : Public and Private Together

13 PACIFIC VISION FOUNDATION EYE INSTITUTE San Francisco USA

14 Humanizing Capitalism Use profit and production capacity to serve Profit is good; it ’ s how you use it that makes a difference Profit is a means to an end and not the end itself Maximize distribution while being profitable VS Maximizing return on investment Use pricing to change the competitive landscape in favor of the consumer

15 Finance from the Customer Policy Implication for INGO’s Instead of re-inventing cash flow each year to pay for programmatic operating expenses: – Make programs self financing from user fees – Use freed-up finance for start up or expansion of new service delivery

16 Create and Use Market Forces Change the competitive landscape by providing accessible high quality services Consumers become program planners Stimulate industry development by converting need into demand and proving that markets exist

17 Interplay of technology, disruptive pricing and compassion 14 million eyes regained sight through affordable Aurolab products 8% global market share of intraocular lenses 1.9M annual volume Products sold in 120 countries: 60% to non- profits; 40% commercial CE Mark for most products, FDA for suture IOLSuturePharma Volume 1,337,901 1,173,953 1,675,122 Aurolab Price USD$4.50$1.10$1.50 Competitor Price $100+ $10 $60 Aurolab

18 Aravind’s Growth and IOL’s Aurolab 1992 Source: “Restoring vision to Millions – underlying management concepts” a presentation by Aravind Executive Director Thulasiraj, 2010 Total procedures over time

19 Humanize Capitalism-Product Development 1.Demystify product development, manufacturing and regulatory costs 2.Control technology/IP to be in control of manufacturing, distribution and pricing to insure affordability to end users 3.Engage extreme technical competence – find people who already know what they are doing 4.De-construct supply/distribution chain to cut out unnecessary margin 5.Take the help of IP lawyers

20

21 Aurolab

22 Humanizing Capitalism- Distribution 1.Create novel channels that remove non-value-added margin 2.Use pricing and quality to change competitive landscape 3.Create companies that transform their industry and are in favor of lower income people 4.Convert great unmet need for lower income populations into demand 5.Sculpt costs and margins to result in affordability, while achieving reasonable returns 6.Create novel, disruptive supply chain ecosystems that reach middle class, lower middle class and poor

23 Technology Development Formula Find individuals with extreme technical competence Build company around them Low cost product development Short product development cycles- typically 2 years

24 Sculpting Costs & Margins to fit Reality Comparing Apples to Apples Manufacturing costs may be the same but margins and distribution are vastly different Figures for 2007 IOL'sAurolabMajor competitor Price$2-30 ($4)$ ($130) Volume1M7M Revenue$5M$920M Cost of goods$2.50$32 Manufacturing$1

25 Quick test User adjustable Attach to Ear SoundWorld: Hearing in 30 Minutes $ 2000 vs. $100-$200

26 Quantum Catch Fundus Camera Fully automated operation Field of view about 55 degrees in diameter (mosaic) high resolution Separate images under near-infrared, red, and green retinal illumination All images are stereo pairs Price not yet set but far lower than existing cameras

27 Glaucoma Detection Hopkins Study Conclusions: A prototype pupillography device appears able to discriminate glaucoma from normal with relatively high specificity and sensitivity. RAPDx is a pupillograph utilizing a high- definition, machine-vision.

28 Non-Invasive Blood Glucose Monitor Aqueous Humor We measure optical properties of the aqueous humor related to glucose concentration Concept: shine light into eye, measure output; correlate to blood glucose level, all in a hand-held device for home use Light

29 Change Competitive Landscape with Pricing India market growth in cataract surgery after Aurolab : 2 companies grow to over 10 Commercial companies compete with Aurolab on price and quality Market grows from 800,000 to 5 million cataract surgeries per year Big Co vs Aurolab /Indian Govt. – Aurolab forces competitor to reduce pricing for suture from $240/ box to $23 using competitive pricing as the weapon

30 Changing the Competitive Landscape with Finance Financing as tool of influence to tilt an industry in favor of the poor Criteria by which funds are invested changes competitive landscape Engineered financial instruments are needed to grow social enterprise as an asset class

31 Deutsche Bank – IAPB - Ashoka $0.5 million Subordinated Debt $1.5 million Equity $2.3 million Senior Debt $14.48 million Eye Fund 1 Investor Protections: 84% first-loss protection to commercial socially motivated investors provided by Deutsche Bank, foundations, and development agencies 1% loan loss reserves 6-month interest reserve $10.18 million Subordinated Loans Investors Storebrand Livsforsikring, Norway SPP Livförsäkring AB, Sweden Agence Francaise de Developpement, France USA Investors Overseas Private Investment Corporation The Bernard A. Newcomb Foundation Deutsche Bank Americas Foundation COFRA Foundation, Switzerland Janet A. McKinley Investments: China Nigeria Paraguay

32 IAPB Capacity Building: $1.5M to 8 Institutions to Provide Training to 37

33 Eye Fund Two $50M affordable debt Presently accessing demand Regionalize Combine with grants and possibly equity fund

34 Enhancing Organizational Effectiveness Raise $10-20M to support creating sustainable eye care: Strengthen organizations providing sustainability planning, consultation and training services with clients in their region Create IT infrastructure to support all activities, including monitoring and reporting to donors; demonstrating results Take lessons learned in creating sustainable eye care and apply to other medical specialty arenas. Apply lessons learned in developing countries for creating more equitable and cost-efficient eye care service delivery in developed countries.

35 For-Profit Social Enterprises Development of a new asset class to facilitate financing for social enterprises – For profit social enterprise that can leverage off of increasing valuation of assets vs. non profits, which can’t – Go beyond Corporate Social Responsibility to use assets and core competencies to be socially transforming

36 “Middle-Way” of Capitalism Philanthropy is not sustainable and often does not reach the beneficiary Strictly return on investment commercial sector does not address problem in it’s full public health magnitude Need for “Middle-Way” of capitalism that maximizes distribution while being profitable Socially transforming vs. CSR Service to others ‘baked’ into the organizational DNA

37 Fight All Forms of Blindness Physical Blindness Blind to the needs of others Empathy with the blind and visually challenged and our desire to do something about this. IAPB – we are small but powerful in our collective quest to serve others and ameliorate human suffering

38 Dr. V and Systems Change Guiding Philosophy “… Spirituality allows the divine force to work through each of us for a greater good


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