Americans once watched admiringly as celebrities like Bob Geldof and U2′s Bono took the stage to alleviate hunger among the world’s poor.
But today the game has changed: the world’s impoverished economies have become the world’s emerging economies, with growth rates already outpacing the U.S.—and a slew of lingering socioeconomic problems.
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This promise of growth and challenge has created alluring opportunities—not only for investors, but also for U.S. social entrepreneurs. Emerging economies like India, China and African nations still face pressing issues like water scarcity and lack of electricity and access to credit. But they also present entrepreneurial problem-solvers with a chance at creating a business and introducing a solution in an unknown market.
“The market for start-ups in many sectors—especially technology—is simply more attractive abroad,” says Steven Koltai of consulting firm Koltai and Company, which works to foster entrepreneurship abroad. “One example is Africa, which accounts for 70% of today’s mobile payments—with 40% of those happening in Kenya.”
Here, we bring you three real stories of social entrepreneurs who are reaping the rewards—tangible and intangible—of launching in lands far away.
Peter Frykman, Driptech
The problem: Lack of simple, low-cost irrigation for small-plot farmers.
The solution: Irrigation that uses the cheapest of materials—plastic—and won’t waste water in regions suffering from water scarcity.
How he did it: “In 2008, while getting my Ph.D at Stanford in mechanical engineering, I was in Ethiopia doing research for a course and saw that small-plot farmers couldn’t water their crops during the dry season. Ninety percent of the world’s farmers are small plot, meaning they work on five acres or less. Drip irrigation, which already existed, is the best solution, but everything on the market was too expensive, costing upward of $1,000 per acre, or too tough to install. We decided to make drip irrigation affordable, easy to install and maintain, functional even with low water pressure, and available locally.
Back in California, we developed an irrigation system that could be deployed anywhere for between one-third and one-fifth of the conventional price, so within months of the Ethiopia trip, I quit my Ph.D and started doing Driptech full time.
The potential for both financial and social impact is much larger in developing countries than in the U.S. because of the sheer volume of small-plot farmers there. India and China have roughly half of the world’s 500 million small plot farms, which amounts to a $10 billion market.
After a pilot study of 15 farms in Tamil Nadu, India, confirmed that farmers using our system were saving water and labor, and increasing their crop yields, we were ready to start selling. Shortly thereafter, we made our first major sale to a local government in China for 200 small-plot farms.
In designing for emerging markets, you have to be excruciatingly sparse: A small-plot farmer can’t waste a cent of his income on a product or service that costs too much or doesn’t do what he needs it to. The “trickle-up” effect applies: If you start with the goal of radical affordability, then it’s easier to make a higher-quality product later.