Our Managing Director, Bonnie Chiu, was invited to be a panelist at the Google for Startups Accelerator on the SDGs on 5th May 2020, alongside UNICEF Innovation Fund, UN Women Innovation, UNDP Accelerator Lab Network and ELRHA Humanitarian Innovation Fund. This blog post summarises our thoughts on scaling.
How to scale innovations is arguably a “Million Dollar question” in social change. Over the years, at TSIC we have sought to scale innovations ourselves, advised our clients on scaling their innovations, as well as scaling ourselves as an organisation. With the COVID-19 pandemic, how to scale innovations becomes an even more pressing issue.
When thinking about scaling, a helping starting point is to distinguish scaling of impact versus scaling of organisations. They sometimes correlate but not necessarily. UNDP Accelerator Lab Network mentioned that they look at scaling in three ways: scaling out (impact greater numbers), scaling up (impacting laws and policies) and scaling deep (impacting culture). With this framing in mind, let’s delve into the challenges.
Challenges stemming from funding
From our experiences, there are many systems-level challenges scaling innovations, especially technologies which are capital-intensive, in development and humanitarian settings. Given our expertise in social investment, we will focus discussing challenges that stem from the funding model in development and humanitarian sectors.
1) There is little funding for innovation. One estimate shows that only 0.2% of humanitarian funding goes to innovation. Traditional donors want to provide funding to safe and proven outcomes, rather than new bets (innovations) that may not yield any results.
2) Funding from donors is restrictive and requires high levels of accountability. As such, most international NGOs and UN agencies have long and complex procurement processes.
3) Social investment is still relatively immature as a market. Social enterprises are often caught in the middle, not addressed by both philanthropy (grant money which tends to favour non-profits, though that’s changing) and investors (who tend to be primarily focused on maximising profits).
Mitigation strategies
For startups to overcome these challenges in order to scale technologies, mitigation strategies we’ve seen work include:
1) Partnering with international NGOs and UN agencies is easier if you can find monetary resources elsewhere. Consider joint fundraising with these organisations from corporate donors, bilateral donors (such as DFID and USAID which are increasingly interested in private sector engagement) and foundations. But to put in the business development time to make this happen, you may need to find investor for it.
2) Go local. If your innovations are focused on deploying in countries, go to the local office to bridge a partnership, while keeping stakeholders at a global level informed. Over time this can grow into a global relationship.
3) Build a diversified income model. Selling your technologies, or getting funding to deploy your technologies, in development and humanitarian settings is difficult, but cross-subsidisation model always works – look at grant funding opportunities, earned income opportunities, selling to developed markets versus lower-resource settings, etc. Procurement can also be part of the picture, but it is a lengthy and resource-intensive, and often, organisations are not procuring for ‘innovations’ (as they don’t know what they need). But this is a way to become a trusted supplier and receive funding from these organisations directly. You can set up alerts with the UN Global Marketplace and other tender portals so you receive notifications, and as you grow you may choose to bid for opportunities to build your skillset in this area.
We are trying to go through this process ourselves by incubating Humanity Data Systems, so we will be sharing more lessons learnt over time. We hope this is helpful advice and if we can be of any support, don’t hesitate to reach out.