Investing in those who can make a real difference to society..
Political etiquette seems to have rubbed off on Jayant Sinha, son of former Finance Minister Yashwant Sinha. Dressed as he is in a typical ‘gala band' jacket and sporting the persona of a politician, it is difficult to imagine that this former-Partner of McKinsey and former Managing Director of hedge fund Courage Capital Management has shifted focus to the world of philanthropy.
Now heading the India operations of philanthropic investment firm Omidyar Network, as Managing Director, Sinha believes that this is his opportunity to give back to the nation after spending 20 years in the field of investment and strategy consulting. In this role, the IIT Delhi student and MBA from Harvard Business School is expected to manage and develop Omidyar's India portfolio.
Omidyar Network aims to invest in entrepreneurships or NGOs that have the potential to achieve large-scale social impact. Conceived by the founder of eBay, Pierre Omidyar and wife Pam, Omidyar Network is based on their conviction that every person has the power to make a difference.
Some help to scale up
Though increasingly in India and across the globe ‘philanthropy' is being viewed as an activity that smacks of an unequal world, where instead of rights, charity is handed out to the have-nots, Sinha explains that Omidyar's aim is different. He sees his role and that of his organisation as the one that makes a difference by investing in those who are endeavouring to change the social fabric. Besides, he points out, the Network is in the process of creating a completely new category of investments.
Omidyar's sphere of interest ranges from microfinance to property rights, base of the pyramid entrepreneurship, social media, online marketing and government transparency.
At the global level Omidyar has a vast number of investments, including in social media organisation Wikimedia Foundation which provides the supporting infrastructure for Wikipedia and India-based online marketing site Quikr that allows people to post and respond to free local classifieds for apartments, cars, jobs, services, used goods, events, and more.
According to Sinha, the Omidyar couple has invested around $900 million in philanthropy across the world, of which $325 million has been sunk in by the Omidyar Network.
In India, to date, $45 million has been invested by the Network, half in grants and the other half for profit. “We are a flexible capital organisation and invest both in not-for-profit and for-profit organisations,” explains Sinha, detailing the impact he expects his organisation to make. “We help organisations to scale up to the next level and believe in high-touch engagement,” he says. Interestingly, the Network also helps in leveraging synergies and facilitating an exchange of information between for-profit and not-for profit investee companies.
The differentiating factor for Omidyar is that it does not only provide finance but also takes on the responsibility to provide human capital as well, effectively ensuring the viability and scalability of the investee company.
Omidyar has already made a few strategic investments in India. One of the prominent ones is in the sphere of property rights where it has chosen the Rural Development Institute, which works towards granting and protecting property rights. RDI is currently active in Karnataka, West Bengal, Andhra Pradesh, Madhya Pradesh, Gujarat and Uttar Pradesh. The institute also specialises in developing public-private collaborations to help rural families access land and gain legal literacy.
The Network says that through funding property rights organisations such as RDI, its aim is to increase ownership of land and property for all people, encourage transparency and flexibility in property ownership, and develop legal education for property rights.”
In the microfinance sector, the Network has provided funds to Microsave, a micro finance institution, and Unitus, a firm providing consultancy to MFIs. Though microfinance is a for-profit activity, Omidyar says it focuses on it because it aspires “to make high-quality, affordable financial services widely available to the poor so that they may gain financial security and escape poverty. Women, who are especially vulnerable, can use microfinance services to start a business and earn status in the family and community.”
On the entrepreneurship front, Omidyar is willing to give seed capital like any other venture capital company. Here, the Network is in search of what Sinha calls, “base-of-the-pyramid entrepreneurships that are for the larger good but at the same time have a market-based approach in activities such as providing solar lanterns or drip irrigation.”
And what exactly is ‘base-of-the-pyramid entrepreneurship'? Omidyar explains on its Web site: “More than two billion people worldwide live on less than $2 a day, and another estimated two billion struggle with problems of inadequate housing or lack the financial resources and stability to procure basic services, protect themselves from economic shocks, and build wealth. These four billion people represent a socio-economic class referred to as the base of the pyramid” it says.
Working through Ashoka
In the entrepreneurship category in India, Omidyar already supports the cause of Social Entrepreneurship and has sunk funds into Ashoka, a community of over 2,000 social entrepreneurs across 70 countries. Through its Ashoka Fellow programme, the organisation ensures that its fellows' ideas can be replicated, scaled up, sustained and have a large social impact.
Last, but not the least for Sinha, who after all has grown up in a home familiar with political debate, is the field of government transparency.
His organisation aims to support technologies that give the public access to credible information on what the government is doing.
In India, Omidyar is on the lookout for organisations providing technologies that give citizens access to information about government actions, influence, spending and activities.
As India head, Sinha is sitting on $100-$200 million which he can disburse over the next five years to organisations where he sees a potential. All they have to do is be good at their job and deserve the investment.