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Julias Prompt: We would like you to write about your perspective on social impact entrepreneurship in Brazil in general, comparing

us to other markets and then using Murilo as an good example. Just a broad view from a perspective of someone who is not emerged on Brazil's reality.

At First Glance: Social Business in Brazil


My interest in social business was born when I met a German in his twenties who was at Yale University as a Global Justice Fellow. Manouchehr had previously been part of the Yunus Brainpool, put together by the Grameen founder, and he presented the concept of commercially successful enterprise that increased the standard of living in low-income communities. The business he had in mind was microfinance and he shared many stories of Bangladeshi women who found dignity and happiness from income they generated by starting micro-loan funded small businesses. In the years since that conversation, Ive found social enterprise to often dominate the culture and media around development and philanthropy. In a moment of indecision about how I could align this idea with my professional goals, I took a year of leave from University. I joined Dalberg Global Development Advisors in Mumbai a strategic advisory firm that specializes in international development. That time enabled me to work within talented teams to discover opportunities for enterprise in a range of sectors such as non-formal primary education in Bangladesh, low cost healthcare delivery in India, and the off-grid lighting market across sub-Saharan Africa. These experiences initiated me into gaining a macro-perspective of what these new social markets look like in various geographies as well as the organizational models and financing channels that support it. To get first-hand, operational insight to these for-purpose companies, I enrolled myself into a yearlong seminar on Social Enterprise in Developing Economies offered by Bo Hopkins and the Jackson Institute at Yale. Later that semester, I applied to intern at Endeavor in New York for the summer. My recruiters were receptive to my search for a social business that two of my classmates and I could visit and write a case study on. Soon enough, I was connected to Julia Dias and Camilla Junqueira at Endeavor Brasils Projecto Viso de Sucesso that was leading training programs for entrepreneurs with a passion for changing the socioeconomic reality at the base of the pyramid while also generating revenue for their company. My team had spent months looking for the right enterprise worldwide but within a few conversations we were booked on a plane to Rio de Janeiro.

Our focus was on an early stage agri-business. Treebos enables users to plant virtual trees online that represent actual fruit trees that Treebos plants in small farms in Brazil. Its a little like Farmville, but a lot more meaningful. Brazilian agriculture and supply chains are very inefficient up to 40% of the food gets lost in transport and the farmer gets only around 7% of the final market price. The average Brazilian also consumes only 68 of the 400 grams of fruit that the WHO recommends we eat daily. Treebos users watch their trees grow online and can buy subscriptions that deliver fruit, sourced from these trees or local organic farms, to their homes and offices. This creates a new source of crowdfunded capital that subsistence farmers use to rebuild their agri-businesses using sustainable methods. It also creates an efficient supply chain and transport system. The bottom line is that urban users get convenient access to nutrition while farmers double their income. It sounded like a great idea. The problem was that it was still developing and in prelaunch phase. In many ways, the Treebos case seemed to capture trends shared by social businesses in Brazil and elsewhere. A Variety of Entrepreneurial Histories Our first striking observation was the founder himself. Murilo Ferraz, 34, had seen his career take many not entirely related turns. As a teen, he made a small fortune organizing concerts and parties. Later, he found himself with a gynecologists practice. A few years pass and hes facing Guyanese bandits in the Amazon forest as an army doctor. Then Treebos happened. It made for a great life story but wasnt that surprising social entrepreneurs, whether in Brazil or Kenya, often pursue vastly different careers before finding their channel for impact. I had interviewed former management consultants who now used mobile payment platforms to sell inexpensive solar lanterns in Uganda, or read about a former boxing coach who now worked to make favelas safer through education financed by the sale of professional training equipment. Brazil, we realized, had a similar diversity of stories in its more than 20,000 social enterprises and nonprofits that operate on sales of products or services. Advisory Capital In an article in the Stanford Social Innovation Review, Sitawis Leonardo Letelier shared a few insights from starting Brazils first social fund: advice is not enoughmany consulting projects for for-profit or nonprofit clients dont yield impact; capital is not enoughmany grants do not generate impact either. His emphasis on providing a holistic approach to mentoring and funding social enterprise seems to be shared widely in

the country but sometimes without the necessary emphasis on legitimacy. While I had come across successful cases in which mentorship made the difference for a fledgling social startup seeking scale, the sheer number and pervasiveness of accelerators and incubators seemed unique to Brazil. On our first day in Rio, Murilo pointed to an entire office building that mostly housed such incubators many of which were startups themselves, sometimes even competing with their mentees for VC investment! It underscored the importance of seeking mentorship from well-established organizations that drew from pools of entrepreneurial experience in its own staff and institutional history. Murilo speaks fondly of his time in Projecto Viso de Sucesso and the mentors he gained there. Perhaps Brazilian startups need to overhaul the domination of equity seeking incubators. Inequality to Opportunity The other interesting facet of social enterprise in Brazil appeared to be its conversion of social inequality into opportunity. Most of the for-purpose companies I had previously observed focused on delivering an essential product or service to a low-income customer, thereby accessing the fortune at the base of the pyramid. Academia has seen much debate about such orientation see for example, CK Prahalads 2005 proposal encouraging businesses to see low-income communities as customers and his colleague Aneel Karanis response that this fortune is a mirage and social missions would be better served by framing these communities as producers rather than consumers. While even social businesses that view the poor as customers at times experiment with crosssubsidy and utilize differences in income of their customers to drive their purpose, in Brazil Ive noticed most social entrepreneurship focus primarily on income generation opportunities and inclusive growth. Treebos itself is one of these: it capitalizes on the inequality between the premium, organic eating urban consumer and the rural subsistence farmer to provide value to both. Engaging the Elephant in the Economy Spending three weeks in Brazil afforded us the opportunity to watch what (social) business as usual is like and it appeared that its success often came despite the state, not because of it. In Brazil, taxes seem to be more certain than death. The lack of appropriate legal definitions in Brazil imposes challenges to companies that align business values and organizational culture with social sector raison dtre. Treebos, for example, is required to pay close to a staggering 42% of revenues in taxes across different cost heads. Getting registered as a nonprofit is a procedural nightmare. Entrepreneurs must be hard pressed to

think of creative ways in which to preserve their social mission from mandated contributions to the state. I imagine that the recent success of B-corporation legislation in the United States would be especially meaningful in the political economy of Brazil. But its not just tax reform or legal identity that could make for important points of interaction between government and social business. While it is crucial for the poor to increase incomes (and this is often supported by state sponsored welfare programs), development is ultimately driven by consumption of better education, housing, nutrition, healthcare, or energy things that increase ones capabilities. There is a strong argument to be made for promoting better markets at the base of the pyramid to achieve development outcomes. The Brazilian states strong commitments to welfare and government service delivery could have potential for much greater innovation and efficiency by encouraging private for-purpose enterprises. In some parts of the world (including higher education in Brazil), this has emerged in the form of voucher delivery or benefit transfer. The state provides qualifying citizens with vouchers redeemable at private providers of essential services. A former classmate of mine who now works at Nyaya Health celebrates the success Nyaya found in partnering with the government and taking over operations of public hospitals and rural outposts in Nepal. Developing rural and neglected urban markets, encouraging private, for-purpose providers (while also enforcing their accountability) could be an important step forward in improving efficacy of governmental welfare programs and the states development agenda. One of the most straightforward ways to begin such partnerships could be the establishment of the Brazilian states own impact investment and grant funds where transparency and accountability would be key values but innovation and delivery expertise would be freed from public policy deliberations. The Personal Network Entrepreneurs in emerging markets often decry the networks of patronage and lack of transparency that plague them. Having been born and raised in India, this was all too familiar to me. While most Brazilians I met shared similar resentment, I couldnt help noticing how there also emerged an organic, people driven network of connections that distributed pivotal opportunities to many of them. Word of mouth and informal networks of acquaintance worked faster than broad, open announcements from media, industry associations, or other institutions. Thats how lawyers in downtown Rio would come to partner with a doctor in Guarapari upon being introduced by a professional business coach the grapevine enabled creative partnerships between professionals from dissimilar spaces as they pooled together a currency of contacts. Similarly, opportunities to go to Silicon Valley sponsored by one entrepreneurial services firm would get shared widely even by its competitor. The tendency to reach into personal networks rather than a

formal, web based recruiting platform would help a startup in Espirito Santo to quickly find an Art major in New Haven, Connecticut, willing to code pro-bono during a prelaunch design emergency. Perhaps it was only mistranslation but Murilo always used the word partner to refer to employees. The propensity to react promptly on proposals made in casual conversation seemed very different from the culture of intensive recruiting practices I had noticed in start ups elsewhere. Perhaps the personal nature of business in Brazil is captured well in the convention of email signatures that end with beijos or abraos. Three weeks of exploring one startup isnt nearly enough experience to understand a diverse and rapidly growing sector in an unfamiliar economy. But it does begin to shed light on how a global idea of alleviating poverty through profits and capitalism gets localized by particular social, professional, and political cultures. As social entrepreneurship quickly gains audience in mainstream media, studying Treebos and the social sector in Brazil brings us a little closer to separating the signal from the noise. Abhinav Nayar is a student of Ethics, Politics & Economics at Yale University and a Partner at Treebos.com. He may be reached at abhinav.nayar@yale.edu.