Testing the Social Enterprise Market

Here's an interesting story from the WSJ's Live Mint.com site. It discusses the strong interest investors have in social enterprises. More and more, for-profit "social" companies are creating a buzz among venture capitalists. Why? In part, it's the recognition that marketing to the bottom of the pyramid can be a good business strategy. As the article points out: "the for-profit model, as opposed to profit maximization, seeks returns on investment measured in part by the difference the enterprise makes to the life of a consumer."

The WSJ story highlights a company that is building low-cost hospitals in rural and semi-urban areas in India. That's pretty cool. Vaatsalya Healthcare Solutions Pvt. Ltd., the company mentioned in the story, was one of 50 finalists in a social enterprise competition in India.

Note what the company does: it provides a social service that is typically provided by the public sector (or by non-profits). But here, entrepreneurs recognize that there are opportunities to make a profit and serve communities when the state either cannot or will not serve the poor: in this case in the health care arena. Especially in countries that lack capacity to supply traditional public goods, the prospect of having social entrepreneurs fill this void is especially attractive. Companies like this truly can make a difference in the lives of the world's poor.

- Karol