Analysis of the SELCO business model through the lens of Social Entrepreneurship

1. SELCO : The Solar Electric Light Company
Mayank Prabhakar - H13086
Roopan Roy John - B13168

2. Energy Services in India
400 million Indians have no access to electricity.
More than Half of rural households are not connected to
state electricity grids
World Bank Report
Reliable Energy Services leads to
 Development of Family.
 Upliftment of Quality of Life.
 Better Education.
 Healthy Working Conditions.
 Increased Income.
Chronic cooking fuel shortages
Lack of power to undertake
Income Generation Activities
Lack of Reliable Lighting
Electricity Deficit
Distribution Constraints
Paradox
People who really need
alternate energy options cannot
procure them.

3. Selco
SELCO, for-profit venture, was established in 1995 to disprove
the following ‘myths’:
• Myth 1. Poor people cannot afford sustainable technologies.
• Myth 2. Poor people cannot maintain sustainable
technologies.
• Myth 3. Social ventures cannot be run as commercial entities.
Value Proposition
Including the financing requirement in the overall product package.
Innovate not only in the usage of technology, financing methodology, modes of marketing etc., but also in
ways of ‘linkage’ innovation.

4. Business Model :A for-profit Social Enterprise

5. Business Model: Innovative Linkages
Poverty
Increased Income
Generation
Income
Generating
Activities
Energy Services
Alleviate By
By
Surely Require
Energy Services
Sustainable
Technologies
Reliable Supply
Chain
Need
Need to be provided By
Poverty Alleviation & Energy Services Technology & Energy Services

6. Business Model: Innovative Linkages
Sustainable
Technology
Energy Services
End User
Finance
Sustainable
Technology
Energy Services
End User
Third Party
Financing – End User – Energy Services - Technology

7. Business Model: Innovative Linkages
User Payment Sources & Loan Repayment

8. Product Design
Customized to meet the expectations of the
specific clients
Philosophy Categories
A SELCO photovoltaic solar home system consists of a panel, a battery and a charge regulator.
Panels charge during day and works for 12hrs without being charged.

9. Conceptual Tools to measure/assess the
impact and effectiveness of Social Enterprise
• This tool aims to understand the impact of entrepreneurs
receiving funds to do social sector work.
Ashoka Measuring
Effectiveness
Questionnaire
• This tool quantifies a potential investment's social output
and compares it to the universe of existing charitable
options for that explicit social issue.
BACO Ratio
• Base of Pyramid (BoP) Impact Assessment Framework is a
method that helps organizations better understand and
improve their on-the-ground poverty alleviation impacts.
Base of Pyramid Impact
Assessment Framework

10. Need for innovations
Q. Why do the under served need Innovation?
Q. Why has it not happened?
Financial Risk
Technology Innovations
Lack of Commitment

11. Service
SELCO has the potential to utilize its
distribution network and customer
relationships to be at intersection of
product, service, and finance:
Selling high quality, branded consumer
durable products coupled with after-sales
service and consumer financing
Product
Finance
•Sustainable
•High-Quality
•Branded
•Consumer Durables
•Empowering
customers
Installation and after-
sales service at the
Customer Home on
all company products
sold
Matching the
cash-flow
SELCO = Technology + Financial Instruments
Expanded SELCO Vision: Moving beyond Strictly Solar

12. Organizational Framework

13. Philosophy
MYTH #1
The poor cannot afford technology
MYTH #2
The poor cannot maintain technology
MYTH #3
Social ventures cannot be commercial entities

14. Growth Story
2008
2009
2010
2011
2012 135,000
121,000
105,000
92,000
81,000
Number of
systems installed
by Selco
2013 160,000

15. customization
“Wants can be standardized;
needs have to be customized”

16. matching needs + market linkage
“The moral of the story is if you can create a product that matches
[people's] needs, it does not matter how poor [they] are,” there will be
a market for it
“an increase in productivity, not income; She has no market for those
extra baskets. There is no market linkage.”
* wants SELCO to address the entire supply chain
surrounding a product

17. Typical chain of an energy delivery services setup of SELCO.
SELCO’s Role
• Demo of Technology
• Accessing the needs
• Developing the need based product
• Partnering with local financial
institutions
• Installation of the system
• After Sales Service
User’s Reasons
• Lighting for Study
• Powering small motors
• For Income Generating activities
• Cleaner
• Safer
• No maintenance
Financial Institution’s Role
• Accessing the credit worthiness of the client
• Creating the appropriate financial product
• Partnering with SELCO to meet the needs.
• Collection of loan installments

18. : Matching money with missionINVESTORS

19. Continuity
• Tailor-made Payback/ Financing(Creative Financing)
•Employees
• Designing products for the poor (tailor-made solutions)
•Innovative customization
• Building Assets for the poor

20. Scaling Up & Challenges
•Is it about numbers in Decentralized energy?
• Lateral or deeper?
• Customization vs. Commoditization?
•Big SELCO or numerous SELCOs
• Replicate or scale?

21. Leadership and Personal Qualities
•Empowering the poor
• Bank accounts / solar loan/ Siddi community (gujarat/karanataka)
•Point of View: BOTP as an asset and not a market
• Views BOTP as money goes IN, product comes OUT
•Th!nk Sustainable
•Cross pollinative innovation ~ ‘light in a tiffinbox‘
• Multi-pronged problem solving!

22. •Open source
•Model: Replicate, rather than scale up
•For and By the people who need it
•Solution is the best form of protest
•Hands-on Leadership
•Attention to detail
•Emotional/Empathetic
Leadership and Personal Qualities