Saskia Bruysten of Yunus Social Business: 5 Things I Need To See Before Making A VC Investment

As a part of our series about “Social Impact Investors”, I had the pleasure of interviewing Saskia Bruysten.

Saskia co-founded Yunus Social Business alongside Nobel Peace Prize Laureate Prof. Muhammad Yunus. Yunus Social Business Funds finances and grows social businesses focused on ending poverty and protecting the environment, with teams in India, Brazil, Colombia, Uganda and Kenya. For her work in social business, Saskia has been awarded the Vordenker Award 2020 by BCG and Handelsblatt and the BOLD Woman Award 2020.

Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what made you decide to become an angel or VC?

At first, I followed the traditional business school and consulting path. But by my late twenties, I craved purpose. The financial crisis had hit and traditional capitalism was failing. I knew something was missing for me so I went back to studying at the London School of Economics. There, I met Professor Muhammad Yunus at a lecture; his talk about social business was the missing piece I was looking for. He inspired me to rethink business as a tool to solve the problems we face in the world today. The concept of ‘social business’ offers a fresh perspective. A financially sustainable mechanism to efficiently achieve social change, by firstly identifying a social problem to address and then seeking to maximize the impact it can create. I took his card and flew to Bangladesh to see for myself how large-scale social businesses were bringing clean energy, micro-loans and education to a country struggling with immense poverty. We then co-founded Yunus Social Business to bring successful social business models from Bangladesh to countries across the world.

What you are doing is not very common. Was there an “Aha Moment” that made you decide that you were going to focus on social impact investing in particular? Can you share the story with us?

On that first trip to Bangladesh in 2008, I saw for myself how social business worked. For example, taking an issue like energy, the social business Grameen Shakti looked at the weekly cost of kerosene, enough to light a family’s home. Replacing with the greener alternative of a solar panel was not cheap, costing around $150 or more. But by investing that same amount in weekly instalments, customers were able to pay off the solar panel within 2 to 3 years. This was a real eye-opener. It was so simple and yet so logical.

In this way, you can ensure poor people can afford important capital goods — if you adapt to their needs rather than to the needs of the business. That was a game-changer for me. I wanted to create more ‘Grameen Shaktis’ outside of Bangladesh. And we found many bold entrepreneurs who didn’t have access to financing. That was the gap in the market we needed to fill. Social investment was a concrete way of helping social business entrepreneurs to grow.

Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?

I don’t think success can be attributed to one decision or moment. It’s the constant hard work, learning and iterating that have brought results for Yunus Social Business. Our social-business portfolio now reaches 13 million poor people in developing countries with essential products or services and creates higher incomes for more than 70,000 people. I’m very happy to see this progress. But if we really want to create a systemic change for our economy, we also need large corporations to act.

So I would say our “tipping point” happened when large corporations started approaching us to find out how they could integrate social business principles into their core business. We started our Corporate Social Innovation team at YSB to help corporations to transform into net positive contributors to the world. We do this by guiding corporations to build their own social ventures, invest in or buy from social businesses. Ultimately, corporations have so much to learn from social businesses to build a better world.

None of us are able to achieve success without some help along the way. Is there a particular person or mentor to whom you are grateful who helped get you to where you are? Can you share a story about that?

For me it would have to be my Co-founder and Chairman, Prof. Muhammad Yunus — not many people are lucky enough to be mentored by a Nobel Peace Prize Winner! His absolute commitment to the work he does is astonishing. I don’t know anyone else at 80 who works every day to make the world a better place. It’s truly inspiring. One of Prof. Yunus’ founding principles of the social business movement is ‘do it with joy’. I think it’s so important not to lose sight of that, especially when you are working on complex challenges that seem insurmountable. We need to remember to do our work with joy — it’s a marathon, not a sprint.

You have been blessed with great success in a career path that many have attempted, but eventually gave up on. Do you have any words of advice for others who may want to embark on this career path but are afraid of the prospect of failure

If you don’t try, you don’t succeed. When I decided to go to Bangladesh and find out more about social business, I also didn’t know where this journey would take me, so I committed for just 1 year. I figured, if it didn’t work out, I could always come back to my traditional career path. Little did I know — 12 years later — I’m still here. So my mantra is, just try it and see if you enjoy it. You don’t have to leave your job straight away, or risk all of your savings. You can start with something small on the side. You can try to effect positive change within the company where you are working. We all have agency and a small part to play to create the world we want to live in.

Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?

We have a systemic problem in our society that cannot be solved simply with a black square on social media. We need to actively champion female and minority founders to have the skills and opportunities to be running our board rooms and our governments. As a white woman, I too recognize my own privilege and I am committed as a CEO to open doors behind me for others to follow. Yunus Social Business runs programs like the F-LANE accelerator for founders addressing gender equality and our AMEI program in Brazil, which champions diverse female founders in a very white, male sector. These kinds of initiatives are vital to level the playing field.

You are a VC who is focused on investments that are making a positive social impact. Can you share with us a bit about the projects and companies you have focused on, and look to focus on in the future?

We are lending relatively small loans of $100,000 to $500,000 ticket sizes to early-stage social businesses focused on poverty alleviation that are looking to scale their impact. These businesses find it difficult to find appropriate funding as they are too big for micro-loans but too small for commercial investment. Take our portfolio company SMV Green in India, which provides affordable e-rickshaws, guaranteeing a sustainable source of income for drivers whilst reducing air pollution and carbon emissions. SMV Green provides opportunities for marginalized people to own an e-rickshaw and create their own sustainable business by helping customers obtain financing, and supporting with licensing and registration procedures. They have enabled 1,400 e-rickshaw drivers to lease their own vehicle, more than doubling their incomes.

In general, which business sectors excite you most and which sectors do you look to invest in?

Our funds invest across Agriculture, Health, Education, Livelihoods and the Environment — we are sector agnostic but are particularly drawn to businesses that have multiple impacts across social and environmental goals. During such testing times for the economy, I am really excited by businesses that focus on vocational training and secure employment as they allow opportunities for people to support themselves. We just made an investment in Brazil in a company called Provi, who provide affordable financing for students to complete practical placements. This is what money should be used for, to open up opportunities for a better future.

Can you share a story with us about your most successful Angel or VC investment? Or an investment that you are most proud of? What was its lesson?

I have seen first hand that the problems we face in the world today can be solved with a business approach. In Uganda, a country with over 40 million people, over 20 million do not have access to clean water. One of our first investments was the social business Impact Water, who sell water filtration systems to schools at an affordable price. They are now reaching over 1.2 million children with safe drinking water. For Impact Water, success means reaching more poor children rather than maximizing return for shareholders. It makes me proud to have helped them on their journey with support and financing.

Can you share a story of an Angel or VC funding failure of yours? What was its lesson?

Funding early-stage businesses means you are constantly taking risks. A few years back we invested in a social business called Agruppa in Colombia. Agruppa aimed to create closer links between farmers and consumers by ‘grouping’ wholesale orders for small shops in the cities. Agruppa would save the small shop owners time and money by not going to the market and the produce would be delivered directly to their shop. However, the well meaning entrepreneurs found their business model was solving the wrong problem. The owners of the small shops actually liked going down to the market to buy the produce themselves. It was a strong learning experience for us as investors, to ensure our businesses have a deep understanding of the motivations and needs of their customers. You shouldn’t ever make assumptions about what people need.

Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?

I wouldn’t say there is a company we have turned down that we now regret. If there is a good deal we will jump through hoops to make it happen and want to get in there first! But if a like-minded impact investor makes the deal instead of us then, really, that’s also great news. Our mission is to create as much social and positive environmental impact as possible, so we don’t see other impact-first investors as competitors but more like our co-workers! We would love to make more investments, but we currently have the capacity to make about 10–20 per year.

Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why? Please share a story or example for each.

1. Credible Social Impact.

The primary factor we look for in our investments is the breadth and depth of social impact. Whether that is children reached with clean water, stable employment secured or trees planted! We are sector agnostic, which means we don’t focus on just one area — but we really want to see the business making a real difference. We will then look at the depth of the impact, how far is the product or service going to improve the lives of the clients it is serving? For example BURN Manufacturing in Kenya produces clean cookstoves that can last for years. They can attribute their cookstoves not only to healthier home environments for over 960,000 families but saving over 3,600,000 tons of wood from being burnt.

2. A Strong Business Model

Social business is not charity. So it’s absolutely imperative that the business model has solid financials in place before we invest. When you are looking at business models that serve the very poor, the profit margins are clearly much smaller — so your business acumen has to be even tighter. We offer loans rather than equity so we are also looking for businesses that will be able to start repaying and are already making revenues. Our investment teams work closely with the social businesses to level-up their accounting and financial modelling. A great example is the motorcycle leasing social business in Uganda, Tugende, from the very start we were impressed with their business plan and financials and now a few years down the line and they are one of the strongest assets in our portfolio, growing year on year.

3. A Committed Entrepreneur and Leadership Team

The right person holding the reins is essential. But they also need a strong, knowledgeable team behind them as one person cannot do everything. Social entrepreneurs need to be able to step back, hire the best people and give responsibility to others in their team — which can be difficult with such personal projects! Someone that instantly springs to mind as a fantastic leader is Roshan Miranda, who runs Waste Ventures India. The business recycles plastic waste to better the environment and improve the lives of the waste pickers they work with. During the pandemic, Roshan was on the front-line, not only organizing but serving meals to the waste pickers to support them through the lock-down. It’s that kind of commitment from our social business entrepreneurs that is truly inspiring.

4. Potential For Scale

The business doesn’t have to be the most original concept — but those that are truly successful have the ability to scale. If you take the example of Impact Water, providing water filtration systems to schools is a really effective way to scale. Rather than a system for the home which serves just one family, using the multiplier effect of a school, or B2B business model means a much larger potential for scale!

5. Local Expertise

Working in developing countries, I see that often solutions to problems are not one-size-fits-all. We look at home-grown solutions that work to address local challenges. You can’t bring a solution that works well in Berlin directly to Kampala and expect it to perform the same. That’s why local teams who understand the market inside out are vital for both the social businesses we invest in and our own funds team.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

Societal value should be at the core of everything we do. Our planet is in crisis so it’s time to set higher expectations for ourselves and our businesses! There is no point in doing good work as a side project or charity initiatives to offset the guilt of exploitation and environmental degradation. We see too many companies congratulating themselves for green and social projects which are happening on the sidelines. My movement would be ‘aim for the core’!

If you could tell other young people one thing about why they should consider making a positive impact on our environment or society, like you, what would you tell them?

I don’t think young people need convincing to make a positive impact. With movements like Friday’s For Future, we are seeing a hugely engaged emerging generation who are demanding change. The mistake society is making is continuing to run unethical, environmentally damaging businesses while hoping that the younger generation will clean up after their mess. This is a problem we need to solve now — youth activists are telling us to change our behavior. It’s time for the CEOs to listen.

We are very blessed that a lot of amazing founders and social impact organizations read this column. Is there a person in the world with whom you’d like to have a private breakfast or lunch with, and why? He or she might just see this. :-)

I wish I could have had the chance to sit down with Ruth Bader Ginsburg before she died. Her lifetime commitment to a more equitable society has truly changed the system.

How can our readers further follow your work online?

You can find us at www.yunussb.com or follow me on LinkedIn to hear more on the social business movement.

Thank you so much for this. This was very inspirational, and we wish you only continued success!

About the Interviewer: Jilea Hemmings is a staunch believer in the power of entrepreneurship. A successful career revamping Fortune 500 companies was not enough for her entrepreneurial spirit, so Jilea began focusing her passion in startups. She has successfully built 6 startups to date. Her passion for entrepreneurship continues to flourish with the development of Stretchy Hair Care, focusing on relieving the pain associated with detangling and styling natural black hair. For far too long, people with tender heads have suffered in pain. Until now.