From African Assets:
Impact investors are alive and well in the tech industry; a few businesses had secured funding from foundations in the US that we had never heard of to carry out mobile-inspired development work under a for-profit banner. The profit part will continue to be the tricky factor in the impact investing equation.More here
Several businesses spoke during a recent ICT4Development session, but only two of them (who were partners) presented a convincing business model with potential revenue streams. The others avoided business models completely or spoke about how hard it was to make money. While the businesses themselves seemed to confuse this, in our minds there was a clear dividing line between the businesses with a plan to make money and those with no clear profit model: those with revenue streams were the ones aggressively providing a service that people would be willing to pay for; the others were providing public goods, such as educational games or public health information.
Public goods are public goods because people do not like to pay for them – in Africa or anywhere else. The problem with mobile businesses focused on development impact is that they are often trying to provide public goods on a for-profit basis. In some cases, such as health care or education, this works, because people are willing to pay for the service and the government fails to provide it well. But in many other cases, the revenue streams simply do not exist. Start-ups in Africa need to get better at making this distinction early on and stop getting lost in the bleeding-heart haze of development-oriented ‘business’. One presenter put it well: rural African women need health care; rural African women also want entertainment. Business is about providing services that people want and will pay for, no matter where you are in the world.