Seattle is such a startup hub that folks here are backing new ventures not only outside of the city, but on the other side of the globe.
Upaya Social Ventures is running an accelerator targeting India-based startups that employ some of the country’s poorest residents. Over seven years, the nonprofit has invested in 14 “social impact” companies that have created more than 7,700 jobs.
It all started with some experiments launched about a decade ago. Upaya co-founders Sachi Shenoy and Sriram Gutta were working for Unitus, an organization trying to address poverty through microfinance and microcredit. They were testing strategies for helping people in India living in extreme poverty, which is currently less than $1.90 a day. For five of the pilots, they fulfilled basic needs that families lacked: three meals a day, health care and schooling for kids. When those pieces were in place, they connected the families with jobs.
Then there was the sixth approach.
“We are simply going to match people from day one with income-generating activities and see what happens,” said Shenoy. Without resolving their unmet needs first, the people connected with jobs right away were more successful than those in the other pilots. “It really shocked us. We hadn’t patched up all the holes in their lives.”
After seeing these results, Shenoy and Gutta teamed up with Steve Schwartz, another Unitus colleague, and created Seattle-based Upaya in 2011. Many of their staff and board members come from microfinance and global poverty efforts, including PATH and the now-defunct Vittana.
Since Upaya began supporting Indian startups, a survey of some of the companies’ workers found that 80 percent of the people had moved out of extreme poverty by the second year of employment.
Upaya initially partnered with a couple of companies each year. Last year it launched an accelerator that mentored eight startups and ultimately awarded equity investments to two of them. One is a Mumbai-based venture called UpSkill Management Services, a business focused on training unskilled and often poorly educated workers.
Mansi Agarwal, CEO and co-founder of UpSkill, recently visited Seattle. Her trip was sponsored in part by Seattle University as an “entrepreneur in residence” — a pilot program being tested by the school. Over a week, Agarwal met with students and businesses to share her experience and learn about local startups.
Agarwal described startup lessons that will resonate with entrepreneurs everywhere: the need to shift focus when their hypotheses were disproved, struggling to hire people with the right skills, and the challenge of promoting and publicizing a venture while in the throes of building it.
“We had to pivot our business model almost three times,” Agarwal said. Their enterprise initially looked at providing housing for the poor, then shifted to loans to pay for workforce training. Eventually they realized that people really needed help building “soft skills” such as how to communicate with colleagues and report to a manager, and learning basic digital and financial literacy.
UpSkill, which launched in 2013, now provides those soft skills as well as specific training that targets jobs and companies located close to peoples’ homes. That includes jobs in auto repair, sewing, call centers, hospitality and data entry. The company has added a second dimension to its business: developing proprietary software to support job training and communication between students, educators and the businesses that need workers.
“Those pivots were a little bit frustrating,” Agarwal said. But “every time we pivoted we got closer to our goal, and that was exciting and fascinating.”
The message resonated with Seattle University students, said Meenakshi Rishi, a professor of economics in the university’s School of Business. They could see “how an entrepreneur has to be agile and pivot,” she said, “and lead from the head and the heart.”
The university emphasizes doing good in the world, but that can be hard to do effectively, as Agarwal found out. “She was able to say, ‘I’m going about it the wrong way,’” said Rishi, and then try a different path.
Agarwal and Upaya’s team both advocate for using “social enterprise” versus handouts as a means for aiding those in need.
Upaya is currently accepting applications for its next accelerator and expects to select 10-12 startups, with two or three receiving funding at the end of the program. The nonprofit receives support from individual donors and foundations, including the Bill & Melinda Gates Foundation. Building on the success of the companies in their portfolio, Upaya is considering expanding beyond India.
“If we can invest in a company that can be sustainable on their own and we can get our equity back, we can help the next company,” said Kate Cochran, Upaya’s CEO. “And that’s a model that can grow.”
Agarwal said that by running her venture as a company and not a nonprofit, she knows she’ll have reliable funding from revenue and can control UpSkill’s expansion.
So far they’ve opened nine training centers and graduated 4,500 students. Next year, they want to instruct an additional 5,000. UpSkill is working with two new software customers, which could add 40,000 students to their platform. The company would also like to offer training in languages beyond Hindi and English.
“We still have so many problems to solve,” Agarwal said. “There is no stepping back now.”