Maya Chandrashekar | November 11, 2016

Impact vs Scale, are they mutually exclusive?

As impact investors, we are often asked if the term itself is not an oxymoron. Especially in the education space, is it possible to have both scale and impact at the same time? Does the one not impede the other?

Of course you can have both. Growth is potentially a little slower – the hockey stick trajectories of Silicon Valley are not a given – and there’s a lot of hard work upfront on research, product development, curriculum design, engagement models and assessment of outcomes. Because we’re not in the business of selling/delivering products or services, but fundamentally changing the way people (most often children) learn, we pay deep attention to all of these early in the process.

We focus on real businesses with realistic growth trajectories.  If an e-commerce company or hyperlocal delivery app decides to ship fast and break things, all that is affected is delivery of a product. In our business, the impact is deeper and more sustained, and we tread in a more measured way. Identifying a gap is not enough. Proving a result is critical, and that takes time.

That said, scale is core to us from both the impact and the investor perspective.

As an investor, we have fiduciary obligations and need businesses to grow and generate revenues in a way that creates sustainability and returns. Fortunately, the collapse of so many me-too ecommerce companies and the wider market corrections show that there is no escaping business fundamentals. Growth trajectories can’t be gamed – they have to be based on a solid business that solves a problem, provides value and does so for many people.

Obviously we want scale. Only through scale will we see real adoption and change in a country the size of India. We believe that scale and impact go hand-in-hand. A company that creates a product that works, solves a large problem, works with all the stakeholders in the education system, improves learning and does so at a price point that make business sense is going deep and growing wide simultaneously. That’s what creates impact, while making investors happy.

When an entrepreneur/ team approaches us, we ask ourselves a few questions –
How real is the problem they’ve identified?
How do they know it’s real?
How many potential customers have they spoken to, to understand the nuances of the problem?
How appropriate is the solution to the problem?
How does it prove that it addresses the issue?
How much feedback/ iteration has the product/ solution taken on-board
Is the price point one that would make sense to a low-income customer?
Is the price point one that would make sense to a sustainable business?

We look for balance in how an entrepreneur has approached the problem, the solution and the business. To be clear, that balance is far from easy to create and equally hard to maintain. At different times of an organization’s growth and evolution, different areas will suddenly emerge to take precedence over all else. Especially for a team that is growing fast and focused on execution, it’s sometimes difficult to see the tilt. That’s where we step in to help provide perspective, highlight the required balance and help refocus the energies of the team.

So, as a long answer to a short question, the balance between impact and scale is both possible and proven, and our job is to help facilitate this.