Taking innovations to the market to benefit the rural poor – The Villgro experience - India

How can innovative products with rural benefits be brought to the markets and thus impact the daily lives of the rural poor? How can the gap between rural innovators and entrepreneurs be bridged?

The Office of the Chief Development Strategist invited Mr. Rathin Roy, a consultant who has often collaborated with IFAD, to present the experience of VillGro, an India-based NGO that aims at taking rural innovations to the market.

VillGro has endeavoured to find and support the home-grown geniuses who, when confronted to the problems faced by small-scale farmers on a daily basis, have come up with simple but useful solutions, be it a fuel-efficient stove, a coconut dehusking machine, or an insect-trap.

Over its ten years of existence, VillGro has known failures and success stories, and it has built on this experience to develop a unique model of “incubating” innovations, a process through which an innovation is tested, improved, marketed, and progressively connected to entrepreneurs and investors through the design of a business plan and VillGro’s extensive networks. If this experience is of any value, we should admit that “Innovators are not Entrepreneurs !” said Rathin Roy.

Of course, not all innovations, useful though they might be, can pass the test of the market, and VillGro therefore applies a rigorous screening process that allows a mere two percent of all submitted applications to reach the incubation stage. In spite of this screening process the failure rate remains close to 50%, making innovations incubation a “Risky business” as Rathin described it. The test of the market remains the only and main guarantee of sustainability of an idea or solution. Hence the importance of creating what Rathin calls an “innovation incubation ecosystem” that consist of a number of support services around the incubation function that help increase the likeliness of success. Investors are critical to bringing ideas to scale. Venture capital tend however to exit too quickly as compared to what rural innovations would require and there might be a role for agencies like IFAD in providing what Acumen Fund calls “patient capital” while ensuring that we do not bypass the market test.

This presentation of VillGro’s experience was particularly interesting from an IFAD standpoint, as the organization is now engaged in a process of boosting its innovation and knowledge management strategies, and is promoting the vision of small-scale farmers as business-persons. The ensuing debate emphasised the contribution that institutions such as IFAD can make by promoting innovations at a local level through an awards system, or by sponsoring innovations that are promising but would not be immediately profitable if marketed. IFAD could also make use of its extensive networks at country and regional levels to promote innovations in its projects and on the local markets. A number of challenges were identified on the road, such as the difficulty of working through public agencies to promote innovation. The presentation and debate also stressed the importance of experimenting with the incubation of innovations in order to progressively define the right set of tools and a flexible strategic framework and the need to innovate and sharpen our own instruments if we are to engage in this field more substantially.