Where social problems and business solutions meet

Cultivating consumers from the world’s poorest people may sound like the business model of an exploitative corporation, but that’s exactly what Aliza Belman Inbal wants Israeli businesses to do.

In the interest of full disclosure, she’ll tell you, there is a dual purpose: While private-sector-driven technology has fertile ground for turning a profit in the developing world, it’s also the best way to help bring people out of poverty.

“We’re so good at innovation and finding creative solutions to difficult problems, particularly in fields that are of such crucial importance to the developing world like food security and combating desertification and renewable energy and medical technology,” says Inbal, stressing that the private sector, and not the government, is the best catalyst for such technological innovation.

A former World Bank researcher with a doctorate in development who directs the international development program at Tel Aviv University’s Harold Hartog School of Government and Policy, Inbal argues that consumers at the “base of the pyramid” (BOP) represent an estimated $5 trillion in purchasing power. Because they tend to overpay for basic goods and services, they also represent an opportunity for companies that develop smart technological solutions – as so many Israeli companies do – to solve the problems that the poor face.

Over the course of the past week, Inbal huddled together with 70 young social entrepreneurs in Mizpe Ramon for the first-ever ID2 (Israeli Designed International Development) gathering. Partnering with ROI, an organization focused on Jewish innovation, the conference was aimed at contemplating how Israeli technology could be used to alleviate social problems and spur development, not just through non-profits or charity, but with business and private capital.

“In order to do this well, you need a partnership between technology people and development people who understand these markets,” says Inbal.

“It’s something that’s good in terms of profits but it’s also good in terms of Israel’s international reputation and who we want to be as a nation.”

At the conference, Cecile Blilious, managing partner at Impact First Investment, laid out a diagram of investments with purely social outcomes (philanthropy) and pure profit (regular market investments), pinpointing the area of overlap between the two as companies that generate measurable social or environmental goals alongside profit.

Such “impact investments” reached a new high of $8 billion in 2012, and are expected to grow a billion more in 2013, according to a survey by JPMorgan and the Global Impact Investing Network (GIIN) released on Monday.

“What we’re looking to do is utilize Israeli technology and innovation to create globally scalable social impact with companies that have blended value,” says Jordan Feder, a principal at Impact First Investment.

“Essentially, we’re looking to mobilize market capital and the power of the free market to achieve social goals.”

Fair Planet, an agricultural company, provides an example of a socially minded firm. It seeks to find which seed species grow best in specific developing countries, information that could create new markets. Similarly, Amiran in Kenya sells a farmer’s kit that helps small-scale farmers access modern agricultural technologies and methods, many of them Israeli-made.

“You’re increasing the productivity of poor people by bringing them technology and education and that enables them to create their own economic value later,” explains Inbal. Similarly, there are economic gains associated with alleviating many social problems.

When added to the high level of education, research, and innovation that turned Israel into the “Start-up Nation,” expertise in agriculture, health and software could make it a world leader in development technology, says Gaddy Weissman, a co-founder of the Dev Tech Hub.

“Look at venture capital firms now. They have clean-tech and agri-tech,” he notes. “We’re going to add dev-tech.”