Sun Co-Founder Uses Capitalism to Help Poor

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Ramila Chawda, 30, second from right, leads a group of female customers of Ujjivan, a microfinance firm in Bangalore. She is using her loan to school her children.

By VIKAS BAJAJ

MUMBAI, India — Vinod Khosla, the billionaire venture capitalist and co-founder of Sun Microsystems, was already among the world's richest men when he invested a few years ago in SKS Microfinance, a lender to poor women in India.

But the roaring success of SKS's recent initial public stock offering in Mumbai has made him richer by about $117 million — money he says he plans to plow back into other ventures that aim to fight poverty while also trying to turn a profit.

And he says he wants to challenge other rich Indians to do more to help their country's poor.

An Indian transplant to Silicon Valley, Mr. Khosla plans to start a venture capital fund to invest in companies that focus on the poor in India, Africa and elsewhere by providing services like health, energy and education.

By backing businesses that provide education loans or distribute solar panels in villages, he says, he wants to show that commercial entities can better help people in poverty than most nonprofit charitable organizations.

"There needs to be more experiments in building sustainable businesses going after the market for the poor," he said in a telephone interview from his office in Menlo Park, Calif. "It has to be done in a sustainable way. There is not enough money to be given away in the world to make the poor well off."

Mr. Khosla's advocacy of the bootstrap powers of capitalism is part of an increasingly popular school of thought: businesses, not governments or nonprofit groups, should lead the effort to eradicate global poverty.

Some nonprofit experts say commercial social enterprises have significant limitations and pose conflicts of interest. But proponents like Mr. Khosla draw inspiration from the astounding global growth of microfinance — the business of giving small loans to poor entrepreneurs, of which SKS Microfinance is a notable practitioner.

Advocates also find intellectual support for the idea from the work of business management professors like the late C. K. Prahalad, who have argued that large corporations can do well and do good by aiming at people at the so-called bottom of the pyramid.

Besides Mr. Khosla, entrepreneurs like Pierre Omidyar, a co-founder of eBay, and Stephen M. Case, a co-founder of America Online, have started funds with similar aims.

But Mr. Khosla, 55, who moved to the United States from India as a graduate student in 1976, has another motive, too. He wants to goad other rich Indians into giving away more of their wealth.

India's torrid growth over the last decade has helped enrich many here — Forbes estimates that India now has 69 billionaires, up from seven in 2000 — but only a few have set up large charities, endowments or venture capital funds.

"It surprises me that in India there is not a tradition of large-scale giving and helping to solve social problems and set a social model," Mr. Khosla said.

Mr. Khosla is not alone in worrying about the state of Indian philanthropy. Bill Gates, the Microsoft co-founder, who was in China last week with the billionaire investor Warren E. Buffett, said Thursday that he and Mr. Buffett might go to India as part of their campaign to get the very rich to give away half their wealth.

Charitable activities and venture capital investing have been a mainstay for some Indian business families like the Tatas and for technology entrepreneurs like Aziz Premji of Wipro, the Bangalore outsourcing firm. But many others have given very little.

A recent Bain & Company study estimated that Indians give much less as a percentage of the country's gross domestic product than Americans. Moreover, individual and corporate donations account for just 10 percent of the charitable giving in India, compared with 75 percent in the United States and 34 percent in Britain. The balance comes from the government and foreign organizations.

Rich Indians "are more into temple building and things like that," said Samit Ghosh, the chief executive of Ujjivan Financial, a microlender based in Bangalore, "rather than putting their money into real programs, which will have real impact on poverty alleviation."

Mr. Khosla said his experience with microfinance had helped shape his views on the best way to tackle poverty. He has invested in commercial microfinance lenders and has donated to nonprofit ones, and he said that moneymaking versions had grown much faster and reached many more needy borrowers.

He said he wanted to help create a new generation of companies like SKS, which started lending as a commercial company in 2006. It now has 6.8 million customers and a loan portfolio of 43 billion rupees ($940 million).

more....

Edited October 6, 2010 by El Buscador

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In India, private enterprise is doing more for the poor and the middle class than the government ever has.

Kind of the exact opposite of what they're doing here in America.

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In India, private enterprise is doing more for the poor and the middle class than the government ever has.

Kind of the exact opposite of what they're doing here in America.

Do you think that some of that has to do with the left over remnants of a Caste System?

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Do you think that some of that has to do with the left over remnants of a Caste System?

Not everything in India has to do with the caste system, Steven.

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In India, private enterprise is doing more for the poor and the middle class than the government ever has.

Kind of the exact opposite of what they're doing here in America.

but there's a government program to fix that.

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but there's a government program to fix that.

There's a government program that will help American businessmen care about America? Interesting, if true. Of course, in most other countries you don't need a program. In most other countries, caring about the people of ones own nation comes naturally to those with the means and ability to facilitate positive change. Not so here. I wonder why.

[Ban Hammer 13,360]

There's a government program that will help American businessmen care about America? Interesting, if true. Of course, in most other countries you don't need a program. In most other countries, caring about the people of ones own nation comes naturally to those with the means and ability to facilitate positive change. Not so here. I wonder why.

we just need to send india some democracy, that will fix things right up!

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we just need to send india some democracy, that will fix things right up!

?