Our Approach

The Evolution of Our “Enterprise-Based” Model

Targeting scale of impact and sustainability is not easy – and we’ve learned as much from failure as success.

Over the years, we've moved away from conventional grant-making to develop a new enterprise-based model that we find a more cost-effective way to deliver lasting impact at scale.

By making these changes we calculate that 75–80% of our grants now support initiatives that are progressing to scale and sustainability (compared with under 20% in our early years as a conventional grantmaker).

Building Inclusive Markets

Social innovators face major obstacles to disrupt the status quo and achieve global scale. They cannot do this alone – but backing game-changers is risky and most pioneers do not find the early-stage support they need to succeed.

Based on our experience, and analysis of our work by Monitor Deloitte and Forum for the Future, Shell Foundation has developed a SIX STEP MODEL to accelerate social innovation and build new inclusive markets.

We play a catalytic role to demonstrate the viability and scalability of new models – and work across the social investment ecosystem (with investors, corporates, NGOs, governments and multilateral agencies) to catalyse adaptation, replication and greater collective impact.

Step 1 - Catalyse

We focus on a few big issues related to energy, mobility and job creation – and combine business and development DNA to look at entrenched challenges in a different way.

This means working to:

• identify the market failures that underpin these challenges
• conduct market research to understand the wants and needs of the people we seek to serve.
• build networks with experts and innovators to identify high-potential yet high-risk solutions
• formulate radical new ideas for market-based solutions with the potential to scale

Step 2 - Pilot

We believe in learning by doing. The information we need to assess different technologies or models rarely exists for new product or service categories aimed at low-income consumers – so we test a range of new solutions to understand more about the market.

This helps us:

• test the viability of business models
• demonstrate new technology or product prototypes
• find evidence for market demand and consumer preferences
• identify highly-promising partners with the greatest potential to deliver impact
• We want to discover genuine game-changers. This means taking risk and accepting uncertain outcomes.

Step 3 - Create Pioneer

A great business plan isn’t enough to ensure success. We form long-term partnerships with entrepreneurs who have proven skills and experience – then create new organisations that target large-scale impact and financial independence from the outset.

Our portfolio of partners include social enterprises (focused on delivery of products and services) and market enablers (intermediaries that accelerate the growth of market-based solutions).

We provide early-stage grant funding, management support and business skills to help pioneers:

• refine business models
• develop their customer offering
• agree performance metrics to track impact, growth and financial sustainability
• invest in world-class talent to get their businesses off the ground.

Step 4 - Scale

Once partners have proven the viability of their models in a particular region, they need to build operational capacity for global expansion.

We provide patient and flexible finance, strategic guidance and day-to-day business support to help them:

• expand their customer base
• build assets
• recruit world-class talent
• develop global systems and processes
• strengthen supply chains
• adapt products for new regions

We also play a governance role to help partners achieve their social and environmental targets, and to build the track-record they need to attract second-stage finance. While we are predominantly a grant-maker, we act like an investor in the way we track performance, analyse risk and evaluate the growing impact of our partners’ activities.

Step 5 - Tackle Market Barriers

Pioneers working in extremely tough markets face some major obstacles. As they grow and we learn more about the market, we uncover structural barriers that prevent sustainable growth for others who may seek to replicate their models.

Examples include low consumer awareness, affordability constraints, limited routes to market in rural areas or supply chain fragility. Our teams work to innovate new solutions to these barriers, facilitating new types of public and private collaborations across the supply chain.

At the right time, we help pioneers transition to non-grant investment from the private market to fund their future growth.

Step 6 - Market Building

Creating one pioneer simply isn’t enough. To help others to replicate and adapt these models we create specialist “market-enablers” to accelerate the growth of new “pro-poor” markets:

• intermediary enterprises who tackle barriers to scale across the value chain (such as consumer affordability or last mile distribution) or provide working capital and growth finance to new entrants.
• non-profit “institutions” who build the infrastructure needed for markets to thrive: codifying best practice, developing standards, leveraging investment or advocating for policy, legal or regulatory change.

We also share our results and learning transparently with others in the social investment ecosystem to support greater collective impact.