About a year ago, My Crowdfunding Study touched down on the beaches of Big, Bad Brazil. While the focus of the trip was clearly crowdfunding in South America, Brazil was full of many other surprises, including the emergence of a new generation of social enterprises. While we have written a little bit about one such enterprise, Solidarium, today we are going to go a step further and break down the impact-driven business model of another inspiring Brazilian social enterprise, ASTA Network.
In today’s world, impact is becoming the new currency for entrepreneurs. Sure there are still many that dream of becoming the next Mark Zuckerberg, going from zero to a billion in a few years, but there is another emerging crop whose focus is to change the course of humanity.
In Brazil, in particular, the need for impact-driven entrepreneurs is especially high, as social problems touch almost every level of the Brazilian society. While many people around the world have put Brazil on their radar because of its rapid rise in (GDP) growth, the real stories worth telling are happening on the ground thanks to a new generation entrepreneurs. One such story revolves around Alice Freitas and the creation of ASTA Networks, the first door-to-door network of products made by Brazilians from low-income communities.
What makes stories such as ASTA so exciting is that they are leading the charge towards a new era of business by creating enterprises that generate mass-scale social returns while still striving for profitability. The lines are starting to blur between social enterprises and businesses thanks to the development of impact-driven business models. So let’s dive into ASTA and look at how a simple marketplace created a decade ago has blossomed into a full-scale network across Brazil.
It started back in 2002 when the Founder Alice was 22 years of age. Her friend had returned from a trip to New Zealand and was encouraging her to go travelling with her. Alice felt restless and wanted to go, but needed a purpose for the trip – to make it feasible – so she brainstormed ideas for a social-focused project.
With a little creativity and ‘cara de pão’ persistence, the ReAlice project was launched in 2003. The portal was designed to allow the travelers to share the inspiring social projects they were seeing with other Brazilians. They travelled for a year and half through India, Thailand and Bangladesh and posted each story on the portal.
Upon returning, they were sick of travelling and wanted to do something more local. At that point, Alice encountered a cooperative of 30 women in Campo Grande and began to start selling their products in 2005. It was at that moment that they started to see the problem – women were not able to sell their products.
It was that realization that gave birth to the big idea behind ASTA – setup the first door-to-door direct sales network of inclusive products in Brazil. The market size of this problem was more than big enough to support a large-scale initiative:
- 25,000 cooperative groups producing artisanal products
- more than 2 million people
- 67% have difficulty selling
The idea got its first formal backing from Fundação Avina, a leadership organization dedicated to social entrepreneurs, and the ASTA Network was officially born in 2007. What drove the idea was the notion that the network wouldn’t be about selling things from outside-in, but from inside-out.
Starting in 2008, ASTA had only seven resellers. But an initial surge from an ASTA Network member had every person calling five of their friends or family to get them involved in the idea, and suddenly ASTA was alive. When the first bag of products was sent out to be sold, it came back empty within a week.
In 2008, 7,000 Reais worth of sales were completed, while by 2011, ASTA generated 625,000 Reais (approximately $312,500 USD) in sales and had more than 200 resellers. As of this year, it was estimated that more than 50 cooperative groups were supported and almost 2,500 people impacted directly.
The question is, how does ASTA work and what’s the impact-driven business model?
The process starts when artisans arrive with the products in hand. Members of the ASTA Network then select the ones they like; all the products are top quality and beautifully designed (first-hand knowledge). From there, an ASTA member photographs the items and puts them in the ASTA catalogue. The ASTA catalogue is then shipped out to one of the ASTA resellers, who then shows the products to their friends and family. The reseller then places an order, which ASTA processes, packages and ships from one of its inventory centres. The percentage of sales are broken down as follows:
- 50% of the money goes to the producer
- 22% goes to the reseller
- 28% goes to ASTA
The beauty of ASTA products is that you know exactly where each product is made and where the money goes. The business model behind the company is quite simple, but because they are building a large network of artisans who produce high-quality, in-demand products, there is a lot of room for expansion and innovation. As the company continues to grow its network and presence, a whole new array of opportunities will open up. The real beauty is that a growing business model doesn’t just translate into increased bottom-line profitability, but increased impact.
ASTA has developed over the course of a decade thanks to the persistent and unrelenting efforts of Alice and her team, along with the support from organizations such as Avina and Aliança. In fact, during a conference last year in Brazil, Alice spoke of the paralleled development between ASTA and Solidarium, which were both incubated in some way through Aliança Empreendedora, an incredible organization based in Brazil’s South that focuses on sparking entrepreneurship in low-income communities.
Overall, the advent of the impact-driven business model is helping social enterprises reach self-sustainability and profitability without watering down their reach. Brazil, in particular, is a hotspot for a new breed of social entrepreneurs who are using impact, rather than Reais, as their metric for success. While it’s still early days, the sunny, beach-lined coasts of Brazil are a breeding ground for much more than soccer stars and bikini-clad women. Nevermind the World Cup or the Olympics, the real games have already begun.Tweet