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USAID is incubating start-ups to tackle poverty problems

USAID upends aid agency model by investing in start-ups that tackle global poverty and hunger

With his nifty PowerPoint slides and carefully crafted pitch, Yashraj Khaitan might be mistaken for any other fast-talking, code-savvy Bay Area millennial boasting that he has hit on the idea to solve a vexing world problem.

Yet, in Khaitan's case, some very influential people in Washington think he may be right.

The federal government agency charged with easing world hunger and poverty has bet a million dollars on Khaitan's tiny start-up. It is among a handful of companies that the US Agency for International Development is looking to as it seeks to upend the way aid agencies go about trying to improve living conditions in some of the world's most deeply impoverished places.

Deep in rural India, Khaitan and his partner, Jacob Dickinson, a San Diegan he met at UC Berkeley, are tweaking a scheme designed to help bring power to the 2.6 billion people worldwide who live off the grid. They are tackling the rural electrification conundrum with Silicon Valley bravado, promising a plan that would not only bring power to huge numbers of people but also slow climate change at the same time.

Their firm, Gram Power, is scrambling to erect clusters of solar panels that transmit modest amounts of energy to homes through sophisticated, hyper-efficient electricity meters the firm invented. In many households, that clean electricity is replacing kerosene lamps, which emit toxic fumes that can lead to sickness and also accelerate global warming.

"I never wanted to go work for a big corporation to build the next big app or do things like that," said Khaitan, a native of India who dropped out of his master's program at Berkeley after USAID invested in Gram Power, spurring others to put money into the company. "I wanted to use technology to work on something high impact."

Many in the $20-billion international aid bureaucracy hope Gram Power and firms like it can infuse the lumbering global development establishment with Silicon Valley ingenuity and confidence.

"The old model was we need something built, we hire a contractor," said Rajiv Shah, the aid agency's top administrator. "The new model is solve these huge and challenging problems with innovators and entrepreneurs who can come together and create the kind of solutions that can scale up to reach tens of millions of households."

"Everybody respects the power of the Silicon Valley mindset and approach," Shah said. "We want to bring it to something as powerful as ending extreme poverty around the world."

To accomplish that goal, USAID has taken on the role of start-up incubator.

The agency has launched development labs at seven major universities to draw students and faculty into collaborations aimed at building new approaches to global poverty. Like any other venture capital investor, USAID seeks out projects that have potential to be economically viable and stand on their own once the start-up dollars run dry.

The labs are field-testing products, including sophisticated hand-held medical diagnostic instruments that create new possibilities for tele-medicine and thermal-storage devices that can provide milk refrigeration for off-the-grid dairy farmers.

They are trying out an innovative modular sanitation system in African slums that processes human waste into fertilizer and renewable energy. A project called Bioneedle delivers vaccines through tiny implants that don't need to be stored in a cold environment, greatly simplifying the process of getting medicine to people in remote, tropical areas.

One common thread is that all these efforts involve products that can be dispensed cheaply, efficiently and broadly. In the case of Gram Power, for example, the company leveraged preexisting subsidies so that for about 20 cents a day, it can provide enough energy for each of its customers to keep on a few lights, a fan, a mixing machine and maybe a TV set.

"This is not about philanthropy," said Eric Brewer, a vice president of infrastructure at Google and Berkeley professor who is guiding the Gram Power effort. "This is about things that can be financially sustainable. "

Brewer is an evangelist for Gram Power, arguing its model could vastly expand the number of households in India receiving electricity without straining the coffers of Indian governments. Gram Power has come to the country at an opportune time: Indian leaders are focused on building 10,000 self-sustaining microgrids, which include projects like Gram Power's, by 2022.

Currently, India has one of the world's most inefficient electrical systems. Where the power grid does dispense electricity, it does so poorly, with nearly half the energy produced from polluting fuels such as coal and diesel getting stolen or lost in wayward transmission lines.

Gram Power is among several entrepreneurial firms considered pioneers in the field of off-grid renewable energy in India, according to Gaurav Gupta, Asia director for Dalberg, an international development consulting firm. But, he said, "the ability for these early entrants to scale and keep up with new tech developments remains to be seen."

In addition to supporting the solar microgrids, the Gram Power metering technology is about to be deployed in areas already serviced by the grid, where engineers will use it to ensure electricity is not just wasted.

Back in California, the marriage between tech and international development agencies has caused both to rethink how they do business.

"Silicon Valley has a technology utopia view of the world, that technology can fix all problems," Brewer said. The three dozen or so professors at Berkeley engaged in development, he said, are "much more about the public service orientation and the on-the-ground reality."

Khaitan's upbringing in the state of Rajasthan, in northwestern India, made him uniquely qualified to bring those two perspectives together. His engineering skills are complemented by familiarity with the politics, social hierarchies and business relationships that dominate the rural areas where Gram Power is operating.

"The fact that I am from India and my family has been in business here for three generations now has given me a strong support system," he said.

The firm will be tracking customer energy use for researchers back at Berkeley and MIT, who will compare it against household income and other data to assess whether the new electricity systems are improving living conditions.

"We are looking for ways to find more Gram Power type projects," said Ticora Jones, who directs university-based start-up collaborations for USAID. "We want to populate a pipeline of innovators."

evan.halper@latimes.com
Twitter: @evanhalper

Times staff writer Shashank Bengali in Mumbai, India, contributed to this report.

Copyright © 2016, Los Angeles Times
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