Karolina Dvorakova,
Robert Akerboom,
Jeffrey Ros
Didac Trubat Ponti
Design & Innovation
Smart | Dairy
interview questions
- What type of enterprise your company is and what is the company's business?
- How did you search for funding of your projects and are there any other ways of attaining the initial capital for a starting project?
- How would you define “sustainable entrepreneurship”?
- What are the main trends regarding “sustainability” in businesses?
- How is sustainability perceived within businesses?
- Do you consider branding your company as sustainable is attractive for customers?
- How do you think that the perception of sustainability will change in the future? How will it affect the businesses?
Smart | Dairy
The start-up company Smart | Dairy is based in the Netherlands, however it focuses on the emerging markets in developing countries, particularly Kenya, Nicaragua and India. The focus of the company is high quality milk, a product which is currently lacking in the markets; the current quality as well as quantity of the milk supply is low and the prices are very volatile. With its new business model Smart | Dairy is trying to bridge the gap by creating a whole system in this spotted niche market, while becoming a facilitator of this whole system and a connection between the farmers producing the milk and the customers buying the milk. In the process of doing so, new job positions in the areas are that way created. Currently the company is finding itself in a point of building first farms in Kenya, searching for new investors and establishing contacts in India and Nicaragua.
There are several steps in the process of starting this type of business in an emerging market, which Smart | Dairy follows:
- attaining initial capital from private investors
- establishing 50-50 joint venture between Smart | Dairy and local investor, knowledgeable about the local market
- presenting an offer to the farmers in form of “franchise package” containing access to the technology, know-how and funding. This is done by signing a long-term contract with the farmers and offering them a loan payable back within several years, through which the farmers are able to establish and manage their farm. The starting expenses are fully covered by Smart | Dairy.
- offering extension services to farmers in form of extension management overlooking the farm, veterinarians, technology; all ensuring high quality final product and high yields
- buying the milk from the farmers and selling it to the customers
The sustainability within this company is visible in the way the business in the developing countries is established not in the terms of sustainable environment, but more in sustainable growth. They do not believe in creating a macro barns containing several thousands of cows, mostly because the management of such system would be immensely difficult. Thus by focusing on smaller local farmers, each with 25 cows, the whole system is much easier monitorable and manageable as well as the particular farmers are much more enhanced in the whole process as they feel like they are the actual owners of the business. However, such close circle system in reality does not really allow farmers to be flexible and work with their own ideas; the whole system is quite precisely predefined.
financing starting entrepreneurship
The private investors, investing in the innovative idea, are the key players in the whole system. These investors are engaged during starting the business and are convinced about the future potential profits within the business and thus becoming willing to invest the initial capital needed for starting the business. The investors are then paid back in forms of dividends if the business becomes profitable. In case of Smart | Dairy, the investment is seen as containing high risk thus expected to yield high profits and also the process of searching for investors is ongoing as the business is expected to grow also in the other countries.
Other possibilities of gathering money for the start-up initiative could be through subsidies from certain governmental bodies or from non-governmental organisations. The way the business is financed at the beginning highly depends on the type of business and the potential market, expected profits and size of the company you try to create. Crowdfunding is another way of attaining the capital, which in practise has also been successful, mostly in cases which are “flashy” and easily marketable.
starting a company
The way the newly created company is established very much depends on the personalities of the people managing and establishing the company. However in general it could be stated that the phase of setting up a business requires a certain degree of flexibility, while adapting to the market and while searching for the gaps within the market.
sustainable entrepreneurship
The sustainability within the system is about encouraging potential entrepreneurs to go for the business by keeping a fertile soil for the entrepreneurship. This could be done by organising the necessary means for the business while facilitating the environment in which these new ideas could grow into the next stage of establishing businesses.
This environment is established already in the societal perception of the entrepreneurism. Moreover, knowledge needed regarding starting the business is needed to be acquired from universities or other knowledge institutions. Luckily, in contrast to other countries, the Netherlands in general is a liberal country supporting new initiatives and new ideas and proposing the possibility of starting their own business. Dutch people then are motivated and triggered to actually try to start the business and become entrepreneurs and by doing so the mutual learning process is accelerated.
Nowadays the term “sustainability” is used within companies mostly as a way of promotion, “stamp” put on products to look better. Sustainability in itself is a hot topic, making the products look more desirable if labeled sustainable. Needed to say that such labeling and promoting the sustainable business is actually a way to move the transition forward through a snowballing effect - more people will know about it, more they will demand it and more businesses will have to behave sustainably. Nowadays the sustainable products are usually more expensive than the unsustainable ones. However as the profit and return on investment still remain a key importance for any business, the only way to make sustainability truly embedded in the businesses is to make it profitable either by building up on the “hot topic” issue or by some huge technological innovations.
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