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SKS Microfinance, one of the largest microfinance organizations in the world, recently issued an IPO that raised over $350 million. It is important to note that SKS is not the first microlending company to go public, but it is certainly the largest, sending some jolts through the burgeoning field of double/triple bottom-line businesses. 

The SKS Society started as a nonprofit in 1997—Vikram Akula was selected as an Echoing Green Fellow in 1998 and subsequently received our Be Bold Award. SKS Microfinance was created as an off-shoot for-profit arm in 2005 as Vikram believed the for-profit route would allow its impact to scale at a much faster rate. SKS has grown from 2,000 borrowers in 2001 to 4.7 million in 19 states across India, with $1.8 billion disbursements and $554 million of loans on the books—an incredible feat, which puts it in the top 10 percent of India's 3,150 microfinance institutions. But its leaders think it can grow more.

There has been some strong vocal discourse about the morality, as well as the implications of this IPO on the social impact and social entrepreneurship “industry.” Some argue that poor people will be exploited if companies are driven by dividends now owed to their shareholders; that SKS will be plagued by mission-drift and dilute its social value in favor of dividends and investor returns.

The other side says that this IPO is a boon, shifting the very crux of what it means to “do good” and make money simultaneously. No doubt, the IPO will allow SKS to make more loans; they plan to reach 15 million customers by 2012 and 50 million eventually. Elisabeth Rhyne, managing director for the Center for Financial Inclusion, recently made a very convincing point; she said that taking a company public is not an easy task and likely something Vikram would not take lightly. The transition of pioneer BancoSol of Bolivia from nonprofit to for-profit in 1992 was certainly arduous and not without many difficulties. “A leader like Vikram Akula, SKS's founder, needs a compelling reason to take his organization through that ordeal. For Akula, as for many others, that compelling reason was capital for growth.”

The question, however, of balance between profit and impact remains.

In a recent interview with Forbes magazine, Vikram said “Grameen Bank reaches 7 million clients and that's amazing. On the other hand, it took Professor Yunus [Grameen Bank's founder] 35 years to do that. Can you imagine how many generations it will take to reach 150 million poor households in India if we took that approach? We have to scale more rapidly, and only commercial capital will meet our huge funding requirements.”

Professor Yunus, a vocal proponent of social business, is wary. His concern is that the motivation for profit will allow a new version of loan sharks to gain cover through the guise of microfinance institutions. To avoid any confusion, Professor Yunus believes in a for-profit model of social business that reinvests any earned profits back into the business, with only the original investment amount returned to the investor.

SKS's journey as a publicly traded company has only just begun—there is much to be seen about how this new approach  will unfold and the bumps in the road will surely serve as valuable lessons for everyone who will follow—and they will follow. The Economist recently cited no lack of enthusiasm for social entrepreneurship, but a problem of speed and scale—there is no one in the field similar to the likes of Microsoft and Google. Maybe SKS Microfinance is on its way.

Vikram is not the first to take a social business public, but he is certainly leading a paradigm shift in the very nature of business and what it means to create scalable, sustainable change. We are carefully, but eagerly awaiting to see where this IPO goes and we applaud Vikram for his boldness.

Join the conversation and share your thoughts with us. Are publically-traded, socially driven businesses the wave of the future? Are they the answer to reach scale? And what implications does that have on social impact?