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Pioneers Ventures is a venture capital firm specializing in pre-seed, early stage, pre-market, and start-up investments in Fintech sector. The firm considers investments in information technology/cloud/big data, financial technology, IOE/hardware/sensoric, e-health/quantified self, media, retail/commerce, and digital businesses sectors. It primarily invests in Europe. The firm seeks to make investments between €0.02 million ($0.02 million) and €0.13 million ($0.13 million) in companies with valuations below €1 million ($1.07 million). It invests on an average of €0.1 million ($0.11 million) in its companies. The firm prefers to invest in B2B and B2C models. Pioneers Ventures is based in Vienna, Austria.

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If they randomize at the individual level, they would put all the eligible children’s names into a bowl, or a list on a computer, and run a lottery. Some children would get an iPad. Some would not. If they randomize at the school level, they would do this for the school names and some schools would receive iPads. In a phase-in/pipeline design, the individuals or schools who did not receive an iPad initially would be placed in a queue to receive it if the study found them to be effective and funds were available.

Beyond this simplified example, the RCT methodology can be adapted to a wide variety of contexts.

As with all human subjects research, RCTs are subject to rigorous ethical reviews to ensure that no human subjects are harmed during the research process.

The RCT approach is flexible enough to accommodate a variety of contexts and sectors. It can be used in education, health, environment, and so on. With a little imagination, randomization can be adapted to a number of different circumstances. Constraints and what RCTs cannot do will be discussed below. For now, here is a short gallery of examples of what RCTs can do.

Simple (one treatment, one control)

In a microfinancestudyby the AbdulLatifJameelPoverty Action Lab (J-PAL), a large Indianmicrofinanceinstitution,Spandana, identified 104 low-income neighborhoods in Hyderabad, India, which were potential locations to open a branch office. Prior to opening the branch offices, 52 neighborhoods were randomly selected to have an office open in 2005 – this became the treatment group. The remaining 52 neighborhoods remained “control” (receiving an office in the following years). Households were then interviewed 15-18 months after the introduction ofmicrofinancein the treatment areas.

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Multiple treatments/Factorial

RCTs may investigate multiple treatments against each other – or multiple treatments against each other and a control group.

A study inBiharandRajasthan, India,examined several treatments to address low literacy levels of children. One intervention focused on offering mothers literacy classes, assuming that more educated mothers would be more effective at helping children at home. A second intervention provided a guide to mothers on at-home activities which could enrich the learning environment for their children at home. A third intervention combined these two: mothers received both the mother literacy classes and the at-home activities guide. A comparison group received none of these services.

View example

Rotation

A remedialtutoring program in Indiaused rotation design. Rotation design refers to a situation where, for two groups, one group is treatment and one is control – and then, those roles switch, with the previously-treated becoming control and the previously control becoming treated. In practice, the NGO Pratham identified 77 schools in Mumbai and 124 in Vadodara. Pratham’s intervention was a remedial tutor (called a “balsakhi”, or “child’s friend”) who would meet with 15-20 students who were falling behind in their grades.

Randomization was “rotated” in that, in 2001, half of the schools received a tutor for grade 3, and the other half received one for grade 4. In 2002, the schools received a tutor for the previously untreated grade. In this way, the impact of treatment could be determined by comparing grade 3 students in schools who received a grade 3 tutor to grade 3 students in schools who received a grade 4 tutor.

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Phase-in/Pipeline

Often, budget constraints prohibit a full-scale roll-out of a program. These staggered roll-outs can thus be leveraged for randomized impact evaluations by simply selecting, by lottery, the areas which will receive the service first.

J-PAL’sdewormingstudyused random phase-in. For three years, between 1998 and 2001, massdewormingwas rolled out in 75 schools in western Kenya by the NGO International Child Support Africa. The 75 schools were placed in a lottery, with 25 schools receivingdewormingin 1998, 25 in 1999, and the remaining 25 in 2001. In this way, in 1998, the 50non-dewormedschools served as a control group for the 25dewormedschools.

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In many situations, it is politically, ethically or administratively untenable to deny services to a control group. In some of these cases, an encouragement design can be used – randomly-selected individuals will receive a promotional script or advertisement alerting them to this already-available service. In these cases, control group individuals still have access to the same service, however they will not receive the same reminders to use it. By the same token, treatment individuals can still refuse service (as in most interventions).

AJ-PAL study in Tangiers, Morocco, worked with a local utility company –Amendis– which was already distributing drinking water (though take-up was less than 100%). The program was providing a subsidized interest-free loan to install a water connection.Amendismade this loan available to all eligible households; however, for the evaluation, a random subset of those households received a door-to-door awareness campaign and offered assistance with filling out the application. This promotion was the “encouragement” which pushed selected households (treatment) to sign up for the loan more often than those households which did not receive the promotion (control). In this way, the researchers were able to determine the impact of newAmendiswater connections on households.

In the end, because take-up of water connections was higher in the “encouraged” (i.e. treatment) group than the non-encouraged (i.e. control) group, these two groups could be compared. And since encouragement was randomly assigned, any difference in outcomes could be attributed to the difference in the take-up rates of water connections.

View example

Randomizing within the bubble

Sometimes randomization can occur within a “bubble” of eligibility. For example, aJ-PAL study in South Africaworked with an anonymousmicrofinancelender to identify 787 rejected loan applicants who had been deemed “potentiallycreditworthy”by the institution. (Applicants had been either automatically approved or rejected under the bank’s normal application process.) Within this sample of 787, this “bubble”, a randomly-selected subset of rejected applicants were assigned to be given a “second look” by one of the lending institution’s financial officers. These officers were not required to approve these individuals for loans, but they were encouraged to. (Thus, we can see that “take-up” in this case related to the financial officers approving applicants for loans.)

View example

RCTs share, with other impact evaluation methodologies, a number of the same tasks and options. For example, by definition, they must specify key evaluation questions . These questions could be things like: will deworming pills lead to increased school attendance? Will they lead to improved educational outcomes as well? Does access to microfinance lead to greater business investments? Is iron-fortified salt an effective way of decreasing anemia rates in the rural population?

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