Impact Investing Landscape in India
When I give my 2-minute elevator pitch about TechSangam to friends or acquaintances, I usually follow-up with the question “Do you know what social enterprises are?” The answer invariably is “No.” The only other term with a lower aided awareness is ‘impact investing’. Heck! I first heard the term during this year’s Sankalp Forum and quipped on Twitter – Is there any kind of investing that does NOT look for impact?
Once you spell out impact investing as social impact investing, most people get it. For my friends new to this space, I define impact investing as the type of investing that lies between venture investing and philanthropy. If one were to map investors on a spectrum, philanthropists and traditional venture capitalists would be found on opposite ends with social impact investors (aka impact investors) somewhere in the middle. Philanthropists write cheques purely for social impact while venture capitalists invest in companies primarily for financial returns – any resulting social impact is incidental and considered a ‘bonus’. In some extreme cases (think SKS Microfinance/Sequoia), social impact can even ‘get in the way’ of financial returns.
This brings us to the thin sliver of impact investors. An impact investor invests in social enterprises with the dual expectation of social impact and financial returns. Since social enterprises, by definition, are striving for success on two dimensions, it should not surprise us that their financial returns would, for the most part, be lower than classic startup ventures that are maximizing only for financial returns. In an earlier post (Thoughts on philanthropy disruption), I’ve opined that i’s easier to transform philanthropists (than venture capitalists) into impact investors.
I’m now going to burst your bubble and state that the impact investing landscape in India is quite bleak! While there’s a lot of talk about new impact investors entering the Indian ecosystem, I’m aware of just
six eight fourteen eighteen institutional impact investors.
- Aavishkaar: The grand-daddy of Indian social investors has two separate funds. The Micro Equity Fund ($14 million) operational since May 2002. Expected to make 30-35 investments in the $50,000 to $500,000 range. Already made 20+ investments (short list: Milk Mantra, Vaatsalya, Vortex Engineering, Waterlife Foundation, GV Meditech, Rangsutra, Zameen Organic, B2R Technologies, Saraplast). The Micro Finance Fund ($18 million), operational since 2006, expected to make 15-20 investments in the $500,000 to $2 million range. Already made 7 investments (notables include Utkarsh, BSFL-Basix, Grameen Koota, Equitas).
- Acumen Fund: The global grand-daddy of impact investing is registered as a U.S. non-profit organization. Investing in India since 2001, Acumen has invested $21.8 million in 13 Indian social enterprises, of which 5 are in the healthcare space. Notable investees include: Husk Power Systems, Drishtee, d.Light Design, AyurVAID, Global Easy Water Products, and LifeSpring).
- Gray Ghost Ventures / Gray Matters Capital: 8 investments from the Gray Matters Capital fund (notables include: d.Light and United Villages) and 20 investments from the Gray Ghost Ventures-First Light fund (notables include: Book Box, Promethean Power Systems, SABRAS, and Windhorse).
- Invested Development’s BSP Fund: Boston-based Invested Development manages the BSP Fund which invests in social enterprises in mobile technology and alternative energy for the BoP. Â Indian investments include Promethean Power Systems and Simpa Networks.
- Grassroots Business Fund (GBF): GBF makes equity, quasi-equity (convertible loans or royalty-based loans), and debt investments in wealth-creating businesses that service the base of the pyramid. GBF’s average investment size ranges between $500,000 and $1.5 million, with an average investment horizon of 5-7 years. They’ve made five India investments – Industree, Jaipur Rugs, LabourNet, Servals & Kamadhenu (last two were Series A investees of Aavishkaar).
- Creation Investments: The newest impact investor in this group with 5 global investments. Their only India-investment is the $5.5 million round in Eko Financial Services.
- Omidyar Network: In the areas of Government transparency and property rights, they’ve invested in non-profits (Janaagraha, Association for Democratic Reforms, and Foundation for Ecological Security). Their social enterprise investments include Aspiring Minds, Tree House, and Song Growth.
- Ennovent: Ennovent’s Impact Investment Holding (IIH) is an early stage social investor that invests in the range of EURO 50K – EURO 300K. IIH has already invested in Barefoot Power, a solar product maker for off-grid markets. Scheuch Family Trust is the investor in the Holding.
- Villgro (formerly Rural Innovations Network – RIN): Villgro provides seed capital (up to $60,000) to early stage social enterprises. A few of their portfolio companies include Simpa Networks, Promethean Power, Desicrew, and Masuta. Besides providing seed capital, Villgro also incubates social enterprises and also runs a year-long Villgro Fellowship Program.
- India Innovation Inclusion Fund (IIIF): The Government of India’s fund structured by the National Innovation Council, a final corpus of Rs. 5,000 crores to be raised within a few years. The first Rs. 100 crores seeded by Government of India.
- Omnivore Capital – An early-stage venture fund investing in agricultural technology (“ag-tech”). Skymet, India’s first private weather forecasting service, is their first investment.
- LGT Venture Philanthropy: In India, they’ve made investments in Driptech, Husk Power Systems, Aangan Trust, Educate Girls, Mann Deshi, and Operation Asha. A more thorough look at LGT’s India investments in social enterprises.
- India Social Fund: Fund managed by Gaurav Shah. Plan is to raise a total of 25 crores, one investment made.
- Unitus Seed Fund: Investments in Milaap, Hippocampus, Bodhicrew, and Villgro Innovation Marketing.
- Elevar Equity: Majority of their investments in MFI sector (notably SKS, Ujjivan and Madura); other notable investments include MokshaYug Access, Comat Technologies and Glocal Healthcare.
- Khosla Impact Ventures: Size of the fund is in the 10’s of millions $. Investments in MokshaYug Access, Embrace, Driptech (all in India) and two more investments to be announced soon.
- Lok Capital: Started in 2003, Lok Capital has most of its investments in the MFI space (Ujjivan, Janalakshmi, Basix). Investee Rural Shores is a notable non-MFI exception.
- Harish Hande’s Fund for Sustainable Energy Enterprises: Announced in Jan 2012, the $10 million fund targets mainly non-English-speaking energy entrepreneurs in Bihar, MP, Rajasthan, and West Bengal.
- Upaya Social Ventures: Seattle & Bangalore-based Upaya makes seed investments of $25,000 to $75,000 and also has a 24-36 month business accelerator program (Project LiftUP) for ultra poor focused enterprises.
- Ankur Capital: $5 million seed fund started by Rema Subramanian and Ritu Verma. More details here.
- responsAbility: Headquartered in Switzerland, responsAbility has made investments in Latin America and Africa to date and has recently setup an office in Mumbai and is actively sourcing deals. Their focus areas are MFI, SME financing, Fair Trade, and independent media. Thanks to commenter Aanchal for the tip.
- ACCION: Accion currently works with three microfinance institutions – Swadhaar, FinServe and Saija Finance Accion and has also invested in United Villages, a Cambridge (Massachusetts)-based company providing rural Internet access to villagers in India, Africa and Latin America through mobile access points installed on vehicles in remote villages.
- Caspian Advisors: Via the Bellwether MFI Fund and India Financial Inclusion Fund, Caspian has invested in many Indian MFI heavyweights – Basix, Janalakshmi, Equitas, Arohan, Ujjivan, Trident Microfin, and also A Little World.
- BlueOrchard: Investing in MFI space – unable to find portfolio page on their website.
- Dia Vikas Capital: Partnership with several Indian MFIs thought not clear what the partnership entails.
- Incofin: Has invested in six Indian MFIs including Grameen Koota and Annapurna Microfinance.
- Matrix Partners: So far invested in one social enterprise – Hyderabad-headquartered Waterlife.
- Charioteer Fund-I: Krishnamurthy Vijayan’s Rs. 250 crore fund looking to invest between Rs 1 crore and Rs 10 crore in micro-enterprise clusters. Vijayan’s fund will invest in 25 ventures, and will stay invested for up to eight years. More details in this TOI article.
- Contrarian Capital: Somak Ghosh starts a $50 mil fund.
- OPES Impact Fund: An Italian heavy team that also features Harish Hande on their advisory board. Targeting social enterprises in East Africa and India through equity and soft loans (ticket size 50k to 400k Euros). Water & Sanitation, Energy, Fair Trade, Health and Education.
- I3N: Sounds like a closed version of Angel List for India’s high net worth impact investors. Also lists Toniic as a partner.
- IAN – Impact: The venerable Indian Angel Network (IAN)’s first ever impact investment in Gram Vaani coincides with their announcement of IAN-Impact.
- Unilazer: Entirely funded by Ronnie Screwvala, invests across asset classes including social enterprises.
Did I miss anyone? Update history below..
Oct 3, 2011: Hat tip to Christina Tamer for alerting me to Invested Development’s BSP Fund. Also added Grassroots Business Fund. So now we have a grand total of eight funds!
Nov 16, 2011: Added Villgro and India Innovation Inclusion Funds. So now we have a grand total of ten funds!
Apr 11, 2012: Added Omnivore Capital, LGT Venture Philanthropy and India Social Fund. So now we have a grand total of thirteen funds!
Apr 12, 2012: Added Unitus Seed Fund so we are now at fourteen funds!
May 26, 2012: Added Elevar Equity, Khosla Impact and Lok Capital so we are now at seventeen funds!
Jun 5, 2012: Added Harish Hande’s $10 million fund so we are now at eighteen funds!
Aug 15, 2012: Added Mumbai-based Upaya Social Ventures & Ankur Capital. And we are at twenty now!
Aug 22, 2012: Added Swiss-headquartered responsAbility. At twenty-one now!
Sep 20, 2012: Added ACCION, Caspian Advisors, BlueOrchard, Dia Vikas and Incofin (thanks to this Business Standard article) so we are now at twenty-six now!
May 4, 2013: Added Matrix Partners so we are now at twenty-seven now!
Sep 9, 2013: Added 6 so we are now at 33 now.