In recent years, impact investing has become prominent on the global stage as an approach to deploying capital with social/environmental goals as well as financial return objectives. Deployed in both developing and developed markets, impact investments are made across a range of sectors and asset classes.
South Asia is home to more than 1.6 billion people and has experienced dramatic economic growth over the last decade. However, this rapid growth, while changing some economies dramatically, has been uneven between and within countries; about a quarter of the region’s population continues to live on less than USD 1.25 per day1 and large population segments lack access to quality social services, fiance, energy, and infrastructure as well as to affrdable consumer products. The opportunity for impact through the deployment of capital into organizations and enterprises that increase incomes, create jobs, and provide access to essential services is signifiant, and the
status of the impact investing industries in these countries is worthy of attention.
India is globally regarded as a major hub for impact investing, with a highly evolved ecosystem comprising diverse stakeholders, well regarded successes in BoP entrepreneurship, pioneering investors, and a wide array of enterprise enablers. This study provides a ring side view of the development of this investing ecosystem. It draws out some of the main influences around the sector’s emergence and unique characteristics, the dominant approach to investing, and the key areas of focus for the sector going forward.
Four key characteristics explain the India impact investing story: Innovations Rooted in Local Context; Investing that adopts an Entrepreneur led Approach; Ecosystem Focused on Accountability; and Impact Investors with the Ability to Unlock Mainstream Capital. Venture approach to investing is the dominant impact investing approach in India.
An analysis of impact investment trends from the year 2000 shows that USD $ 1.6 billion of capital has been invested in 220+ impact enterprises across India. It also reveals that around 60% of total impact investments have been made in just 15 enterprises, and that Healthcare, agri-business and clean energy are the leading sectors outside of financial inclusion, attracting investments of USD $ 341 million.
In this report, Unitus seek to summarize and provide insights on the trends they are seeing as active day-to-day participants in this market with the objective to help share knowledge and be a helpful resource for private equity investors and impact businesses seeking to expand their operations and impact on the BoP in India. One of the key trends highlighted in the report is most investments in 2013 were in early-stage impact businesses reflecting the youth of this sector;
This report analyses the current landscape of impact investing in India highlighting the key obstacles, ecosystem availability for social enterprises and finally assesses the role of philanthropy in accelerating the ecosystem development of impact investment space.
Key features of the report include providing a big picture perspective on the various hues and shades of the industry. The report focuses on impact investments. We define venture capital investments that are made in social enterprises as impact investments. Broadly, enterprises that are engaged in the making of products or services that benefit people from the low income or the Base of the pyramid (BoP) segments in a cost effective and sustainable manner can be called as social enterprises. In recent years, the commercial opportunity that exists in the BoP segment has caught the imagination of the VC investors and there has been a robust growth in deal making in this sector.