GP Corner

We are invested in a number of early stage startups in the segment that are tackling various aspects of the very large problem of access to jobs and increasing income levels of the lower income population. Many of these startups came up with innovative ways to continue to engage and utilize their worker base through the lockdown and early days of the pandemic, thus ensuring that livelihoods were not as adversely affected. Startups like DriveU and Blowhorn got their driver base into essentials delivery, while BetterPlace continued to on-board workers onto their platform in greater numbers.

02. Could you share some of your experiences and key learnings from the past year?

When the pandemic disrupted the normal, it reinforced the fact that ‘only the decisive can survive’. We realised that the ability to react quickly to fast changing situations will prove vital. One should have a Plan B or C and beyond, because unprecedented times like this requires a collaborative approach, not a prescriptive one for a founder-investor relationship to succeed. To say that the pandemic has been a real test for entrepreneurs, is an understatement. Founders have had to adapt like never before, turn adversity into advantage and create the best possible opportunities and outcomes. More importantly, this has brought forth the value of creating and investing in great teams. Finally, what I consider to be the greatest learning of all, is to adequately invest in our mental health.

03. Could you tell us a little bit about your impact reporting framework (social, financial and ecosystem impact) and the metrics you track to evaluate portfolio performance?

Our impact reporting framework looks at three broad areas of impact. These are:

• a. Socio-economic impact on low income populations looks at how our investee companies improve the lives of people at the ‘Base of the Pyramid’ through access to jobs, education, healthcare, and financial technology.
• b. Financial impact on the investee companies is about how portfolio companies generate revenues to become financially sustainable and access further capital from other investors to continue scaling.
• c. Catalytic impact on the entrepreneurial ecosystem views how we engage with a local network of advisors, skilled service providers and strategic partnerships to support a thriving entrepreneurial ecosystem.

We take a pragmatic approach to measuring impact and work with the entrepreneur to identify metrics that are feasible to measure considering the stage and availability of resources of the business. We have a holistic framework for measuring impact that involves:

Inputs: All resources required to run the business (E.g., funding, infrastructure, team, curriculum etc)

Activities: What the business does with those inputs (E.g., worker training, student engagement)

Outputs: The product or service delivered by performing those activities (E.g., number of lives Impacted or jobs created)

Outcomes: Immediate or short term benefit of the business (E.g., Increase in income, reduction in cost of access)

Impact: The long term desired benefit at a systemic level (E.g., access to higher quality training; access to quality healthcare etc)

04. Over 75% of Unitus Ventures portfolio companies meet gender smart investing criteria as defined by the 2x Challenge. Please share a few insights about the organizations gender smart initiatives.

Yes, we conducted a recent review that indicates that 75% of our first Fund and 80% of our second Fund’s portfolio companies meet gender-smart investing criteria as defined by the 2x Challenge. My colleague Uma Sekar recently wrote this piece, stating that we plan to be more intentional about this going forward, both with our investment decisions and our portfolio management.

We are engaging with our portfolio about ways to increase the percentage of women in their business: in the customer base, supply side, in employment or especially in leadership. By leveraging women-only networks, we also incorporate gender-smartness through many women advisors. In the due course, we are also mindful that it is an evolving process that considers business growth and early-stage pivots with a long-term view.

05. Unitus Ventures has made 8 complete or partial successful exits in the past. Exit timing is crucial for an impact investor. At what stage of the investment life cycle do you consider making responsible exits? Also, could you throw some light on the financial performance of impact investments made by Unitus Ventures.

As a returns focused impact investor, we look for high returns and high impact from our investments. So exits and timing are critical to our success. We go into an investment keeping in mind a 5-7 year horizon knowing that some startups could take longer to exit from.

The cumulative revenue of the portfolio companies improved by 26 per cent through 2020 at $141 million. Our portfolio had a V shape recovery and got stronger by Dec 2020 and this is because they were able to create products and services that catered to the requirements of the “new normal”

06. Unitus Ventures raised a fresh round of funding last year, from Small Industries Development Bank of India (SIDBI), HNIs and some of its existing investors, for its Fund II. You are one of the few fund managers who have a diverse set of both domestic and international investors.

• a. How has been your experience on fund raising during the pandemic? What are your views on the overall investment climate in the impact investing industry at present?
• b. What do you think would help attract more domestic investors to this space?