"Our investment thesis is fundamentally based on human wellbeing outcomes, which naturally encompass climate- and environment-related interventions."

Ms. Audrey Selian, the Director at Artha Impact and Mr. Claudius Gutemann, Senior Investment Manager at Artha Impact, help understand the factors that have contributed to the scalability of their portfolio companies, what factors could possibly contribute to scale the agriculture sector, and how they have been fostering collaborations in the impact investing ecosystem.

Q1: One of the focus areas for Artha Impact has been that of clean energy. Your portfolio enterprises like Frontier Markets and Onergy have been making clean energy accessible and affordable especially to low income communities. It would be helpful for our readers to understand how solutions in renewable energy are penetrating the last mile access.

Although we did begin rather early with recommending some investments in the area of clean energy, Artha’s portfolio is not specialized in this sector and enjoys only a limited experience through portfolio companies like Frontier Markets and Onergy. Overall, our sense is that this has been a difficult segment to operate in effectively, not least due to the ever-changing signals of the policy environment, the time frames for companies to access subsidies in specific product areas, and certainly the challenges of inclusive finance that facilitates customers’ ability to purchase. That said, the utility of a range of products including solar-powered irrigation systems and pumps, rooftop solutions, solar lighting and torches, microgrid solutions, various clean energy products and home appliances and a wide range of agri products and tools at the ‘last mile’ is unquestioned. These products must arrive and the question is simply through what channels, at what price and margin - and to whose benefit?

Could you share some insight into the key aspects of their business models that have made them scalable?

What are some of the other types of solutions in this space that you believe hold potential for scale and make for a promising investment case as well?

There is no one single obvious model that I think works in the context of achieving both financial and impact returns, other than to point out that it takes substantial extra effort not to cede to the tech giants of the world who tend to care less about their impact per se. Successful models in our view are those that integrate the incomes and livelihoods of those who are embedded and living in the communities they serve; ideally, a last mile distribution company is not having to necessarily reinvent the wheel on all the aspects of shipping, logistics and warehousing that are tough areas to compete upon, in what has become an increasingly concentrated space. The focus of high impact companies should be on listening closely to the experience of their customers, the tenure and incomes of their salespersons and team, as well as on the tools and underpinning technology/systems that help those people offer the best possible product mix and pricing to their communities.

Q2: The Artha Impact portfolio has enterprises which are solving multi-sector challenges and also creating a positive climate impact. SMV Green which has e-mobility solutions and SampurnEarth which works towards sustainable waste management are some notable examples.

Which are some of the other multi-sector intersections that you see having great potential for climate impact and could be scaled up with financing support?

Indeed, everything is connected. We see intersections across companies like Aakar Innovations working on compostable and biodegradable sanitary napkins, Saahas Zero Waste working on waste management, Frontier Markets operating with their vast army of female Solar Sahelis, Springhealth working on potable drinking water solutions, Onergy focusing on appropriate sustainable energy products, Tamul Plates working on biodegradable and natural substitutes for plastic and styrofoam dinnerware … all of these companies in different ways and through different product and service models are absolutely focused on positive outcomes that are sensitive to gender, climate and environment. Most impact investors would be hard pressed to find interventions that are not cross-cutting and interconnected with others in some way.

Q3: Artha Impact has invested in enterprises that provide sustainable agriculture solutions to smallholder farmers.

Could you shed some light on any interesting observations from your investments in enterprises including Krishi Star, Flybird and Oorja?

What are some of the initiatives or investment approaches that you think the impact investing ecosystem could work on to scale up the adoption of sustainable agriculture solutions?

The three companies you mentioned have run unique sustainable agriculture solutions. Krishi Star increases farmer income through supply chain innovation, Flybird uses smart irrigation systems to conserve water and promote cost efficiency, while Oorja focuses on clean energy to power agri-as-a-service solutions offered to smallholder farmers.

Drawing from these experiences, we believe there are several strategies the broader impact investing ecosystem can adopt to further scale sustainable agriculture.

Building Capacity and Providing Technical Assistance: A key challenge for smallholder farmers is the lack of knowledge and skills to implement new technologies and practices. Offering resources, training, and support can make a significant difference in their ability to adopt sustainable solutions.

Developing Risk Mitigation Tools: Smallholder farmers are often disproportionately affected by factors such as unpredictable weather or market volatility. A sufficiently large cash buffer is needed to mitigate these risks. The development of innovative financial products have the potential to safeguard farmers from risks such as unpredictable weather or market volatility further.

Engaging in Policy Advocacy: Policy remains a crucial aspect of the access to and adoption of sustainable agriculture practices. Advocacy efforts can push for policies that incentivize sustainable practices and improve farmers' access to resources and funding.

Promoting Market Access: Reaching markets is a key challenge for smallholder farmers. By developing strategies that connect farmers to markets - both locally and globally - we can ensure that their sustainably grown products are sold at fair prices.

Encouraging Collaboration: Creating a conducive environment for the growth of sustainable agriculture requires collaboration between various stakeholders, including farmers, investors, governments, NGOs, and the like.

The wider impact investing ecosystem has a significant role in scaling sustainable agriculture solutions. With a collective, coordinated effort, we can make sustainable agriculture not just an aspiration, but a widespread reality.

Q4: Apart from financing support, Artha Impact has also been fostering collaborations within the impact investing ecosystem and has built partnerships with local investors. It is insightful to understand about your different initiatives such as the Artha Network and the Impact for Breakfast Club that bring different stakeholders together.

Is there a similar strategy that you seek to build to scale up investments for climate impact?

The work our initiative has done to convene investors in person (on the Impact for Breakfast format) and online (on the Artha Networks tech platform) has been with the intention of aggregating practitioners and ultimately creating space for better visibility on when X or Y investors start to undertake diligence on A or B companies. Artha Networks is now a full-blown SaaS product that can be used by any other accelerator, network or convener with any agenda they’d like to amplify. We are for example in discussions with various groups who focus on different aspects of climate impact, notably in forestry, and in nature-based solutions – who seek to leverage this infrastructure to foster easier direct access to opportunities and collaboration. The Impact for Breakfast platform has organized hundreds and hundreds of monthly events over the last 15+ years (now with over 3,400 members and across 32+ cities), of course comprising dozens of talks and sessions in various cities that have encompassed this topic of climate impact through various prisms and lenses.

Q5: You have invested in multi sector funds such as the Aavishkaar Bharat Fund, the Aavishkaar India Micro VC Fund and the Aavishkaar India II fund.

Going ahead, is there a strategic approach towards climate focused funds that you would be looking to support? What kind of investment thesis would you like to build around climate finance?

Our investment thesis is fundamentally based on human wellbeing outcomes, which naturally encompass climate- and environment-related interventions. At the moment, the only fund we are involved with very actively is Menterra Ventures. Menterra looks at agriculture, health and education, and we continue to look at active deal flow across all three areas; to some extent, climate is a cross-cutting theme across these sectors.

Q6: As a provider of catalytic capital that holds the potential to unlock the potential in the impact investing ecosystem, could you share some thoughts on how we could inspire more providers of catalytic capital to build scale around investments and impact for climate?

We believe that the best way to inspire new and additional providers of catalytic capital is to lead by example, and to provide the best tools and networks to facilitate access, discovery, and live opportunities. We need to work together within industry associations and investor networks both - in support of easier mechanics and smarter risk mitigation. There are plenty of opportunities to talk about catalyzing private capital; there are very few places where one can actually go and immediately act. That is what Artha Networks has been designed for; the operating system and information streams that can spotlight immediate opportunities for action, connection and the very practical aspects of due diligence.

Background of Artha Impact

Artha Impact, the impact investing arm of Rianta Capital and a dedicated advisor to the Singh Family Trusts, has been focused on combating poverty and promoting sustainable livelihoods in India since 2007. With a strong commitment to investing in early-stage impact-focused businesses, they have built a diverse portfolio of direct investments and impact funds, concentrating on key sectors like agriculture, healthcare, education, and energy. Through their innovative platform, developed in collaboration with their affiliate company Artha Networks Inc., Artha Impact extends its support to high-impact social businesses globally. This platform serves as a powerful combination of workflow, marketplace, and social network tools, enhancing visibility and fostering effective collaboration among impact investors, donors, support organizations, and service providers.