Mukesh has over 20 years of experience in venture capital and social impact investing. His commitment to resolving disparities in education and healthcare is rooted in personal experiences. Growing up in a small town in Gujarat built for partition refugees, he witnessed the transformative power of education in shaping life trajectories. Mukesh also observed the dire state of healthcare after a massive earthquake struck his district. In 2015, he co-founded Menterra, driven by his unwavering belief in the power of markets and return-focused investing to make a lasting impact.

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About Menterra:

Menterra is a social impact fund that invests in enterprises utilizing the power of entrepreneurship and markets to address some of the most pressing challenges in education, healthcare, and agriculture in India. Menterra aligns private capital with development goals, delivering commercial returns and lasting impact for the underprivileged.

1 As an impact investor aligning patient capital to address developmental challenges, how have you built your investment thesis around impact investing in India? What are some of the aspects that Menterra considers before investing in an impact enterprise?

With over two decades of work in the impact space, we firmly believe that passive capital allocation falls short in addressing the most pressing challenges in the sectors we invest in – education, healthcare, and agriculture. The Menterra Investment Model focuses on articulating the problems we target, coupled with a clear vision of successful resolution. A significant portion of our capital is dedicated to fostering scalable, lasting impact.

We recognize the limitations of relying solely on the market to solve difficult problems and do not hesitate to incubate or create businesses where required. Our incubation DNA is augmented through professionals with operating experience engaged by the fund and investee companies. This empowers us to actively craft solutions using various models. We incubate early-stage businesses led by dedicated teams and, when needed, engage in de-novo creation. The creation involves partnering with experienced operators as Entrepreneurs-in-Residence (EIRs), ensuring the formulation of robust solutions and their effective implementation.

Navigating a market-based model with low-income families demands a deep understanding of structural constraints. Operating in an informal sector, these families encounter recurring setbacks from income loss, debt exposure, and health shocks. The distinctive nature of this segment results in slower adoption and scale compared to business models tailored for more affluent segments.

The challenges posed by the close-ended fund structure mandate optimizing financial and impact outcomes within tight timelines – typically 16-20 quarters at best. We are committed to navigating these constraints while engaging with low-income families in a market-based model.

To address this challenge, we actively seek founders with a sharp problem-solving DNA, complemented by excellent execution discipline and commercial acumen. The deal-making mindset often veers off course from the business agenda, leading to aggressive valuations, inefficient capital utilization, and a deviation from the intended impact. At Menterra, we remain focused on putting essential business and impact drivers in place. Our raison d'être is to define and deliver meaningful and sustainable impact. We do not shy away from rolling up our sleeves to make it happen.

2 We have observed that over the last two years - 2022 and 2023, funding towards impact focused education startups has seen a decline. As someone strongly invested in funding education focused solutions, what has been your assessment of this sector over the last two years?

Assessing the education sector's health demands a broader perspective than just annual deal volumes and capital invested. Let us extend our inquiry to a 5-year period, starting from 2019 before the COVID disruption.

Over this 5-year period (2019-2023), the IIC has reported education investments of US$ 2.5 billion excluding Byju’s). More than 90% of this funding is reported into Series B or later rounds, predominantly benefiting 10-12 companies. 50% of this capital was invested in just 3 companies — Unacademy, Vedantu, and Lead Schools. This concentration becomes even more pronounced when including Byju’s.

This raises a critical question: has the substantial investment of over $2 billion in the top 10-12 companies made a meaningful impact on pressing education issues? Has technology delivered on its promise of levelling the playing field across geographical, demographic, and linguistic barriers?

With over 250 million students, 1.5 million schools, and 9.4 million teachers, the education sector presents a vast opportunity to harness market potential in addressing issues like poor learning outcomes, high education costs, and limited access. Tackling structural business challenges, including seasonality, prolonged sales cycles, and a dearth of evidence on learning efficacy, demands sustained focus and collaboration. It is time to shift from the hype of deal-making to a much-needed approach of delivering purposeful and targeted solutions.

Before pursuing larger capital pools, let us offer an alternate construct for comprehensive resolution to major problems. Menterra invites like-minded partners to join us in shaping and implementing an alternate construct focused on better access, delivery of affordable education, and significantly improved learning outcomes.

3 Could you share with our readers a few examples from your education portfolio that stand out for their innovation and potential for scale? What are some of the business models that present investment-worthy and impactful opportunities?

Menterra Social Impact Fund 1 has made 6 investments focusing on Foundational Numeracy and Literacy during early learning years. This includes experiential learning for STEM subjects and improved reading and comprehension. We have also invested in a full-school core curriculum with innovative pedagogy to develop creative and critical thinking skills.

One of our investees, iDream Career, offers a personalized career navigation solution, helping students in making informed decisions about higher education and careers. It addresses the information gap faced by students from underprivileged backgrounds, providing guidance to 90,000 students (50% girls and 72% from low-income families) and training 1,400+ counsellors (85% women). iDream Career has partnered with leading organizations, including UNICEF, Michael and Susan Dell Foundation, Unilever, Hero Group, the Government of Uttar Pradesh, and Army Public School. For a closer look at iDream Career's impactful work, watch this short video clip.

The company is poised for a 5x+ revenue increase and EBIDTA profits. By focusing on an increasing proportion of high-touch engagement programs, iDream Career aims for a significant surge in college enrolment ratios. We are actively supporting iDream Career and we extend an invitation to like-minded investors to join us in shaping the entire cycle – from career guidance to college selection, scholarships, loan financing, internships, and career fairs.

As one of the largest education markets globally, the Indian education sector is ripe for a positive shift towards solutions that address real challenges. The major investment priorities for Menterra in education include:

1. Delivering affordable education and creating a level playing field for underserved students. We are looking for solutions that rethink the role of teachers, pedagogy, technology, social interaction, and nutrition to create a comprehensive model that meets the needs of all students, regardless of their background or circumstances. We want to address the asset and resource intensity present in existing models that keep away the efficiency benefits of scale in education. Our goal is to back one or more like-minded teams to develop a highly scalable, very efficacious, and low-cost model of education delivery.


2. In India, private teaching roles often pay less than public ones, and a lack of a defined career path hinders teacher development. We are looking for models showcasing effective teacher training, prioritizing foundational skills for impactful teaching and improved learning outcomes. Our goal is to empower promising teachers with essential skills, providing clear progression paths, subject-specific training, and mentorship to attract better talent, enhance earning opportunities, and elevate teaching quality in schools.


3. In skilling and training, we seek partnerships with ventures crafting future-ready curricula in collaboration with industry leaders. Our emphasis is on outcome-oriented programs directly linking training to job opportunities, ensuring a seamless transition into the workforce.

4 Amongst the enterprises that have raised funding, we observe that there are very few who have a gender-inclusive approach. As someone who aligns the 2X gender challenge to your portfolio, do you see a pipeline of such gender-focused education solutions emerging? Do you see potential to develop an investment thesis around this given the strong inter-relation between the two themes?

Menterra's education portfolio demonstrates strong gender inclusivity, with 50% of companies led by promising women entrepreneurs, and 83% of our education capital meeting the 2X challenge. Our investees, such as Chrysalis and iDream Career, have implemented impactful gender interventions, including safeguarding policies and gender-sensitive career content.

In our portfolio, we have made notable strides in meeting the entrepreneurship and leadership criteria. A substantial number of women-led businesses and leaders have emerged. Positive outcomes in employment have also been witnessed, given the nature of the education sector. However, the real challenge lies in addressing the consumption criteria, where there is considerable room for improvement. With over 50% of teachers in India being women and almost 50% of students being girls, there is an excellent opportunity for gender-focused solutions, both for teachers and students.

However, it is crucial to recognize the difficulty of any enterprise in delivering scale and profits while meeting multiple impact dimensions, including learning efficacy, affordable cost, low-income focus, geographic areas with poor access, and gender. Therefore, setting priorities and selecting impact dimensions that are more likely to be fulfilled by the enterprise becomes necessary. Additional resources and expertise will need to be contributed to deliver additional dimensions of impact that are not already ingrained in the business model of the enterprise.

5 We observe that arriving at a portfolio-level impact assessment framework is still an evolving area in India; one that investors still grapple with. In this context, how is Menterra developing its impact measurement and management framework specifically for your education portfolio? What are some of the sector-specific challenges that you have observed that need to be kept in mind? Could you share your learning with our readers?

Menterra recognizes that a one-size-fits-all approach to impact assessment falls short of providing actionable insights. Instead, our focus is on defining and delivering impact tailored to each enterprise's unique context.

Our overarching impact thesis for education investments is that access to high-quality education can have a transformative impact on the underprivileged. Menterra’s investments are focused on delivering affordable education that creates a level playing field for the underserved through improved learning outcomes and better linkage to skills required for jobs in a rapidly changing economy.

We underwrite our transactions to deliver these impact objectives by focusing on products and models created for and able to reach out to low-income, aspirer households. Every investment is assessed against the 2X gender challenge to strengthen women entrepreneurship, leadership, and workforce diversity. Gender-neutral and diversity-centric initiatives are encouraged to ensure our investees' services are inclusive. We seek operations extending to underserved geographies across India.

Our Impact Management aligns with the five key areas outlined in the Impact Management Project. These include the intended outcome, who experiences it, how much of the outcome is experienced, the contribution of the business to that outcome, and the risk that the impact does not happen as planned.

The overarching impact goals, covering all the dimensions listed above, are assessed and reviewed at each stage of the investment process. Specific impact goals and metrics relevant to the transaction under consideration are defined and agreed with the company. These impact goals and metrics are tracked with a specific focus on resources allocated and activities planned to deliver the agreed goals.

In 2023, Menterra conducted a self-assessment against global good practices using the BlueMark benchmark report for impact investing. Out of the identified 20 good practices, 10 are fully implemented at Menterra, and 8 have been initiated. We consistently assess each investee using the five impact dimensions, employ a uniform approach for comparing and aggregating impact performance, and utilize a composite scoring methodology.

However, we acknowledge the need for more comprehensive data and evidence, particularly in the critical dimensions of access, cost, and learning efficacy. In the education sector, few enterprises have successfully gathered adequate data, and an even smaller number have undertaken the rigorous path of independent validation. Menterra is actively collaborating with its investee companies to strike a balance between scientific rigor and practicality to ensure that impact initiatives are not only feasible, scalable but also improve the quality of available data and evidence.

6 Given the current tightened funding environment towards the edtech space, could you shed some light on your investment strategy in education finance in the current year? What are some of the key risks for potential investors in this space - and how should one mitigate them?

Amid shifting investment trends, several investors are reassessing their focus on the education sector. It is crucial to transition from aggressive future promise-based valuations to establishing a clear linkage between company value and business profitability. Equally important is addressing past issues of large equity stakes with departed co-founders and inflated valuations through a one-time restructuring before seeking new investments.

At Menterra, we persist in our search for businesses that can effectively address the identified challenges. We prioritize companies with a proven product-market fit and a clear path to profitability. We seek like-minded co-investors and founders ready to move beyond deal creation and focus on addressing genuine business and education challenges.