1 As an impact investor, with a strong focus on gender-lens investing (GLI), it will help our readers to understand how you are building your investment thesis. Given that GLI is still an evolving space, could you share with us some of the critical aspects you consider before investing in an enterprise, working on creating gender focused impact?

Over the past two decades, GMC has been driven by a steadfast commitment to empowering women and girls across life stages. Our track record of investments in microfinance and affordable school financing has provided essential products and services for women and their children. Our capital has helped to bridge the gap in microfinance from grant capital to commercial equity capital and pioneered affordable school financing as an investable asset class for commercial banks and funds. Both have demonstrated significant gender outcomes.

Our current investment thesis is built on gender-related megatrends and our mission of enabling a path to purpose for women and girls in the last mile. There is a growing aggregation of funding for solutions that intentionally address gender gaps. Recently, the G7 and a broader group of investors committed to investing $20 billion in women’s economic empowerment over the next three years as part of the 2X Challenge. Globally, there is a push towards gender-diverse value chains, creating downstream demand for women's workforce in the MSME sectors. Gender role models are challenging the status quo and social norms, fuelling women's desire to be economically independent at various levels. In India, women's economic participation will be crucial to achieving a $10 trillion economy, which will drive industry value chains and beneficial policies for gender diversity and inclusion.

Considering these trends, we deploy our capital through early-stage equity investments, Impact-Linked Loans, and Gender Outcome Monetization projects to provide targeted support to impact-first businesses, helping them grow, overcome hurdles and deepen their impact linked to gender.

The critical aspects for identifying companies and deployment, include:

• Significant Social Impact and Scalability: Business leaders must demonstrate significant social impact with potential for sustainable growth and scalability.
• Reaching Underserved Populations Efficiently: Businesses should have a proven ability to serve or reach underserved populations with cost advantages compared to their peers in both for-profit and not-for-profit sectors.
• Gender Intentionality in Business Models and Teams: Leadership teams must integrate gender intentionality into the core of their models, ensuring that gender considerations are inherent in their operations and strategies.
• Additionality and Adjacent Possible: Our capital should bring additionality of gender outcomes and enable the adjacent possible through their business models.
• Gender Outcomes: The capability to monetize gender outcomes by demonstrating additional outcomes from a baseline is essential, showing the enterprise's ability to quantify and leverage their gender impact for financial returns.

Our portfolio management approach involves working with our investees to embed gender outcomes into their business DNA. The aim is to demonstrate the link between growth and gender outcomes, creating a virtuous cycle of funding for growth and impact. By integrating gender into the business model, we would like to ensure that as these businesses scale, they do so with gender impact at their core.

2 The gender lens ties in very strongly, with other impact areas such as future of work, education, healthcare and even climate action. In this context, are you seeing a pipeline of solutions come up, which aim to create a gender as well sectoral impact? What are some of the impactful business models that you are coming across?

Gender is a cross-cutting theme across many impact segments. We are seeing the further evolution of impact-first business models promoting gender and sectoral impact. Gender intentionality and intersectionality can enable capital flows to businesses to be even more purposeful.

Some examples include existing organizations with large market access enabling opportunities for other players and using technology/ AI for dynamic impact tracking. This approach lowers customer acquisition costs (CACs), increases revenues, and simultaneously enhances impact efficacy. An example is our investee, ConveGenius, which leverages technology to engage over 150 million learners in India, integrating a gender lens to improve outcomes for K-12 students, with over 40% being girls. Through their SwiftChat.AI platform, ConveGenius collaborates with and onboards other learning companies, utilizing their vast distribution network to boost educational outcomes. Partnering with the government, they address the issue of girls dropping out of school through gender-focused programs, that link daily attendance via a school attendance bot that is available on their platform to provide direct benefit transfers to the girl’s or mother’s account.

In the financial inclusion segment, there is a significant need to provide credit, savings, and insurance products tailored to women's business requirements, necessitating new business models in embedded finance. Fintech companies such as FinAgg are working with large FMCG companies to provide technology that connects them to last-mile Kinara shops, improving inventory management and the working capital cycle. As they move towards enabling 5 million nano-entrepreneurs, they are simultaneously increasing their reach to women entrepreneurs and building products that empower women financially.

Other innovations are in core technology that are driving business models towards creating equitable and transparent rural supply chains. Examples include investees like Terviva, an agricultural innovation company partnering with farmers, especially women, to grow and harvest pongamia; Pongamia is climate-resilient tree that helps reforest land and revitalize communities. The company processes this for fuel and alternate sources of protein. Other companies like Promethean, an investee company, have innovated to create solar-powered micro-chillers and established rural aggregation hubs run by women entrepreneurs. These hubs enable the collection of milk from small dairy farmers. These solutions intersect both environmental and gender issues. We hope this will also create additional funding lines for these businesses by leveraging the carbon market with gender-focused co-benefits.

3 GMC has been the catalyst for growth in early-stage impact enterprises which have thereafter grown in scale and impact. Could you share 1-2 examples from your gender-focused portfolio that are representative of the strong impact an enterprise can achieve given an investor’s support?

GMC is an early-stage risk investor in ideas and enterprises, stepping in when traditional investors do not, and exiting responsibly after serving as a bridge to other impact investors and eventually, to commercial capital. That is how we think about the additionality of our capital.

Our gender intentionality enables us to deploy our capital in ways that empower women. Two examples from our equity investments portfolio are ISFC and edLABs that demonstrate the ripple effect of our additionality and gender intentionality. ISFC was incubated in 2009, as the first global school finance company. The reason traces back to learnings from microfinance investing, during which women in meetings emphasized the need for affordable education for their children. This demand led us to venture into affordable school finance. At that time mainstream banks and financial institutions were reluctant to invest in the sector. Through 15 years of GMC’s dedication, this pioneering investment has unlocked a 1.75 lakh crore opportunity for NBFCs in the affordable private school sector. Recently, we responsibly exited this segment as lending to APSs has proven viable. Now, most NBFCs and small finance banks recognize this as a growth segment moving forward. ISFC during its tenure has disbursed 1200 crore, served 5000 affordable private schools (APSs), and reached 4 million children, about half of whom are girls. This has created cumulative employment opportunities for 50,000+teachers and service providers as a downstream effect of our loans.

Started in 2017, edLABS gives early-stage equity funding to impact-first businesses focused on the Learning-to-Earning space. While making the investments we incorporated affordability, accessibility, innovation, and gender considerations across high-impact areas such as early childhood education (Kreedo), metacognitive-enhancing learning (Chrysalis for primary schools), and career counselling (iDream Career). Some companies were women-led, while others had founders committed to gender issues. We integrated gender intentionality into these companies and they have continued to enhance their gender impact into their products & services and some going a step further and developing new projects that target specific gender outcomes like drop-out of girls at grade 8 or enabling higher enrolments rates to colleges. Some companies like GUVI ( which we have exited) continue to prioritize gender inclusion, demonstrating the lasting impact of embedding gender intentionality into the team and business model.

4 As we speak of measuring on-ground impact, do you think it is time for investors to attach a monetary value to impact outcomes, especially across a girl’s journey in India?

Could this act as an incentive to attract more catalytic capital for GLI?

It will help to understand from your experience and learnings in this space, that can inspire more investors to participate in innovative financing mechanisms like Development Impact Bonds (DIBs)?

The problems are multi-fold, as most are aware. We need ~USD 5 trillion annually but currently we are at ~ USD 2 trillion financing to meet SDG targets. While, investments towards SDGs have increased tenfold, outcomes have only improved by 12%. Structures like DIBs and blended finance are part of the solution, but we need more efficient utilization of capital and reduced costs to monitor and achieve desired impacts. Further, there is a need to build a better pipeline of investable deals that have both profit and purpose.

Our proximity to both successes and setbacks in the impact investing space informs our perspective on what could be done differently at this critical juncture of widening gaps between the SDG targets and the need to increase the pipeline of investable impact-first business that can scale. From GMC’s vantage point, for-profit impact businesses are a crucial part of the solution. These businesses often lack incentives to deepen their impact, leading them to prioritize higher-paying customers. This misalignment results in missed opportunities to serve underserved populations sustainably and effectively through impact first businesses. Incentivizing their impact can bridge the gap between capital and creativity, driving sustainable solutions and attracting DFIs, larger impact investors and commercial investors.

Given GMC’s gender focus, we have started to enable incentives for Gender Outcome to impact -first for-profit businesses who are developing solutions focused on women’s economic independence. We target impact-first for-profit businesses with significant social impact, sustainability, and potential for scaling gender outcomes. Companies will predefine verifiable gender outcomes, incentivized upon achievement, with support for innovation capital and impact-linked finance. Our outcome incentives integrates with the current financing structure, nudging decision-making towards monetizable impact.

So far we have supported six enterprises with targeted gender projects, such as:

• JOSH Talks (Jobs for Women Program): Leverage existing reach to millions of women to innovate and create job readiness programs to facilitate work-from-home opportunities that are especially beneficial for women who face mobility constraints.
• FinAgg (Nari Shakti Program): Created new products for credit access for underserved women entrepreneurs through increasing acceptance of New-to-Credit, loan size increase, waiver of some documentation and requiring no co-applicant. This gender-linked incentivization is done in partnership with Roots of Impact because both our organizations share a similar focus on supporting Gender Inclusive Fintechs through Impact linked financing.

Transitioning from incentives to outcome monetization can unlock an enterprise’s potential for social impact and create additional revenue streams visible on financial statements. We need to create a pull factor for impact-first for-profit businesses, where better impact leads to more capital, aligned incentives, and sustainable income through outcome monetization. Efforts on impact accounting standards, Social Stock Exchanges, and Digital Public Infrastructure will also pave new paths to scale for impact-first enterprises, ultimately contributing to the achievement of the SDGs.

Our immediate goal is to expand our gender outcomes program with partners to showcase the potential. By attaching monetary value to impact outcomes, we can pave the way for a Social Outcome Market similar to Carbon Credit Markets.

5 Impact-washing is a risk that investors continue to navigate. In your opinion, what could be some of the internal processes and best practices that investors need to start implementing, to mitigate this risk?

Impact-washing is a significant concern for investors seeking genuine social contributions. Addressing this challenge, particularly in resource constrained environments of startups and MSMEs, requires a strategic and empathetic approach. While mitigating these risks is difficult and ongoing, there are key processes investors can consider based on best practices:

• Intentionality and Purpose: Align organizational values and goals with the creation of positive social change. Ensure that leadership and team members have lived experiences that motivate their drive to achieve gender outcomes.
• Ongoing Reflection and Evaluation: Implement regular review processes, feedback loops, and adaptive strategies to ensure that solutions effectively address real-world problems.
• Integrated Reporting: Combine impact reporting with financial reporting, giving equal priority to both. Use data triangulation from various sources for a comprehensive view of impact.
• Board Involvement: Allocate board meeting time and resources to discuss impact, embedding it in strategic decision-making.
• Impact Action Plans: Develop detailed action plans with specific targets, timelines, and metrics to measure progress. These plans should be clear, and progress should be incentivized.

We view this as a journey with each investee company and an opportunity to create an authentic pipeline of impact-first enterprises, enabling various forms of impact funding to flow and scale solutions.

6 What are some of the critical impact metrics aligned to GLI that should be tracked to ensure real impact and move the needle on SDG-5?

Tracking critical impact metrics aligned with Gender-Lens Investing (GLI) is essential for ensuring real impact and advancing SDG-5. Organizations like 2X have made significant contributions by providing a solid foundation for these metrics, which include gender-disaggregated data on employees, leadership, customers, and policy changes. This data helps to identify representation gaps, manage risks, build neuro-divergent teams, and enable comparisons between different impact-first organizations, forming the base of gender impact reporting.

At GMC, we believe that while tracking impact we should be mindful of the last mile change that we seek to create. For us, women and girls are on a path to purpose from being beneficiaries to consumers, then producers, asset owners and role models. Each journey can inspire many more and contribute to building a purpose-driven economy ground up. Our impact-first businesses are our agents of change that are instrumental in delivering diverse products and services that can aid this transition. Therefore, we focus on 2-3 key impact metrics that each business is best aligned to contribute to in the pursuit of the larger goal. These metrics should be simple, relevant to the business, transparent, and verifiable at low cost.

Examples of Key Impact Metrics and companies where they have been applied:

• Skilling to Employment Metrics: Track gender-linked indicators such as attendance and completion rates of skilling programs. Employment-related metrics include job attainment, income increase, proof of salary, job retention post-employment, and savings. Applied in Labornet, Board Infinity.
• Financial Inclusion: Metrics include new-to-credit women in the portfolio, enhancement of loan size, business ownership by women, financial product access to women, number of women with low business vintage, and collateral or cosigner free lending. Applied in FinAgg, MyShubLife.

7 Lastly, as you continue to build your work on GLI in India, what are some of the partnerships or ecosystem synergies that you seek, that can scale the impact of your work?

It is crucial for like-minded players with diverse capital pools to align and orchestrate the system by allocating, aggregating, and enabling the flow of capital to impact-first businesses. We should work together to exponentially increase the capital allocated through impact investment, authentically targeting Social Outcomes and linking it to the 'S' in ESG funding. While convergence for impact and commercial investors is happening at the late stage, there is an even greater need for different stacks of capital to come in the early stages to create the pool of impact-first businesses.

GMC’s focus is this early stage of impact investing and we seek collaboration to advance Gender-Lens Investing (GLI) in India through partnerships and by developing a supportive ecosystem for impact-first businesses. The two main collaboration areas are:

• The Path2Purpose Gender Outcome Facility: We aim to co-design this impact funding model to align incentives, pay for predefined verifiable outcomes, and support for-profit impact enterprises in enhancing their gender impact and integrating it into their growth strategies. In collaboration with other investors, we seek to co-develop outcome-focused strategies that align financial incentives with social impact, building a precursor to a Gender Outcome Market.
• Finance and Invest in GMC’s existing portfolio of Impact-First Businesses: GMC already has a pipeline of impact-first businesses advancing gender outcomes across present and future sectors of interest such as Financial Inclusion, Skill Development, the Future of Work, Climate, and the Care Economy. We seek more capital flow in terms of investments, debt, or innovation capital to help these companies grow into segment leaders and innovators.

Our goal is to continue to deploy our capital catalytically, proving that addressing the world's greatest needs, particularly those of women, through impact-first businesses is not only feasible but also profitable. Some require patient capital and greater intentionality. Therefore, it is important for us to collaborate with various types of capital providers and align efforts to create a path for financing and growth of impact-first businesses that enable gender outcomes. By uniting our efforts, we can catalyse substantial and sustainable social impacts, proving that financial success and social impact can be mutually reinforcing, creating a "purpose" economy.