Capital Provider Showcase: The Equity Lens
Dialogue with Ganesh Rengaswamy, Managing Partner, Quona Capital
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1 As an impact investor focused on supporting inclusive fintech solutions, could you share with our readers your thesis around impact investing in India? It would help our readers to understand what Quona Capital considers before investing in an Indian impact enterprise.
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As a “global-local” firm, Quona is a rarity. While we have a common thesis and global themes across the firm, there are also nuanced considerations for specific markets, especially when it’s one of our core markets, like India. Across consumer and SME-oriented opportunities, we seek to invest in solutions that can advance financial inclusion and create impact at scale while generating meaningful returns. As digitisation, DPI, open commerce and finance architectures evolve, we are excited by opportunities that can be catalytic to economic engines by enhancing financial infrastructure, applying fintech to solve real economy needs, and creating fintech solutions to address cross-border needs.
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2 Quona Capital’s India portfolio includes various enterprises spanning SME Finance, insurtech, wealthtech, as well as agri-finance. What are some of the business models that have achieved a trade-off between financial returns and on-ground impact? Could you share some examples from your portfolio that stand out for their commercial viability as well as impactful interventions?
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One of our most successful investments in India was IndiaMART, which is one of the largest SME commerce platforms in the country. The proliferation of smartphones and the democratisation of the internet were turning points in IndiaMART’s scale-up journey. This led to strong growth in SME buyers, sellers, transaction activity, exploration of payment and escrow services, SME digitisation services and more. The opportunity to make an impact for these SMEs at scale through the inclusion of value-added services was appealing to the Quona team.
On the credit side, only 12-14% of overall formal credit goes to MSMEs, despite India being home to over 70 million MSMEs that create over 111 million jobs and contribute around 30% to India’s GDP. Our investments in SME lenders like Neogrowth and Rupifi aim to bridge this massive gap as access to credit can help in the formalization of the MSME sector and drive inclusive growth across the economy.
We also remain very enthusiastic about the insurtech sector. For example, in India we have invested in Onsurity, which enables MSMEs to provide subscription-based health cover to their employees and their extended families. The product helps people become more financially resilient, while also creating loyalty to the employer who offers it, thus benefiting both employer and employee as well as his or her family. In Southeast Asia, we have invested in Sunday, a full-stack insurtech that provides cover for everyday things from cars to cell phones—increasing the resilience of individuals across SEA so they are not sidelined by theft or accidents.
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3 From your experience in other geographies such as Southeast Asia, Africa and Latin America, what are some of the learnings that Indian impact enterprises can adopt, for building solutions that can achieve profitability and scale and also tap into the last-mile consumers?
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In today's interconnected global economy, there's a wealth of opportunities for countries to learn from each other and adopt successful models and solutions from different markets. This cross-pollination of ideas can drive innovation, improve efficiency, and foster economic growth. We, at Quona, have been lucky enough to see the commonality of themes emerge around innovation in financial services across our markets. For example, India and Latin America (LatAm) present a unique opportunity for cross-border learning and collaboration in the areas of trade finance, e-commerce, and fintech tailored for SMEs. LatAm has been leveraging digital technologies to transform trade finance processes, making them more efficient, transparent, and accessible to SMEs. Countries like Brazil and Mexico have explored the use of blockchain technology to create secure and transparent trade finance platforms and the region has also seen the emergence of fintech platforms offering invoice financing solutions tailored for SMEs engaged in cross-border trade.
UPI in India and PIX in Brazil exemplify the transformative power of Digital Public Infrastructure (DPI) in driving financial inclusion, promoting digital adoption, and fostering economic growth. By offering seamless, secure, and efficient payment solutions, these platforms have revolutionized the way people transact, shop, and manage their finances.
The success of UPI and PIX underscores the importance of interoperability, convenience, affordability, and security in designing and implementing effective DPI solutions. As digital payments continue to evolve globally, platforms like UPI and PIX serve as benchmarks for innovation and excellence, inspiring other countries and regions to develop their own digital payment infrastructures tailored to their unique needs and challenges. These platforms have spurred the development of innovative solutions and business models built on top of their infrastructure, a theme which we are tracking very closely.
Another exciting development has been in the B2B e-commerce sector, where we have recently backed innovative B2B commerce-fintech models like Mercai and Prima in Mexico. Both these companies have been inspired by leading parallels in India like Zetwerk and OfBusiness, two prominent players in India that have been instrumental in revolutionizing the way SMEs manage their supply chain, procurement, and financing needs across the unorganized manufacturing and construction sectors.
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4 Given the high social impact that financial inclusive solutions have the potential to create, how are you developing an impact measurement process for your portfolio?
What are some of the impact metrics that you are tracking or looking to track going ahead?
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As an impact investor in emerging markets, Quona has been a pioneer in the impact measurement space since Day One. We were early signatories to the Operating Principles for Impact Management, and over the last decade, we have collaborated closely with impact peers and other leading organizations, sharing lessons learned and contributing to the growth of the impact industry. We continue our commitment to learning and contributing to the growth of the impact industry via collaborative work with leading organizations including the Impact Management Project and IRIS.
In late 2023, Quona completed its second successful impact verification process with BlueMark, a leading independent impact verification provider, to assess alignment to the eight Operating Principles for Impact Management. Quona achieved the highest possible (“Advanced”) score on 7 out of the 8 principles measured. This score places Quona in the top quartile of BlueMark’s impact verification benchmark—a significant milestone given the span of BlueMark’s dataset, which includes much larger institutions, asset managers, private equity funds, DFIs, and more. We are very proud of this achievement; it’s a testament to the work of our portfolio companies and the commitment of the broader Quona team on demonstrating through results our profits-with-purpose ethos.
Our impact measurement metrics align with the United Nations’ Sustainable Development Goals, and some key metrics we track across our portfolio companies are things like number of lives touched, MSMEs and retail customers served, and jobs created (including by gender). We also gather customer-level insights into the impact of our portfolio companies.
We were recently selected by ImpactAssets as an “ImpactAssets50” Fund Manager for the fourth year in a row.
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5 Given your experience with this space, what are some of the key risks for potential investors in this space - and how should one mitigate them?
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There are few distinctions in risk between an impact investment strategy and a non-impact strategy. Business is business. At Quona we focus our efforts on finding and investing in companies with strong, high quality founding teams that have the potential to reach product/market fit, operating in a space where we believe they have the ability to scale.
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6 Going ahead, what kind of enterprises is Quona Capital looking to support in India?
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There are a few key trends that we are paying close attention to right now. First, we think there is incredible opportunity in the sustainable finance and climate tech sector, since fintech can act as an enabler to solutions that can mitigate climate impacts, whether it’s solutions that enable SMEs to go electric, like our portfolio company Turno, or solutions that can enable small farmers to thrive, like Arya.ag and Tarfin. Second, we like solutions that enable financial infrastructure—these would be things like Shivalik and UpSwing in India, both of which are solutions that blend digital platforms with critical products that benefit consumers and SMEs alike. There’s also the trend of fintechs operating at the intersection of the real economy—by this, we mean the advent of things like sustainable supply chains that provide financing and access to global markets, and we have invested in several solutions like this to date.
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Ganesh Rengaswamy, Managing Partner, Quona Capital
Ganesh Rengaswamy is co-founder and Managing Partner at Quona, where he leads Quona’s India and Southeast Asia investment strategy.
Before co-founding Quona, Ganesh led Accion Frontier Investments’ work in Asia. Prior to that, Ganesh was a General Partner of Lok Capital, a venture growth fund that invests in financial inclusion and social enterprises. Ganesh previously served as the Asia Director for Unitus Inc., a global organization investing in sustainable solutions in financial inclusion. During these stints, Ganesh invested and advised leading financial institutions and banks including SKS/Bharat Financial Inclusion Ltd, Ujjivan, Equitas, IFMR/NorthenArc, Vistaar, TechProcess, and Bandhan.
He previously led the entry of Greylock Partners, a leading Silicon Valley-based venture capital fund, into the Indian market. He also co-founded Travelguru.com, which was acquired by Travelocity. Early in his career, Ganesh worked for Infosys, where he was responsible for customer acquisition and growth engagements for US-based Fortune 1000 clients.
Ganesh is a frequent speaker at global industry events including Singapore Fintech Festival, Asia Investment Conference, SuperReturn, Global Impact Investing Network (GIIN), India-China Fintech Summit, and LendIt. Ganesh’s exits include IndiaMart (IPO), Coins.ph (Go-Jek), and Shubham (Premji Invest). Ganesh’s current and past investment and entrepreneurial advisory roles include Village Capital, Accion Venture Lab, GSF Accelerator, and IIM-Ahmedabad, and he has been featured in Bloomberg, CNBC, The Economic Times, Mint, and others.
About Quona Capital
Quona Capital is a global venture firm focused on inclusive fintech. They invest in startups expanding access to financial services for consumers and growing businesses across India and Southeast Asia, Latin America, Africa and the Middle East. Quona’s focus is on markets that are massively underserved by the legacy finance infrastructure, where they see the biggest opportunity for transformation into more equitable financial systems.
Beyond pure-play fintechs, Quona Capital invests in startups solving broader economic and social challenges, where embedded financial solutions can serve as a catalyst—from supply chain and agtech platforms to e-commerce, proptech and health.
Since 2015, Quona has invested in emerging markets while simultaneously measuring its impact on financial inclusion at the company and portfolio level. Quona’s portfolio aims to maintain a balance between returns and impact.
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About Impact Investors Council: Impact Investors Council, India (IIC) is a member-based national industry body formed with an
objective to build and strengthen the impact investing eco-system in India. To know more about our work visit https://iiic.in or reach out to secretariat@iiic.in
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