Beats | July 14, 2020

Impact investors catalyze $10 billion for India’s social venture market over 10 years

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, July 14 – A decade ago, India’s first wave of impact investing collapsed under the weight of unregulated and unsustainable microfinance lending. Since then, the sector has rebounded, multiplied and diversified.

Almost $10.8 billion in equity capital has been invested in Indian companies with a social mission since 2010 (when impact investments totaled only $323 million), according to new research from Impact Investors Council and Asha Impact.

Impact investors have had a catalytic impact on India’s social venture ecosystem: for every $1 India’s social ventures attracted from impact investors, they’ve secured $2 from commercial investors. Early-stage impact investments also “de-risk” companies and drive later-stage commercial capital. Indeed, impact investors accounted for 43% of seed and Series A funding and only 22% of Series B and later rounds.

Impact investing “has also found new ways to improve quality of service delivery to the poor while making it affordable with business models and technology-based innovation for serving the masses,” the report states.

Since 2010, education, healthcare, agriculture and impact tech ventures have emerged in a space once dominated by microfinance. Recent examples: rural delivery service Frontier Markets clinched $2.3 million in a seed round from ENGIE Rassembleurs d’Energies, The Rise Fund, The Singh Family Trusts, Teja Ventures and Beyond Capital. India’s Aye Finance secured $16 million in debt from German impact investor Invest in Visions, after  raising $27 million in equity from LGT Capital Advisors and Alphabet’s CapitalG.

Despite the exponential growth in Indian impact investing in the past decade, $10.8 billion represents just a sliver of the capital needed to achieve the U.N.’s 2030 Sustainable Development Goals. To meet the goals, experts say India must invest $600 billion annually, with half going to SDG No. 5 (gender equality), SDG No. 8 (jobs and economic growth) and SDG No. 11 (sustainable cities).