Impact investments: The New Buzzword For Venture Capitalists
New-age entrepreneurs target healthcare, education, financial inclusion, agriculture and clean energy to tap the bottom of the pyramid population; attract significant investor interest
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Unitus Seed Fund is close to launching a Rs 300 crore fund, which will comprise both institutional and individual investors from both the domestic and international market. It will be the second fund for the impact investment firm that has so far made 14 active investments from the first fund since its inception in 2013.
“We will closing our second fund soon,” said Srikrishna Ramamoorthy, Partner, Unitus Seed Fund, on the sidelines of TiECon 2017, an event hosted in Delhi to boost the entrepreneurial spirit of Statup India. Unitus invests in sectors spanning healthcare, education and fintech. It has so far exited from 2 portfolio companies. The fund typically infuses capital in the range of Rs 1.5-3 crore in social ventures.
Unitus is not the only one eyeing a new social impact fund. IIM Ahmedabad’s Centre for Innovation Incubation and Entrepreneurship (CIIE) recently got an approval from the capital market watchdog SEBI to launch Bharat Innovation Fund that will invest at the seed or Series A stage across several social sectors such as agriculture, health and energy, among others.
“Philanthropy and impact investing complement each other,” said Ramamoorthy while speaking at a panel discussion titled ‘Social Entrepreneurship - Reimagining Inclusive Growth’ in TiECon Delhi. Others present at the event include Geeta Goel, Vice President, Mission Investing, Michael & Susan Dell Foundation, Priyanka Chopra, COO, CIIE (IIM Ahmedabad), Sachindra Rudra, CIO, Acumen, Viswanath Prasad, MD, Caspian Impact Investments, among others.
Social entrepreneurship is increasingly becoming a buzzword in the country. Today, hordes new-age businesses are coming up at the burgeoning startup ecosystem that facilitate social causes in the country. Most of them are still a nascent stage and therefore, need funding to scale up. “Impact investments help social ventures scale up and attract commercial interests later,” said Michael & Susan Dell Foundation’s Goel. The US-based foundation has so far invested about Rs 1,000 crore in the India in sectors such as healthcare an education through grants and equity. It started funding in India with micro-finance projects and has been present in the market for over a decade.
But how do you define social entrepreneurs? “There is no concrete definition. An entrepreneur by nature would want to make capital and do well in the sector he/she is operating in,” said Sachindra Rudra, CIO, Acumen.
According to McKinsey report, impact investments cumulatively totalled $1.1 billion in India in sectors such as healthcare, education, financial inclusion, agriculture and clean energy.