Category Archives: Impact Investment

Guru G featured in Government’s StartUp Initiative

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Investors pumped $9 billion into Indian startups in 2015 and the momentum continues with over $38 million invested in the first 10 days of 2016. India ranks third in the world for the number of startups, after the US and the UK. On January 16th 2016, the Prime Minister will formally launch the ‘StartUp India StandUp India’ initiative and share the government’s action plans to support early stage startups.

On this launch, global tech giant Google is set to host a live contest for early stage startups. They have made a long term commitment to help young entrepreneurs and startups achieve their vision and fuel India’s startup ecosystem. We are very proud to announce that one of five startups featured by Google is an IEIF investee – Guru G.

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Founded in May 2013, Guru-G converts existing content into adaptive teaching packs. These packs provide in-class guidance to teachers on different ways in which they can teach a topic. The guidance adapts to the teacher’s past behaviour, student moods & the practices that have resulted in best learning outcomes for their students. This makes it the easiest, least intrusive and most teacher-friendly way of ensuring that student performance improves.

Watch Google’s video promoting Guru G here.

Help Guru G reach out to more communities by voting for them!

* UPDATE * 

Guru G won the Peoples Choice Award! Thanks to everyone who voted for them. 

10 do’s and don’ts of gender lens investing

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Gender has become an area of interest for impact investors, to promote and support women entrepreneurs. In time for the International Women’s Day some articles were published discussing  a few of these women’s initiatives.

The World Bank’s World Development Report, which focuses on gender equality around the world, offers some stark facts about how women and girls fare in developing countries despite decades of progress. Women represent 40% of the world’s labor force but control just 1% of the world’s wealth. Can we, as investors, help make a difference?

When Calvert Foundation (a non-profit organisation investing in under privileged communities) launched their women’s initiative, WIN-WIN, three years ago on International Women’s Day, they approached it as a pilot initiative. Given that WIN-WIN was the only gender lens investment vehicle available to everyday investors (at that time), they wanted to test whether, and to what extent, investors would support the idea.

They responded well. In December 2013, they hit their goal of raising and lending $20 million to organizations that empower women, proving the demand for this type of opportunity and learning a lot along the way. And the positive trend has continued. New gender lens investment strategies and products are becoming available. These are helping to prove that investing in women is smart and impactful.

With courtesy of Najada Kumbuli, Sr. Investments Officer at Calvert Foundation, here is some do’s and don’ts when thinking about gender in impact investing.

1. DO put research into practice. The impact investing field has been the subject of many studies, as established think tanks seek to quantify the financial gaps and opportunities in certain markets, the impact benefits of certain products and services, and the needed resources to advance our field. We have relied heavily on these studies to inform our investment initiatives.

2. DON’T consider gender a sector. With the potential to lift households, communities and even countries out of poverty, investing in women is a global imperative. But women are not a sector. Rather, we should see women, or gender, as a lens because gender cuts across sectors. In each sector – access to finance, energy, health, education – we need to focus on certain gender elements that create more opportunity for women.

3. DO focus on one sector and its intersection with gender dynamics. We’ve learned that focusing on one particular sector offers the most potential to instill a gender mentality among both investors and investees. This gives them (and us) space to truly understand the gender dynamics of that sector. At the moment we are working at the intersection of women and energy. We also hope to incorporate gender into our global health and access to finance portfolios.

4. DON’T create super specific impact screens. Impact criteria should be aspirational and dynamic. For example, energy is a male dominated sector, yet the benefits to women are huge. If we only screen in organizations whose client base is majority women, then we miss the opportunity to inform these enterprises on how to take a more gendered approach within their operations, and as a result expand the impact to women.

5. DO collect data that has both an impact and financial benefit to the enterprise. Facing human capital constraints, many social enterprises consider impact reporting as an added investor requirement with no financial return. This perception could be reversed if we collect data that fit investors’ impact reporting requirements, but also the enterprise’s growth goals. For example, a solar energy distributor that collects gender data on their micro-distributors might begin to see a correlation between female distributors and increases in sales. They could then feed those insights back into their model, creating a continually evolving feedback loop.

6. DON’T over burden the end-borrower with exhaustive impact metrics requirements. With WIN-WIN they saw a huge improvement in data integrity and reporting timeliness when we tiered our reporting requirements into “must-have data” and “nice-to-have data”.

7. DO focus on the type of investing you do best. Multiple studies conclude that certain sectors are fragmented and in their infancy. As a result, many investors are opportunistically investing along the entire financial value chain (e.g. lending to specific projects, social enterprises, financial intermediaries, etc.). Investors could create better outcomes by building their strengths in a particular vertical in the value chain. This could help fill in the gaps and facilitate the flow of capital to end borrowers. 

8. DO partner with other investors to advance enterprises along the financial value chain. Enterprises needed different types of capital at different stages of their growth (e.g. seed financing, working capital, growth capital, etc.), but the reality is that certain types of capital are more available than other. As a result, many enterprises face the challenge of finding the appropriate type of capital. By encouraging investor partnerships, we can develop a more robust financing ecosystem for enterprises as they scale.

9. DON’T focus the gender analysis only on the impact side. The core of gender lens investing is to incorporate gender analysis in financial analysis to make better decisions. Criterion Institute, a leader in gender lens investing, will be launching a guide to help investors incorporate gender criteria into their due diligence.

10. DO share your successes, failures, and the lessons you’ve learned. As the glow from International Women’s Day begins to dim over the next few weeks, how do we continue the momentum behind gender lens investing movement? Two key words come to mind: collaboration and communication. Collaboration with like-minded peers and dissimilar partners to create systems level change, and communication so build on each other’s success and failures.

Start-ups need support from impact investing

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At CBA we love working with start-ups. This is where there is real potential for innovation, and growth. This article is written by Heda Bayron and it covers the importance of investors to nurture small start-ups rather than just focusing on established players. 

Impact investments are expected to increase globally this year, with South Asia and Southeast Asia among the top target regions, according to a recent survey by JPMorgan and Global Impact Investing Network (GIIN). This could bode well, in particular, for India’s nascent impact investment sector, which is one of the most active in the region.

Intellecap, an India-based advisory firm focused on social enterprises, estimates that US$1.6 billion of capital has been invested in more than 220 impact enterprises across India, with more than half of the investments in microfinance. Unitus Capital, an impact investment-focused investment bank, expects impact equity investments in India to grow 30% this year. Along with microfinance, enterprises in agriculture, health services, clean energy, and education are attracting investments.

We recently interviewed Narayan Ramachandran, CFA, Unitus Capital’s co-chairman, on the prospects and challenges of impact investing in India. “The biggest challenge is the market/business plan challenge, which is, if you invest in something, can it grow big enough and profitable enough for you to have a range of exit options?” he said. Ramachandran noted that while there have been successful exits recently in financial services enterprises, there isn’t a long list of companies in India “that have been sold in subsequent rounds to different and new kinds of investors.”

Operating impact businesses in areas such as agriculture, health services, and other sectors “have really only been invested in over the last five to six years,” Ramachandran added. “There, the record is a little sketchy. Not sketchy in the sense of poor returns, but because they have not had the time to became mature businesses that allow exits.”

Domestic investors have been slow in waking up to the promise of impact investing, so most of the capital has come from overseas. Aditi Shrivastava, head of Intellecap Impact Investment Network (I3N), India’s first angel network, is working to unlock domestic capital from institutions and high-net-worth individuals for the benefit of early-stage impact enterprises.

“While there’s a lot of capital in impact investments in India, most of the capital is foreign and going to mature enterprises” she said. “There’s a need to mobilize capital and Indian expertise to help early stage social enterprises grow.”

Shrivastava added that some Indian high-net-worth individuals who are already engaged in philanthropy are still wary of the field. “We get questions like, ‘Is it ethical to expect money when the intention is to do good?’ We also have to educate them about the sectors that social enterprises are in. Many angel investors have invested in real estate and tech, but a lot of education is required to help them understand the agriculture sector, for example.”

Last year saw the creation of the first rupee-denominated impact-investing fund put together by Incube, Charioteer, and Unitus Seed Fund. The launch early this year of the India Inclusive Innovation Fund by the National Innovation Council and the Ministry of Micro, Small, and Medium Enterprises is expected to boost the availability of domestic funds. A new Companies Act 2013 rule that requires businesses of a certain financial size to spend 2% of average net profits on corporate social responsibility related activities may also have a positive impact on the impact investment sector.

Aside from mobilizing more capital, Shrivastava said strengthening the entire impact investment ecosystem in India is important to the sector’s sustainability. Enterprises in urban areas are able to tap into networks to help their businesses, but those in far-flung locations don’t have access to the same level of expertise. Intellecap says that enterprises in the Indian states of Maharashtra, Tamil Nadu, and Karnataka have cornered the largest share of impact investments so far.

“The support of impact investing around the world needs to come to small businesses in such a manner that they are helped, facilitated, and nurtured to grow into bigger mainstream businesses rather than a large impact business, which mainstream investors are not interested in,” said Ramachandran. “A different way of saying it is that impact investing is not a parallel path; it is a stepping stone to mainstreaming a particular kind of investment.”

Can Impact Investing Save The Planet?

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Can Impact Investing Help Save the Planet?
A new cross-sector study examines whether impact investing can make a difference to global conservation efforts, by Dan Winterson, Eric Hallstein, & Camilla Seth.

“The answer to whether impact investing can help save the planet matters. The growing demand for food, water, and the resources that fuel our economies is rapidly degrading the natural systems critical to human well-being. We need exponentially more capital and new, innovative models for conservation and sustainable economies—so it’s important to consider how much conservation impact investing can help bridge these capital and innovation gaps, and substantively contribute to saving the lands and waters critical to all life.
The buzz around impact investing as a breakthrough solution for persistent, large-scale problems seems to extend far and wide. But there are divergent viewpoints on how impact investing might contribute to conservation—some tout it as the future of conservation; some dismiss it as a niche tool incompatible with conservation goals on a broad scale; and some even view it as a potential threat, believing that financial return objectives may trump ecological goals.”

The report, “Investing in Conservation: A Landscape Assessment of an Emerging Market,” includes data from a survey covering more than 1,300 transactions between 2004 and 2013, plus follow-up interviews with investors. These are the top-line findings:
$23.4 billion of investments in global conservation opportunities were made from 2009 through 2013. Investments by development finance institutions (DFIs), such as multi-laterals and development banks, totaled $21.5 billion, while private investments accounted for $1.9 billion.

Here is the full article.