New Analysis of Impact Investments in India

Convergence of patience, purpose and profit is the key message from the Indian Venture Capital and Private Equity Report 2013. The report focuses on the impact investment landscape in India providing empirical data and analysis based on total  investment of $1,303 million in 173 companies. Produced by the Indian Institute of Technology Madras (IITM),  Prof.Thiliai Rajan in his introduction states that the segment is expected to grow during the next few years at an annual pace of 30%.

Below is a summary of the contents, interviews and some highlights from the findings.

Contents

  1. Social enterprises and impact investments: Overview: Smitha Hari
  2. Impact investments in India: An analysis:  Thillai Rajan A., and Pawan Koserwal
  3. Patterns in the Investor – Investee dyad:  Thillai Rajan A., and Pawan Koserwal
  4. The performance differential: Thillai Rajan A., Pawan Koserwal, and Keerthana Sundar
  5. Institutionalising impact investing: Jessica Seddon

Interviews

  • Democratising entrepreneurship; bringing in change: Vineet Rai
  • Strengthening the impact investing ecosystem: Anurag Agrawal
  • Scale critical for impact: Ronnie Screwvala
  • Sustaining the impact: Anil Sinha
  • Impact through philanthropic grants: Rohini Nilekani 

Highlights from the Key Findings

  • Close to two-thirds of the total impact investment has been in the banking, financial services and insurance segment (BFSI), most of which can be attributed to the micro-finance segment. The other major sectors that account for considerable amount of investment are Agriculture & Healthcare and Non-financial Consumer Services. These three industries account for 90% of the total investments. The trends in impact investment differ markedly when compared to other segments of venture capital investing. For example, BFSI segment accounts for only 24% of the overall VCPE investment. In terms of number of investments, IT&ITES and Manufacturing sector were the top two sectors in the overall VCPE investments.
  • Average investment per deal presents an interesting picture. The average investment per deal in impact investments works out to be $2.82 million. This is much lower than the overall average deal size ($32 million) seen in VCPE investments. This is also lower than the average deal size seen in early stage VCPE investments ($12.6 million).
  • Despite the perception that the target customer segment for social enterprises would generally be in smaller towns, the enterprises themselves are located in the large metropolitan cities. Enterprises in metropolitan cities account for a large chunk of investments, deals, and companies. The average investment per deal in metropolitan city is higher by 43% as compared to the average investment per deal in a non-metropolitan city.

Download the Report by clicking here.

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