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Deborah Keller, Can agri-based start-ups transform the rural economy? 04 Jul 2017
Deborah Keller, 04 Jul 2017

Impact Time: Social venture funds target Rs 5,000 crore this year

MUMBAI: The positive outlook among investors seems to have rubbed off on social sector-focused investments, with venture capital funds focused on the social sector planning to raise something in the region of Rs 5,000 crore in 2015. Also called impact investing, these social sector focused funds put money in companies that have the potential to usher in social change in the country.
Industry trackers say that in the coming years, impact investing in India could be the highest in the world — in terms of the money pumped into these companies. Total cumulative impact investments have crossed Rs 10,000 crore across 220 social enterprises and are at a tipping point.

"We believe that annual impact investment in India will cross the $1-billion mark in 2020, and cumulative investments will exceed $6 billion, or Rs 40,000 crore, by then," said Amit Bhatia, CEO, Impact Investors Council, a self regulatory body for the funds.

Industry watchers say that fund raising in the sector is registering a cumulative growth of around 20-25 per cent. At present, there are about 300 social enterprises which are set to jump to 1,000 by the end of 2020.

According to a report by Intellecap, an advisory firm focused on social enterprises, there are around 100 social venture funds (SVFs) in the sector. It attributes the sudden spurt mainly to the global investors' focus on India.

Also, most of the social sector funds have given decent returns in the last ten years, even at a time when many big private equity funds faltered due to a host of reasons, including depreciation of the rupee.

Of the 100 funds, Aavishkaar, one of the biggest, would be raising anywhere around $400 million, or Rs 2,500 crore, by the end of 2015 through two funds. If Aavishkaar manages to successfully deploy the funds, it would also look to raise an additional fund of anywhere around $500 million, a senior company official said.
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