2019: A roadmap for impact investment in India

Image: Nishant Ratnakar

When you drive past a massive dump of waste in Indian cities, most of us feel helpless. The dump is not only an eyesore but also represents a serious health hazard to the people living around it and more importantly, to those scavenging waste from it.

But if you are an impact investor, you might see this challenge as an opportunity--to not only get rid of it but also help poor rag pickers with better waste management. You not only generate returns for yourself but also end up solving the public health hazard issue.

This is not a Bollywood story, but a real opportunity. The world has been looking at India as a place where good intentions mixed with risk-taking capital is changing the way for the marginalised, whereas low income households are seeing the risks and vulnerabilities in their lives reduced by means of finding new employment.

India has been at the forefront of the Global Impact Investing Movement. On one hand, we have brilliant entrepreneurs coming up with innovative ideas to solve complex social problems faced by farmers, labourers, migrants and the environment. On the other hand, we have professional well-meaning fund managers mobilising capital to fund them. This journey mirrors that around impact investing in countries like the US and UK. However, what makes the India story unique is the scale and potential it offers for commercial return, despite the risks and long tenure.

As we move into 2019, it is useful to look at global and local trends that may define the journey of Impact Investing in India for Indian impact investors and Impact Entrepreneurs.

» Global Trend 1: 193 governments of the world have agreed on sustainable development goals, which imagine a world free of poverty, hunger and inequity. These goals have to be achieved by 2030 and were signed in 2015. This is the most audacious goal, and Impact Investing is a potent solution to achieve this reimagined world. We need to mobilise US $2.5 trillion every year over the next 12 years to be anywhere near these goals; and a lot of pension fund money could soon be looking to find investments that can also change the world. I see this singular trend make an unparalleled impact on the ecosystem in 2019. » Global Trend 2. Global Asset Managers such as TPG, KKR and Blackstone have begun launching Impact funds. Their moves bring global attention to impact investing, a trend that soon would mean strong and positive progress for the sector, and also make us more accountable, transparent and committed to the idea of impact.
» Local Trend 1: While India has been a global leader in impact investor mobilising capital, 95 percent of this capital has been foreign. We have just started noticing the trend of Indians looking at investing in impactful businesses.
» Local Trend 2: With the focus of the Government of India on startups, the impact investing industry has seen a rub-off effect of an entrepreneurial nation, where not only does the government pool of capital support impact investing, but is also seen as positive reinforcement.
» Local Trend 3: India is becoming the solution provider to the impact investing needs of the world, which faces similar challenges. We predict that Indian fund managers and impact entrepreneurs will build global impact business and you could see that idea fructifying in 2019.

My personal belief is that 2019 will be a watershed year for impact investing not only in India, but globally. With some brilliant successes amongst the impact startups in India, the time for global interest in in the Indian impact story is ripe.

The author is founder of Aavishkaar-Intellecap Group.

The thoughts and opinions shared here are of the author.