De-mystifying Impact Investing

It is widely acknowledged that India is one of the major markets for impact investing with innovative entrepreneurs who serve the “Bottom of the Pyramid”, pioneering investors that walk the extra mile to help entrepreneurs scale their business models, and a supportive and highly evolved ecosystem comprising a diverse set of stakeholders.

Together with SIDBI, the Small Industries Development Bank of India, GIZ, under the framework of Indo-German bilateral cooperation funded by the German Federal Ministry for Economic Cooperation and Development (BMZ) aims to make a contribution to further strengthen the eco-system for impact investing. Our joint “Responsible Enterprise Finance Programme” started in late 2013 and as one of our focus areas we work to increase the number of enterprises that have access to risk capital.

Within this framework, we have collaborated with a number of stakeholders to increase transparency in the industry and support capital flow to social enterprises as well as strengthen incubators and help entrepreneurs get investment ready. A recent report launched together with Intellecap entitled The Indian Impact Investing Story shows that USD $ 1.6 billion of capital has been invested in 220+ impact enterprises across India since the year 2000. For social entrepreneurs it is often a challenge to understand when to raise which kind of capital including grants, seed funds, angel investments, impact oriented venture capital as well as debt, which investors to approach for their financing needs and how investor involvement may impact the development of their business. This guide addresses some of the questions we have heard frequently when talking to entrepreneurs, and we hope that it will be of help when looking for capital from impact oriented funds:

Written by entrepreneurs for entrepreneurs, it lines out requirements, investor expectations as well as investor types in an easily accessible way, and also offers support to entrepreneurs in asking the right questions and approaching the right investors for their particular needs.