The Impact Investing Landscape in India: An Overview - Acumen

The Impact Investing Landscape in India: An Overview

By Acumen on December 24, 2014

The impact investing landscape in India has grown quickly over the last decade. In 2000, $1.17 million of capital was injected into social enterprises in India; in 2011, this figure rose to $250 million per annum, according to Intellecap.

While dollars invested are relatively easy to measure, impact is much less so. Acumen recently surveyed several other impact investing funds in India to learn how they approach impact. Both pre and post investment funds are using a range of methods to hone in on their impact, from randomized control trials to new industry tools such as PRISM.

Pre-investment Impact Analysis

Prior to investment, almost all funds we researched develop individualized frameworks to assess impact. LGT Venture Philanthropy evaluates business plans using the Kellogg Foundation Logic Framework and NESTA’s 5 Standards of Evidence. Impact incubators such as Dasra and Villgro also use logic models to define their investee or grantees’ impact and develop meaningful metrics to track using IRIS. In addition to social due diligence, Aavishkaar completes an environmental, social, and governance (ESG) assessment to ensure that investees are compliant with the International Finance Corporation performance standards. Aavishkaar also tracks key impact metrics on a quarterly basis.

Understanding End Users

Investors are also doing more to understand who they are serving. LGT commissioned an impact evaluation at Educate Girls to understand how the program is improving girls’ enrollment, retention, and academic performance in Indian government schools. They learned that the largest changes in learning outcomes come from girls with higher aptitudes to begin with, and are now considering the implications of this finding. Unitus Seed Fund (USF) incorporates government statistics to approximate their BoP reach. For mGaadi, an app-based autorickshaw ordering service in Bangalore, USF measures the number of additional trips taken through the app as a proxy for net increase in incomes.

Acumen is also investing in helping our companies know their customers. Our Lean Data Initiative enables fast, accurate and cost-effective collection and analysis of impact data using mobile tools such as SMS, call centers, Interactive Voice Response and tablet surveying to gather data directly from customers. So far, we’ve piloted lean data at two of our portfolio companies in India: Ziqitza Healthcare, where ambulance callers from Punjab and Orissa were surveyed to determine poverty levels, and LabourNet, where trainees are being surveyed to understand how the training affects wages and employability. At Edubridge, a company bridging the rural-urban divide through vocational training, we’re using call center-based surveys to profile customers. With the backing of the Barr Foundation, we’re supporting an ongoing JPAL study to measure how much off-grid consumers in Bihar are willing to pay for Husk Power electricity and whether their well-being changes as a result of having access to energy.

Post investment impact acceleration

Several funds have gone the extra mile in experimenting with initiatives not only to measure, but also accelerate the social impact of their companies. For example, Omidyar Network initiated a tiered pricing strategy at investee Treehouse, creating a separate Global Champs program. Enrollment at Global Champs exceeded expectations in the first year. Lok Capital uses a Social Action Plan (SAP), a social performance audit of each investee’s mission, goals, systems, processes, products and outreach, integrated with the day-to-day operations of the company. For example, with Vistaar, a Small-Medium Enterprise lending company, Lok’s SAP resulted in improvements in portfolio quality, increased engagement with customers, better social governance standards and the creation of a community banking model. Aavishkaar uses its ESG analysis to help investees reconfigure employment policies, set up waste management facilities and undertake other initiatives that address environmental and social risks. Acumen is exploring several opportunities to accelerate our companies’ impact as well.

Even with these developments, much more can be done to gain insight into the impact we are collectively having, especially on end-users. Cross-investor studies on pressing topics in India such as sanitation and education could help inform policies, and stronger data collection efforts will give us insight into where our capital can have the greatest impact. At Acumen, we are committed to sharing ideas and working towards greater collaboration on impact.

Many thanks to Omidyar, Dasra, LGT Philanthropy, Unitus Seed Fund, Aavishkaar, Villgro, Michael and Susan Dell Foundation and Lok Capital for speaking with us about their impact work.

 

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