While all investing is not impact investing it’s desirable that VCs are guided by an impact-first philosophy, viewing returns not only through the lens of financial gain, but also prioritizing long-term impact outcomes. This allows a fund to take a patient stance when investing in social enterprises, as compared to traditional financing options which often prioritize short-term profitability metrices.
Such patient catalytic capital is key in enabling social enterprises to thrive, considering that businesses pursuing dual bottom-lines require experimentation to develop innovative solutions, and often require a longer time-horizon to fulfil their potential. In a 2019 study by the World Economic Forum, close to half of the social enterprises surveyed cited the lack of consistent access to capital as the primary barrier to scaling their company.
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As an example, in March, DBS and Heritas Capital announced the first close of the Asia Impact First Fund (AIFF), launched last August with an investment mandate to support innovative and high-growth social enterprises in the region. The fund has raised over US$20 million – led by anchor investor DBS, which committed US$10 million, and like-minded impact-focused family offices, foundations, corporates and high-net-worth individuals including Tsao Family Office, IMC Group, Ishk Tolaram Foundation, ANF Family Office, Pang Sze Khai (Chairman of Octava Foundation and Octava Pte Ltd), and others.
The AIFF has a target fund size of USD 50 million and expects to provide catalytic growth capital to 10 to 15 social enterprises in Asia. These social enterprises would have clearly demonstrated social and/or environmental impact in the fund’s impact themes – “Improving Lives and Livelihoods” and “Protecting the Environment” – as well as viable business growth plans to scale their double bottom-line of impact and profitability.
Businesses for impact, which pursue a dual bottom-line of profit and impact and are addressing key societal gaps from a systemic level, play an increasingly important role in this. There’s a heightened need to cultivate a strong ecosystem to support their growth
Karen Ngui, DBS Strategic Marketing and Communications and Board Member of DBS Foundation
Karen Ngui, DBS Strategic Marketing and Communications and Board Member of DBS Foundation, said, “Businesses for impact, which pursue a dual bottom-line of profit and impact and are addressing key societal gaps from a systemic level, play an increasingly important role in this. There’s a heightened need to cultivate a strong ecosystem to support their growth – and through the AIFF, we hope to bring together like-minded partners who share our desire to empower more of these innovative and meaningful businesses, and enable them to thrive, scale, and go on to create greater positive impact.”
In a similar event in March, Rockstud Capital, an alternative asset management firm, launched Rockstud Capital Investment Fund – II, an Angel Fund that will invest in startups at the Pre-Series A to Series A stage. The target size of the fund is INR 300 crores.
As India moves towards becoming a $5 trillion economy, we feel this is an opportune time to enter the space, especially when companies are finding it difficult to raise capital amidst the funding winter
Abhishek Agarwal, Founder and Managing Partner of Rockstud Capital
Abhishek Agarwal, Founder and Managing Partner of Rockstud Capital, said, “As India moves towards becoming a $5 trillion economy, we feel this is an opportune time to enter the space, especially when companies are finding it difficult to raise capital amidst the funding winter.”
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The Fund, which has received the license from SEBI, will predominantly invest in 25 startups across the spectrum of opportunities focusing on digitalization, sustainability, financial inclusion, consumption, and health and safety with ticket size ranging from INR 1 crore to INR 10 crore.
Also, Mercom launched its first cleantech startup pitch competition at the India Renewables Summit 2023.
