What Interests me about Impact Investing?

Published on Oct 2, 20203 min read11 views

The current global scenario, catalyzed by Covid-19, has accelerated my belief that impact investing will be the future of venture investing. As the global investment sector has matured, it has realized that shareholder value is not the only value a business should focus on. This is evident from the entry of large private equity funds TPG, Bain, Goldman Sachs and so on, in the impact investing sector.

The need of the hour is to create a sustainable model that focuses on stakeholder value creation for consumers, suppliers, investors or employees. Value is truly created when each household is educated, financially stable and has access to quality healthcare.

The impact investing sector continues to evolve its approach towards measuring impact. We are not too far from the day when we will measure impact in the same the way we measure stock price of public companies.

Impact Investing and Financial Inclusion

Financial inclusion is a cause that is very close to me. It is my personal belief that most households can improve their livelihood and productivity with better access to affordable financial products. I have worked extensively with businesses that increase access to financial products to the underserved population in a high potential, emerging market like India.

Further, there is a need to innovate and contextualize the product offerings along with its distribution. For example, we cannot distribute the same product to a target group with annual income less than USD 3,000 and that with income greater than USD 100,000. Neither can we provide the same product to a target group that has not had access to formal banking before.

Technology can solve those problems of product innovation and distribution to make the product affordable. From a business perspective as well, under penetration of financial inclusion is a big opportunity to create multiple large businesses with minimum 4-8x return on investment, if not more.

Conclusion

It is possible to solve these critical challenges that we, as generation face, only by accessing the main stream of private capital, given that USD 1.4 trillion is required yearly to meet the SDG's

We have a long way to go till this becomes mainstream but the signs are evident. It is in Capitalism's interest to focus on impact.

Onward.

Note: All blogs posts till 2022 were migrated to this platform (react+next+tailwind). While all efforts were made to migrate wihtout any loss, the migration lost some images and broke a bunch of links in old posts. If you spot anything amiss, please notify me?