As social capitalism emerges, impact investing is beginning to pick up pace in India. Noticeably, there is considerable growth in indigenous non-profit activity with the growth of small grassroots charities alleviating rural and urban poverty, supporting education initiatives and promoting women’s rights.
The challenge for India’s notoriously sluggish bureaucracy is how to regulate and support this growth. On the one hand, various non-profit agencies have sprung up including Acumen, a non-profit that raises charitable donations to invest in companies, leaders, and ideas that are changing the way the world tackles poverty.
More specifically, Delhi+Acumen a volunteer-led chapter of Acumen, initiated by young professionals seeks to bring together like-minded individuals in Delhi who are passionate about supporting Acumen’s mission of creating a world beyond poverty. The aim is to set up an advocacy platform to create awareness of an alternative model of philanthropy.
Projects supported by Acumen include Avani Bio Energy, a company developing pine needle gasification power projects for remote communities in northern India and D.Lite Design that has launched one of the world's most affordable solar lanterns at $8, this lamp is designed for people who have no access to electricity.
“Acumen is a sector agnostic impact investment fund that provides capital to businesses that uplift the local economy and improve the well being of their consumers. It seeks to channel capital that has traditionally gone to philanthropic causes/ charities into businesses so as to create a more meaningful change to the status quo. Its investors in fact donate to the fund rather than invest into it like traditional venture capital funds,” says Aman Kumar, Fundraising lead of Acumens Delhi chapter.
Acumens Delhi chapter (Delhi+Acumen) was established in February this year and is one of 20 +acumen chapters around the world sharing the principles of patient capital, cultivating an understanding of Acumen’s values, and putting these principles into practice in communities.
“In India social enterprises do not often have the bandwidth or access to policy. The objective of the Acumen’s Delhi chapter is to share the story, model and bring about awareness. The idea is to set up an advocacy platform to create awareness of this alternative model of philanthropy and create an advocacy platform for social venture capitalists which can be a bridge between policy makers, financial communities and entrepreneurs,” says Raghav Priyadarshi, co-chair of Delhi's acumen chapter.
The objective remains to ensure targeted philanthropy and giving instead of unstructured donations. Under impact investing, money is used to deliver social benefits alongside financial returns. A key factor why India is an attractive market for impact investors is the accessibility to consumers at the bottom of the pyramid, which has triggered the need for socially impactful market-driven solutions to development issues.
“You need new businesses and new models. You need to start changes that are able to adapt to policy shifts. Most people are not interested in pilot projects because they do not see how to make it scalable or bankable. This is where the role of patient capital is important. Simultaneously, Delhi is the core of policy and central schemes are devised. This is the place where entrepreneurs and financiers need to get together and figure it out,” says Vivan Sharan, policy lead, Acumen Delhi chapter.
Acumen Fund invests exclusively in projects that will generate revenue and return on investment within 5-7 years, while also keeping an eye on their sustainability in the long term. Profits generated at the end of a project are reinvested in the fund and allocated to other projects.
