Giving Compass' Take:

• Sujata Rathi, Johan Thuard, and Ashish Karamchandani highlight opportunities for catalytic investment to make an impact in several issue areas in India. 

• Are you ready to engage in catalytic investments? How can you leverage catalytic capital for your philanthropic goals? 

• Read about the power of catalytic capital

India has a dynamic impact investing market, with many investors—from philanthropic foundations, to impact investors, to commercial investors—seeking to generate commercial, social, and environmental benefits from their investments. In addition, there are incubators, accelerators, networks, and advisory firms supporting both enterprises and investors, and facilitating deal flow.

On the surface, India’s impact investing ecosystem is thriving. There is high activity in the space, with deals happening across sectors and enterprise stages. At the same time, the narrative on impact investing has primarily been centered on capital supply and many investors in India have focused on achieving market-rate returns. This focus on returns left us wondering: are there areas currently not benefitting from this dynamic market, as they do not meet the investment criteria of most impact investors, but have the potential to create high impact?

To answer this question, we spoke with over twenty leading impact investors. We wanted to understand if there are market-based models that are not being supported by investors but which could represent attractive opportunities for investors seeking to create outsized impact or be catalytic. Focusing the research on three key sectors—financial inclusion, green tech, and health care—we found exciting opportunities across innovations, early-stage businesses, and models targeting some of the most vulnerable populations in India. This blog summarizes initial thoughts on such opportunities and seeks to paint a high-level picture of where they stand.

We recognize that the opportunities we share here are not mature. For the most part, they require an investment approach that most impact and commercial funds are not set up to offer, combining capital that is more flexible, risk-tolerant, and/or patient, with handholding and support. Such support could help these enterprises scale their impact, refine their approach, and potentially become the next wave of deals more traditional impact and commercial investors pursue.

  1. Deepening the Financial Inclusion of Vulnerable Populations through NGO MFIs
  2. Leveraging Green Tech for Productive Use
  3. Innovative Approaches to Optimize Health Care Delivery for Low-Income Populations
  4. Investing with an Impact-First Lens

Read the full article about catalytic investing in India by Sujata Rathi, Johan Thuard, and Ashish Karamchandani at FSG.