The Mogul Angels of Impact Investing
Question 1: Can you name some of the active angel investors in India? I’m sure most of us can recall names of several pioneering angel investors such as Sasha Mirchandani, Anupam Mittal, and Rajan Anandan. Question 2: On the other end of the spectrum, can you name some of the biggest philanthropists in India? Once again, most of us are aware about the excellent work that Azim Premji, Shiv Nadar, and Rohini Nilekani have been doing.
In contrast to the press that mainstream angel investors and philanthropists have received, very little has been written about angel investors that are focussing on for-profit social enterprises in India.Until 2012, there were no formal angel networks dedicated to impact in India, and even globally, Toniic was the only such network. Most impact investments until then were being by made impact-focussed venture capital funds such as Aavishkaar, Omidyar Network, Acumen, ResponsAbility, Lok Capital, Grassroots Business Fund, etc.
Over the past two to three years though, with the launch of networks such as Intellecap Impact Investment Network and IAN-Impact, India has seen a new class of impact investors emerge – we call them ‘Impact Angel Investors.’ Impact Angel Investors include high net-worth individuals and family offices that are keen to support promising for-profit enterprises that are trying to solve social or environmental problems in a sustainable and scalable manner. They are actively looking to co-invest up to USD one million into early stage social enterprises, with average ticket sizes per investor of around USD 50,000.
While you might think that impact investors are looking to invest into for-profit social enterprises out of their philanthropy wallets, this is rarely the case. With some exceptions, most HNIs and family offices view philanthropy as a relatively passive activity, and they don’t spend too much time with the beneficiary organization once the donation is made. In stark contrast, as soon as an enterprise claims to be for-profit, the same HNIs and family offices put on their investment hats. They evaluate such enterprises in the same rigorous manner as they evaluate mainstream enterprises. While some angels might be agreeable to making muted financial returns, others see impact investing as a portfolio diversification play, and believe that the huge gaps at the bottom of pyramid markets can allow social enterprises to make high financial returns alongside creating impact.
Let us meet some of the marquee Impact Angel Investors here(in no particular order):
Pravin Gandhi: This name needs little introduction. Pravin bhai, as he is fondly called, has over 35 years of operational and entrepreneurial experience in Indian IT, and also serves on the board of NASSCOM. After exiting from his first venture, Hinditron Computers, Pravin bhai co-founded and led various venture capital firms, the latest of which is seed fund. While seed fund invests into headline-creating companies such as Chumbak, CarWale, and My Dentist, Pravin Bhai has built a markable personal portfolio as well. Talking about the elements he looks for while making impact investments, Pravin Bhai shares, “I look for the same attributes in impact ventures as I do in commercial ones – the team, the sector, the idea, and the potential for scale. I do know that my capital needs to be patient. Also I pick verticals where my expertise and focus lies, and where I think I can add value.”Pravin bhai’s impact portfolio includes: Aavishkaar (impact VC), Head Held High (skill development), Brun (affordable medical devices), and IntelleCash (MSME debt financing platform). View Pravin Gandhi’s full profile here.
Jayesh Parekh: Another high profile name, Jayesh brought IBM to India and is also the Co-Founder of Sony Entertainment Television. A popular name across India, Singapore, and Silicon Valley, you will find Jayesh speaking at most entrepreneurship events. He has one of the largest global networks and is the ultimate connector, always playing professional cupid. Jayesh is currently the Managing Director of Singapore-based Jungle Ventures, which recently roped in Ratan Tata as Special Advisor. This recent DNA article talks about his investment philosophy and love for drones. Jayesh shares, “Investment environments for social and mainstream enterprises still differ quite a bit. Today, digital tech entrepreneurs can get away without a strong revenue model as they may be buildinga large community of users. In contrast, social entrepreneurs need to have a robust business model to attract funding.”Jayesh’s impact portfolio includes: Aavishkaar (impact VC), Milaap (p2p lending), iKure (rural healthcare), Head Held High (skill development), Brun (affordable medical devices), Change.org (petition platform), and GoCoop (social marketplace). Jayesh is also an advisor to soon-to-be-announced impact television show called The Real Deal. View Jayesh Parekh’s full profile here.
Naveen Kshatriya: Clean Energy is slowly picking up an as investible sector for angel investors, and it is people like Naveen Kshatriya who are leading this trend. With over four decades of experience with Unilever and BP-Castrol across India, Asia-Pacific, UK and the Middle East, Naveen’s expertise lies in the Clean Energy sector, with functional expertise in marketing, branding, and customer management, and leadership development. Naveen shares, “Clean Energy businesses are heavy in on-ground execution, so it is essential to understand the socio-economic pulse of your field force and end consumers. This is also a capex heavy sector, so entrepreneurs need to create asset light models via long term leases, and buy equipment only when extremely necessary.”Naveen’s impact portfolio includes: Frist Energy (clean cookstoves; recently received a strategic investment from Thermax Ltd.), Surya Power Magic (solar water pumps), Banyan Green Fuels (biomass to energy), Brun, iKure (rural healthcare). Naveen has also recently co-produced socially conscious film TimeOut with Viacom18. View Naveen Kshatriya’s full profile here.
Aniruddha Malpani: One of the most well regarded IVF doctors in India, Aniruddha has become a force to reckon with. Considered a big gun even by other angels, Aniruddha is the lead investor in most of his investments. He is a prolific writer and blogger, and has authored several books with the philosophy of putting patients first. He is a stickler for pro-active entrepreneurs with an attention to detail. He makes fast decisions, often going from the first meeting to closing the investment on entrepreneur-friendly terms in just two months.Emphasising the importance of post investment support, Aniruddha shares, “Investors fund social enterprises because we want to see them succeed, so that they can help the world to become a better place. Just providing money is never enough. Being an entrepreneur is a lonely and stressful journey, and a good funder can act as a friend, philosopher, and guide. Smart founders understand that their funders can add enormous value since they often serve as unpaid HR consultants, financial advisors, and mentors.”
Aniruddha’s impact portfolio includes: Brun (affordable medical devices), Invention Labs (speech devices), AllizHealth (wellness), JoyByNature (organic foods). View Aniruddha’s full profile here.
Samir Shah: Samir Shah keeps a low-profile, but has become an extremely active impact investor over the last year. Samir returned to India in 2014 with over 26 years in the US and Hong Kong. In addition to financial services, he is extremely passionate about sectors such as clean energy, water, and agriculture. An exception to the usual investor herd mentality, Samir is often the lead investor or goes solo on his angel investments. He likes to get hands-on, often spending several months mentoring entrepreneurs even before investment. Urging more investors to get into impact, Samir shares, “I am encouraged by the increasing number of entrepreneurs focusing on social impact ventures, specifically in education, healthcare and agriculture. Angel capital is much needed in the space as it can have much more flexibility than fund capital. Longer investment horizons, varied investment instruments, innovative structuring, industry connects, andother inputs can ensure continued growth of the investee company.”Samir Shah’s impact portfolio in India includes: Avaz.de (rural community building), Parvata Foods (organic foods), Margdarshak (microfinance), iSEED (school of entrepreneurship), and JoyByNature (organic foods). He is also an advisor to large clean energy company Waaree Energies, and water management firm VA Tech Wabag.
As more angel capital becomes accessible, social entrepreneurs have much to look forward to.