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The Indian Impact Investor Council – A Regulatory Body to Set Norms for Impact Investment

impact investment india

Nine entities involved in the Indian impact investment landscape (i.e. picking up equity stakes in businesses that aim at both financial and social returns) have recently come together to form the Indian Impact Investor Council (IIIC).

Why Regulate Impact Investment?

The IIIC justifies the need of a central regulatory body by giving the example of the derailing of the microfinance industry in India three years ago. Between 2006 and 2010, various funds from venture capital and private equity poured into the Indian microfinance industry. This resulted in tremendous pressure to grow and caused companies to commit excesses and indiscretions while dealing with their underprivileged and impoverished borrowers. Vineet Rai, Managing Director of Aavishkaar Fund, one of the body’s founding members, states that “Microfinance did not have a self-regulatory body. We’ve seen the problems. Being accountable is a good thing, especially being accountable to ourselves.” and “The need for a self-regulatory organisation came from the experience of microfinance”.


The group’s objective is to define what impact investors can and cannot do in their investment practices. They are looking to organise impact investing in India in terms of both philosophy and structure and hope to increase the number of their members from the initial 9 to 30 by the end of the year.

In the current stage, IIIC members are still debating the standards and expect to take another year to finalise them. Several questions have not fully been answered yet such as: how to measure social impact, is it possible to have only one definition, which sectors qualify for impact investments, what should the minimum holding period be, etc. According to Sandeep Farias, Managing Director of Elevar Equity, which manages $94 million under two impact investing funds, states “We will be looking who really qualifies to be in this space as there are so many players today”. Rai further elaborates “We are looking at the economics of impact”. Their definition of an impact fund states that 100% of the portfolio needs to deal with low income.


IIIC will initially consist of nine members, including Aavishkaar, Elevar Equity and Unilazer Ventures, Omidyar and the family office of Ronnie Screwvala. The list of potential members contains large developmental financial institutions such as DFID, IFC and USAID and initial feedback is very positive. Anil Sinha, regional head, advisory services, South Asia, IFC sais “We will come in. No harm in supporting the council. It’s a good idea.”

However, the members need to be aware of potential problems. Harold Rosen, CEO of US-based Grassroots Business Fund, an impact-investing fund, warns that running a self-regulatory body like the IIIC can be highly complicated. The biggest concern he articulates is that it may be very difficult to prescribe general practices that all players are willing to accept.


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ADB invests in Simpa Networks to Provide Rural India with Energy


By 2015, Simpa Networks’ pay-as-you-go solar energy solution is bound to provide more than 60,000 household in rural India with better access to electricity. Supported by a $2 million equity investment by the Asian Development Bank (ADB), the company will offer an affordable clean energy solution to the underserved and underprivileged consumers in India.

Simpa Networks

The company’s mission is “to make modern energy simple, affordable, and accessible for everyone.” In order to achieve this goal, the company introduced a business model that will make sustainable energy choices affordable to the poor.

How it Works

Simpa’s pricing model is highly innovative and called Progressive Purchase. Customers make a small initial down payment for the solar system and then pre-pay for their future energy service. They can conveniently top up their systems in small user-defined increments via a m obile phone. Each of these payments also adds towards their final purchase price. Once the purchase price has fully been paid, the system unlocks permanently and continues to produce electricity without the need of any further payments.

The Importance of Energy Access

Today, there are approximately 1.6 billion people with no access to electricity and another 1 billion with only very unreliable access. Without this access, the poor depend on battery powered flashlights or kerosene lanterns for light and are unable to break the cycle of poverty as they are unable to take advantage of the numerous productive uses of energy. In addition, kerosene light comes with high operating costs, poor light quality and dangers to health and home.

Access to energy is therefore essential for every family’s economic livelihood, safety, health, educational achievement, and overall quality of life.

ADB’s Motivation to Invest

ADB hopes that the success of Simpa Networks could lead to increased venture capital funding for sustainable business models that deliver goods and services to those at the bottom of the economic pyramid.

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SELCO India – Providing Sustainable Energy to the Poor


Image: SELCO Website


I am a huge fan of SELCO India which is why I want to use my blog to introduce them. SELCO India is a social enterprise with the mission “to enhance the quality of life of underserved households and livelihoods through sustainable energy solutions and services”.

SELCO currently employs about 170 employees in Karnataka and Gujarat, spread across 25 energy service centers. Since their foundation in 1995, they have sold, serviced and financed over 115,000 solar systems to their customers!

The social enterprise was established with the aim to dispel three myths associated with sustainable technology and the rural sector as targeted customers:

1)      Poor people cannot afford sustainable technologies

2)      Poor people cannot maintain sustainable technologies

3)      Social ventures cannot be run as commercial entities.

They were able to prove those myths to be wrong! SELCO aims to and succeeds in empowering its customers by providing a complete bundle of product, service and consumer financing.


SELCO’s key characteristics are:

1)      Products based on end-user needs – going beyond just being a technology supplier but rather customising products based on the customers’ needs

SELCO’s systems utilise solar photovoltaic modules that generate electricity for water pumping, lighting, communications, entertainment, computing and small business appliances. These products can be purchased by both businesses and private individuals and do not need to be connected to a larger network.


2)      Installation and after sales service – dedicated regional energy service centers to ensure timely service and maintenance

SELCO offers high quality service for its customers and was able to build long term relationships with over 100,000 satisfied customers so far. Each of their systems is designed to meet their customers’ specific needs. The services offered include:

  • Custom system design
  • Installation
  • Training on proper system use
  • After-sales maintenance and support


3)      Standardised financing packages –  create attractive channels for end users to be able to afford systems based on their individual cash flow

SELCO benefits from the potential of the country’s significant rural banking system which allows them to finance sustainable energy solutions for poor rural households. So far, the company has developed partnerships with nine regional rural banks, NGOs, commercial banks and rural farmer cooperatives. These partnerships make it possible for SELCO to enable their customers to obtain the necessary credit to purchase their products.


Prizes won

2005: Accenture Economic Development Award

2005: Ashden Award for Sustainable Energy

2007: Ashden Award for Outstanding Achievement

2009: FT ArcelorMittal Boldness in Business Award in Corporate Responsibility


To learn more about SELCO, please visit their website >>


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Students Turn Teachers to Fight Illiteracy in India

Undergraduates from Uttar Pradesh’s Indian Institute of Information Technology-Allahabad (IIIT-A) decided to become teachers in the evenings to make street urchins and underprivileged children literate. While the scale is still very small, I believe that this model has potential to be leveraged to other struggling areas as well. Over 100 children of poor families of street vendors, rickshaw-pullers, labourers and those involved in garbage collection are currently being taught by the IIIT-A students. The program has already been running for more than three years and teaches kids aged 6-14 Hindi and English alphabets as well as mathematical calculations. The IIIT-A students offer the courses for free and even provide their students with text books, exercise books and other stationary items.

Feedback from the local community is great. Bhagwati Prasad Khare, a retired school teacher said that “They are doing a remarkable job. They have given us a lesson how you can serve the country with a limited resource,” and Said Prem Kumar Banarwal who owns an eating joint said “If everyone of us start shouldering our social responsibility like the IIIT-A students, I feel we would make our nation quite progressive.”

I believe that this is a beautiful, simple example of social entrepreneurship where socially minded people come together and have social impact in their community even though they lack access to resources.

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Aakash-2 – the World’s Cheapest Computer

Photo: Aakash Website

The world’s cheapest computer has been introduced to the Indian market. The so called Aakash project, a tablet introduced by the Human Resource Development Ministry, is supposed to revolutionize learning in Indian universities and colleges. The first version of the tablet was introduced in October 2011 but unresolved issues among the parties involved in the project seemed impossible to resolve. Now, a few months later, the project seems to be back on track.

Dozens of the new tablets have been distributed and are currently being field-tested by teachers all across India. Sample tablets will also be sent out to students for testing and feedback in the near future. The tablet will be available to Indian students in 416 universities and 20,000 colleges, at a subsidized price of 1,132 rupees (approx. $21), which equals 50% of the 2,263 rupees the government pays per tablet. The manufacturer behind Aakash-2, Data Wind, will also introduce a commercial version called “UbiSlate” which will cost between 3,499 and 4,299 rupees. Data Wind has been contracted to deliver 100,000 tablets to the Indian Institute of Technology (I.I.T.) Bombay over the next six months. The I.I.T. has been chosen to spearhead the project.


Aakash-2 – the world’s cheapest computer

The new version of the tablet weights less than a pound, more than a mobile phone but still little enough to make it fit comfortably in one hand. It has a capacitive touch screen which allows simple and fast navigation. The new version has 256 megabytes of RAM, a USB port, a headphone jack and a small slot for a memory card, which can be used to expand the external memory to 32 gigabytes.

On the inside, Aakash-2 has been upgraded. While the old version had 2 gigabytes internal storage capacity, the new version has 4 gigabytes. The operating system has also been upgraded from Android 2.2 to 2.3 and the new device has an 800-megahertz ARM Cortex-A8 processor, compared to a 366 megahertz ARM 11 configuration in the old product.

The Aakash-2 will come in two different versions, one with SIM card, which allows to use the tablet as a phone as well, and another version without SIM card but a second USB port instead. In terms of Internet connectivity, the device can only be used with Wi-Fi, mobile dongles cannot be plugged in.

For more information, you can visit the Aakash Website, Data Wind Website or find an article about the project launch here >>

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Challenging the Distribution Issue in the Developing World

As mentioned in a previous post, technology can empower the poor economically and create a system of checks and balances. However, creating technologies for the developing world is not enough if there is no distribution infrastructure in place to get products to the people in need. An innovative India based company called Essmart Global is addressing exactly this issue and is trying to revolutionise distribution and supply chains.

Essmart Global

In January, the Essmart Global team launched a pilot project in India and will be starting up full-time operations in August. Instead of focusing on very rural areas straight away, they will first distribute products to the outskirts of cities. The first products will be LED lights or water filters, because they are cheap enough to be purchased while still being an investment, costing between $10 and $30. The company will demonstrate the products to local shop owners and cooperate with school teachers and local children to spread the word about the availability of those technologies.

Essmart Global chooses products that have a warranty and educate the shop owners on how to get parts or send products away for repair instead of throwing them away if they don’t work anymore. The company also incentivises shop owners to stock their catalogue and demonstration products. Deliveries are made on a scheduled basis or show owners can pick up technologies at Essmart’s warehouse in person.


The Essmart Global team believes that India is a perfect place to launch because of the country’s vast population and the fact that many products they endorse are already available there but not widely distributed. Once they have the Indian market covered, they can go elsewhere, leveraging the existing retail-shop network around the world, with products tailored to specific regions. At the same time the company is making a pitch for improving the system, not just the technologies. They want to bring the distribution challenge into the spotlight and help to overcome it. For its effort to help underprivileged communities around the world, Essmart Global has recently won the grand prize in Dell’s Social Innovation Competition.

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Jaipur Food – One of the most technologically advanced social enterprises in the world

The Indian company Jaipur Foot provides world-class artificial limbs, rehabilitation aids and other appliances to physically challenged individuals living in poverty and don’t charge the beneficiary even a single rupee for it. Social entrepreneurship at its best!

About Jaipur Foot

Jaipur Foot is a non-profit social enterprise with 20 staff across India and services 65,000 patients each year, 20,000 of whom require new leg and feet replacements. The remaining 45,000 require crutches, wheelchairs, hand-peddled tricycles and other aids. This makes Jaipur Foot a global leader in prosthetic science, production and manufacturing as well as surgical in its fiscal discipline. In addition, they distribute their products to another 25 countries.

The company was founded in 1975 with less than US$10,000 budget and is now operating with an annual budget of US$3.5mio. It is funded by government support (30%), donations (60%) and earned income (10%). The whole marketing of Jaipur Foot is closely tied to their culture of accountability and the high quality of their products. Both donors and governments want to know whether their money is being used for intended purposes and in the most efficient and effective way possible. Therefore, the organization’s steady growth is rooted in rigid expenditure policies and cent-by-cent accounting coupled with a suite of incredibly cheap, world-renown prosthetics, aids and appliances.

The Product

Jaipur Foot’s $45 ultramodern prosthetic is simply unmatched when compared to a similar $12,000 limb produced in the United States. The Jaipur Knee is made of self-lubricating, oil-filled nylon and is both stable and flexible. Comparable devices produced in other countries generally include a titanium replacement which can cost $10,000 or more. What sets Jaipur Foot’s products apart is their lightness and mobility and those that wear the limbs can even run, climb trees and ride bicycles. The new knee replacement was developed in cooperation with Stanford University and costs a mere $20. For this great achievement, the Times Magazine named it one of the 50 best inventions in the world. Devendra Raj Mehta, head of the Jaipur Foot team, believes that “Too often the NGO sector relies solely on sentiment. We need to marry sentiment with science.” – and they are definitely very successful in doing exaclty this!

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