Roopa Kudva on MSMEs, successful exits & impact investing

The CAGR of impact investments over the last decade in India has been 25% and the growth has significantly accelerated in the last few years.

ETMarkets.com
The world over and in India, people and investors want to align their investments with their values, says MD, Omidyar Network India.

Omidyar has been very proactive during the pandemic with the rapid response initial initiative in the first three months and now the ReSolve Initiative is coming in. What has been your experience and how has it been dealing with the initial impact of Covid-19.
Like for everyone else, it has been very intense. Words like unprecedented and all have been of repeated in the last four months but that has impacted investors and as an organisation with a large portfolio of about 99 investees and grantees, which is focussed on India’s income distribution, a population that we call the next half billion, as we are an investment firm, our strategies, our development of thesis, choice of entrepreneurs, etc, is very much geared to a longer term focus. However, the pandemic is here and now. Its economic consequences are going to be here and now. So what kind of responses as an investment firm can we develop in the immediate term and then in the medium term is very important.

Which are the sectors and businesses that you think could survive and thrive during this time?
We invest in early stage start-ups, typically seed to Series B and we have a large portfolio and there we are seeing three sets of companies really. Number one is the companies which are in sectors that have been positively impacted by the pandemic and these are digital businesses like edtech, digital health, content businesses, essential retail trade. In our portfolio, on the edtech side, we have Vedantu, WhiteHat Jr., Doubtnut. On the digital health side, we have companies like myUpchar, 1mg. On the content side there is a whole bunch from Dailyhunt to Pratilipi. These are all organisations and segments which are seeing positive traction.


Going forward you have had some successful exits as well. We saw that last year. What is the industry outlook now in terms of willingness to make fresh investments during this phase? Is it a little more tentative? Are you looking at a specific sphere of companies?
Let me begin with the exits. 2019 was a good year for us in terms of exits. We made three full exits and one partial exit and these are some of the learnings and takeaways for us. First of all, we are very delighted because every exit that we as an impact investor make, is one step further improving the impact investing model.

So exits really served as a good showcasing of the potential of the impact investing industry. Second takeaway was they demonstrated that it is possible to have attractive exits outside of the financial services space because a lot of the exits so far have been in the microfinance space which has done exceedingly well. But all our exits in 2019 were outside microfinance. In fact, we as a firm have not investments in the microfinance sector.

Do you feel enough has been done to provide relief for MSMEs? How is it that funds like yours can come in over here?
Let me begin by talking about the MSMEs first and then I will come to the social stock exchange. I see them a little differently. That is why we have announced MSMEs as one of the focus areas under our resolve initiative. There we are looking at what new solutions one can one bring to the table in collaboration with other funders, think tanks, researchers, entrepreneurs and the government.

ADVERTISEMENT
We have identified four areas; number one amplifying the voice of SMEs with much more robust data, much more robust research and much stronger feedback loops on the exact nature of the problems they are facing. Number two, stimulating capital in a risk-averse environment, we think it is not enough to just have debt and equity for MSMEs. It is important also to look at other financial structures. For example, credit guarantees or credit enhancements, which will enable the flow of capital and this whole scheme of credit schemes that have been announced will really be able to activate them in a much more purposeful manner.

Do you see impact investing becoming more mainstream in India going forward with traditional VCs looking at actively investing in the space?
Even before Covid, impact investing was gathering greater momentum, not just globally but even in India. We have just had a report being released by the Indian Impact Investors Council which has shown that the CAGR of impact investments over the last decade in India has been 25% and the growth has significantly accelerated in the last few years.

The world over and in India, people and investors want to align their investments with their values. Globally, we are seeing a movement in the US. We saw the leaders of the top companies coming together and a 100 CEOs signing a declaration two months ago saying that the corpus of the enterprise is not just to serve the equity shareholders interests, but balanced value creation for all stakeholders.
ADVERTISEMENT
READ MORE

READ MORE:

LOGIN & CLAIM

50 TIMESPOINTS

More from our Partners

Loading next story
Text Size:AAA
Success
This article has been saved

*

+