From profit to purpose: Novel initiatives support social impact entrepreneurs Premium

Formed earlier this year in April, Bengaluru-based Next Bharat Ventures, unlike conventional venture capital firms that look at high short-term returns, turns their attention to these impact entrepreneurs who try to make an impact in rural and informal economies across India. The timeline for returns is around 15 years. They call it the patient capital.  

India is today home to more than 100 unicorns. But Vipul Jindal, managing director at Next Bharat Ventures, says he would rather invest in ‘elephants,’ a term which he uses to denote entrepreneurs who attempt to solve the myriad social challenges the country faces.

“They are grounded, slow, steady, relevant and not imaginary. We call them impact entrepreneurs,” he says.  

Formed earlier this year in April, Bengaluru-based Next Bharat Ventures, unlike conventional venture capital firms that look at high short-term returns, turns their attention to these impact entrepreneurs who try to make an impact in rural and informal economies across India. The timeline for returns is around 15 years. They call it the patient capital.  

It’s been a persistent worry in the Indian start-up ecosystem that funding scales are often unduly tilted towards a handful of sectors, and in the process, social impact entrepreneurs get left out. A few initiatives are now trying to change this by stepping away from the traditional VC route and adopting their own novel ways to infuse more capital into initiatives that attempt to bring about real change for the masses of India.  

“A lot of philanthropists, corporate CSR and family officers have realized that we are now seeing innovation in the development sector. But, traditional venture capital or impact investing cannot actually move the needle there because their playbook is not designed for that,” says Manoj Kumar, founder at Social Alpha, a not-for-profit initiative that supports high-impact start-ups early on.  

“If you look at a typical fund, they have a 10-year closing period. As a VC you take money from your LP, and you have to return it within a time frame. You also have to give them a certain level of returns. If you are solving problems of, say effluent water treatment, industrial waste management or energy storage, it won’t work because the typical VC playbook is not designed for those. It has been designed for services or digitization or app economy, where it works very well, and we have 100-plus unicorns in that space.”  

But solving complex problems in the development sector needs a higher level of risk-taking ability and constant derisking of business model as well as technology. There’s no guarantee of success; failure rates could be high.