NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, July 25, 2014

Having started as an impetus for microfinance nearly a decade ago, impact investing today influences a wide array of sectors and supports innovative business models. Over 220 ventures have raised close to $ 1 billion from impact investors, with the number of deals having gone up nearly four times from 22 in 2007 to 82 in 2013. But what makes this noteworthy is the diversity in investments, as only 12 of the 82 deals were in the MFI space in 2013. What does this signify?Definitely, better clarity and a broader outlook on what constitutes impact ventures.

Impact investors have primarily focused on investing in early stage companies that have a strong low income segment focus. Over half the impact investments last year have been under $ 2 million, across seed to series A rounds (Unitus Capital India Impact Equity Investment Report 2013). However, a few investors are now investing in companies that are effectively bridging the quality or access gap apart from just an affordability and income focus.