Changing Tack for That Social Impact
Ten years, two funds and the first close of its third fund, impact investment firm Lok Capital is all set to change tack as it continues to bet on ventures that have a social impact.
Lok will focus on three sectors only – financial services, agriculture and healthcare. It has dropped education and renewable energy from the list of sectors it will invest in because it believes that it is difficult to build sustainable businesses in these two sectors while still catering to the bottom of the pyramid. Apart from financial services, where it will continue to do early-stage investing, Lok will invest in growth-stage ventures in agriculture and healthcare.
Lok has raised about Rs. 270 crore ($40.5 million) of a proposed Rs. 650 crore ($100 million) third fund. It hopes to raise the remaining money in the next 12-18 months and plans to invest the third fund over five years. The first fund, launched in 2006, was $22 million and the second $64 million. The first fund was mainly invested in the financial services sector, especially in micro-finance ventures. That was the time micro-finance institutions were taking off and Lok was among the early investors in the space, as it wanted to have a tangible impact and it also addressed the needs of the economically deprived.