While there may be many institutions currently present for funding as later-stage support, startups in the social enterprise space sorely lack early stage hand-holding.
"Support in the early stage is missing and that is part of our interest in terms of getting the School for Social Entrepreneurs (SSE) to India,” says Jaivir Singh, vice-chairman of PwC India Foundation. The foundation is the corporate social responsibility arm of the global tax advisory giant.
Supported by PwC, SSE brings together and equips people with the technical knowledge and business support to take forward their enterprises in the social sector. This includes startups tackling urgent issues like poverty, education, inequality and health, among others. The India school is part of a chain of 11 similar ones across the United Kingdom, Canada and India.
"Yes, we do provide funding but it is focused on creating the capabilities and resources required to run the SSE fellowship rather than later stage seed capital support", Singh said.
India has firmly woken up to the startup boom and added more than a 1,000 such firms in 2017, industry body Nasscom has said. However, even as the nation strengthens its position as the third-largest startup ecosystem globally, the level of support and interest from venture capital firms for social enterprises are yet to match those that have been witnessed for their counterparts in other segments.
On this note, Singh says India has a very old culture of giving but the nature of doing so is changing significantly over the past two decades. He adds that companies like e-payments player Paytm which has been able to fuse a message of social impact and responsibility as part of its larger business model stand a much better chance of receiving funding.
The large CSR space in India is slowly understanding the need and benefits of for-profit enterprises which are more sustainable and robust in the longer run, Singh argues. With regard to whether large firms were hitting their CSR requirements, he said the process is ongoing and is expected to witness a jump over the next few years.
Under the Companies Act, 2013, implemented by the corporate affairs ministry, there are strict norms for ensuring good corporate governance practices besides requiring certain class of profitable companies to shell out a minimum amount towards CSR activities.
In December, the ministry informed the Lok Sabha that it had given its permission for penal action against 187 companies for violating CSR norms in 2014-15 fiscal. However, action is slow since the monitoring of thousands of companies is a strenuous process and sanctioned number of officials is small, a senior government official said.
To deal with the issue, last month the government launched the National CSR Data Portal to provide a snap shot of CSR activities carried out by eligible companies. Provisional figures for 2016-17 suggest 6,286 companies incurred Rs 47,19 billion worth of expenditure.