Impact Investment deals up 8% in 2015, deal value down marginally

Social VCs deploy $95 million across 53 deals; Focus on cos leveraging IT

Deals involving social/ impact venture firms rose by 8.2 per cent during the year ended December 2015. However, the value of such deals dropped.

According to Venture Intelligence data in 2015 number of deals reported was 53, with a total value of $95 million as against 49 such investments valued at $106 million in 2014.

The larger-sized investments in 2015 included the $15 million investment in Swarna Pragati Housing Microfinance, by investors including Zephyr Peacock, Omidyar Network, Aavishkaar Goodwell and Intellecap Impact Investment Network and the LGT Venture Philanthropy-led $8 million investment in dental clinic chain myDentist.

With 14 investments worth about $25 million, the Information Technology and IT-enabled services (IT & ITeS) industry emerged as the favorite industry for investments among Social Venture Capital investors too during 2015 accounting for 26 per cent of the investment activity and 27 per cent by value.

The larger investments in IT & ITeS companies included the $5 million from Unitus Impact and Exifinity Fund raised by Shotang, a B2B e-commerce marketplace which raised and a similar amount invested in SME funding platform Indifi by Elevar Equity along with Accel India and angel investors. Other IT & ITeS investments by Impact Investors during 20-15 included regional languages focused tech firm Reverie Language Technologies (Aspada and Qualcomm Ventures), m-commerce firm Lookup (Khosla Impact and others) and credit scoring firm CreditMantri (Elevar Equity, Accion International and IDG Ventures India).

With 11 investments worth $8 million education sector was the second favorite industry among Social VCs in 2015 (against 10 deals in 2014). Vocational focused companies attracted the most interest. Significant sized investments included Karadi Path Education that provides training in English that raised $2.3 million from Aavishkaar and Pearson Affordable Learning Fund; iStar, a vocational training company raised $1.5 million from Unitus Seed Fund and Dell Foundation and Avanti Learning, a test preparation firm, that attracted $1.5 million from Dell Foundation and Pearson Affordable Learning Fund.

Healthcare & Life Sciences companies, topped by specialist clinics, attracted eight investments worth $15 million in 2015. LGT Venture Philanthropy led an $8 million investment in dental clinic chain myDentist, while Aspada committed an additional $3.1 million to semi urban hospitals focused Be Well. Other sectors that attracted investor attention during the year included telemedicine (MeraDoctor) and Medical Devices (breast cancer focused UE Life Sciences and eye-care focused Nayam Innovations).

Impact Investments in the Banking, Financial Services & Insurance (BFSI) industry declined for the second year, attracting just four investments worth $19 million in 2015 (compared to six investments in 2014). BFSI investments were led by the $15 million investment in Swarna Pragati Housing Microfinance (by investors including Zephyr Peacock, Omidyar Network, Aavishkaar Goodwell and Intellecap Impact Investment Network).

Companies in the Southern region saw 28 investments worth $41 million (i.e. 54% of the volume and 41% by value) compared to 22 deals worth $30 million in 2014. Western region recorded 11 investments worth $22 million in 2015 compared to nine investments worth $11 million in 2014.

Among cities, Bangalore-headquartered companies have retained top spot as favourites among Social VC investors in 2015, attracting 16 investments worth $23 million, followed by Mumbai-based companies, with nine investments worth $19 million and Delhi-based companies (eight investments, $27 million).

India-dedicated VC funds in 2015 accounted for 16 deals worth $35 million compared to foreign funds which invested $17 million across 25 deals. The average investment size of India-dedicated funds was also larger at $2 million compared to $0.7 million of foreign funds, according to Venture Intelligence data.