Somewhere in December 2013, I first came across Janta Meals. The company headquartered out of Gurgaon had launched a series of outlets where they were selling tasty, clean, nutritious meals at very affordable prices.
When I met the promoters and investors behind the venture, I understood what was motivating them. Janta Meals promoters had noticed a gap. Lower income families or couples for varied reasons couldn’t manage to cook a meal three times a day. You had to eat at local eateries or from vans and carts on a daily basis. The food on offer was oily and usually unhealthy. The intention, therefore, was to offer a healthier yet affordable option to this segment.
I wrote about the company as I liked the way the investors and promoters were thinking. Yes, they had set up a company and were trying to make money but the prime motivation was to fill a gap they had noticed. They were here to solve a larger problem.
Soon after Janta Meals, I came across Akshay Saxena of Avanti Learning. For a 30-something-year-old, Saxena had made unusual choices. Instead of opting for a life of relative ease (as a consultant earning several thousand dollars a year), he’d come back to India and set up this company that would help children from very poor backgrounds get into the country’s premier engineering institutes. What I liked again was that while Avanti had introduced a for-profit segment, this was not the sole driving factor. As Saxena told me back then: if he only wanted to make money, there were many easier ways of doing it. Seeing children from underprivileged backgrounds make it into IITs and the sea change that brought into their lives gave him far more satisfaction than any amount of money he would earn.
These two were the beginning, but for the last two years I have met and come across dozens of interesting, new social enterprises in India that I am quite excited about and have been writing about. The main driving factor for each of these companies and investments is to tackle and solve a broader problem facing the country — even if they are small in scope. Education, health care, water and sanitation, clean energy and nutrition are some of the main areas where these companies typically function.
These companies are often provided capital — usually small amounts — by impact investors and funds with pretty long gestation periods. Typically, the investors invest small amounts in at least 15-20 projects expecting two-three of them to reach a certain scale and maybe even list at some stage. Many investments may stay small in scale and size but still do good work and become profitable.
In terms of scale, social impact investing is still small in India. Non-profit and charity funding would be US $ 60 billion in India while this is just US $2.5 billion in 350 social enterprises — this is the installed base of investment in India as of now. New investment in this sector was US $480 million in 2014 and US $508 million in 2015. By 2020, it is expected that new investment will be to the tune of US$ 1 billion and the installed base will be US $6.5 billion.
Why am I excited about this sector? One, all the efficiencies of a market-led economy come into the running of the enterprise the moment one moves away from charity, CSR and the NGO sector. The enterprises, since they need to make money, keep the customer in focus. NGOs and charities often forget the target audience they are serving, focusing excessively on what the donor objectives and motivations are. Since the money of investors is involved, there is a considerable amount of accountability.
Two, it’s great to see private initiative stepping in and performing tasks — be it in sanitation or health care — that successive governments have seemed incapable of handling with a far higher degree of efficiency and commitment.
And last but above all, almost all the promoters I have met have age on their side — ranging between 24 and 35 years. Unlike a lot of old, traditional business, these young entrepreneurs bring a lot of passion into what they are doing. And what is delightful to see is that the sole motivating factor — again quite unlike a lot of old business — is not to only make money. Yes, creating wealth is important to make the business sustainable over a long period but it doesn’t appear to be the only driver. They seem capable of looking beyond their own noses. It gives me hope that the India of the future will be a more equitable and possibly happier place.