Geeta Goel

Early-stage risk cap­i­tal can ac­cel­er­ate the growth of so­cial en­ter­prises.

Business Today - - CONTENTS - BY SONAL KHETARPAL

When Geeta Goel joined Michael & Su­san Dell Foun­da­tion in 2007, she was all set to break new ground, that of im­pact in­vest­ing. The USbased foun­da­tion de­cided to take a small step at first, putting money into Ujji­van Fi­nan­cial Ser­vices, a five-month-old mi­cro­fi­nance in­sti­tu­tion ( MFI). At the time, the gen­eral per­cep­tion was that eq­uity in­vest­ments into so­cial en­ter­prises would mean a push to­wards prof­itabil­ity and that could hurt the value those com­pa­nies were cre­at­ing. But Goel did not think so. “If a so­cial en­ter­prise gets the right sup­port from early-stage risk cap­i­tal and proves to be a sus­tain­able busi­ness, it then cre­ates a new sec­tor with many more play­ers and fol­low-on cap­i­tal, grow­ing the mar­ket and also mul­ti­ply­ing the im­pact,” she says.

What hap­pened sub­se­quently proves her point. Ten years ago, ur­ban mi­cro­fi­nance was less than 5 per cent of the to­tal mar­ket, but it has now reached 54 per cent. With Ujji­van on a roll, new MFIs came up fast, and in­vest­ments grew as well. “We be­lieve in paving the way by in­vest­ing in a clus­ter of com­pa­nies that can catal­yse the mar­ket to cre­ate a sig­nif­i­cant im­pact,” Goel ex­plains.

By 2009, she had led eight early-stage in­vest­ments into MFIs and then fo­cussed on the fi­nan­cial in­clu­sion space. To date, the foun­da­tion has spent around `1,100 crore through grants, debt and eq­uity fund­ing, helped 40 so­cial en­ter­prises work­ing on ed­u­ca­tion, fi­nan­cial in­clu­sion and liveli­hoods, and im­pacted around 11 mil­lion house­holds. The big bet was on ed­u­ca­tion though, which helped 3.7 mil­lion chil­dren. In 2014, In­dia Ed­u­ca­tional In­vest­ment Fund was set up for early-stage in­vest­ing, in­cu­ba­tion and men­tor­ing.

The foun­da­tion has come up with a unique mix of non-profit (grants) and for­profit (eq­uity in­vest­ments for re­turns) com­po­nents, but the lat­ter has grown sig­nif­i­cantly – from 10 per cent of the to­tal In­dia al­lo­ca­tions in 2006/07 to 65 per cent in 2016/17. Goel, how­ever, says it is the global trend, and the model has also been adopted by the foun­da­tion in the US and South Africa where she has done sim­i­lar work since 2013. ~

GEETA GOEL Vice Pres­i­dent, Mis­sion In­vest­ing, Michael & Su­san Dell Foun­da­tion, In­dia

WHY SHE MAT­TERS She helped the foun­da­tion with im­pact in­vest­ing to lever­age a unique model where profit and phi­lan­thropy go hand in hand.

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