Pioneering a new path forward: 10 lessons learned in impact investing

Since the we started our work in India in 2006, we’ve had one overarching goal: To provide urban youth and families with the tools they need to break the cycle of poverty. For us, this has often meant taking the road less travelled to find the solutions that work. These solutions often come from models that other investors deem “too risky,” but sometimes these are the models that have the greatest potential.

This approach isn’t without its challenges though, and it’s never easy to pioneer a new path forward. We’ve seen promising businesses fail and high-risk models scale to impact the lives of many. But with each investment – successful or not – there are always valuable lessons learned. And this is what continues to drive our mission forward day after day.

10 years and 10 lessons learned

With over 50 investments during the last 10 years, we have been able to watch countless families find their way out of poverty through new access to education, training and microfinance.

In this Business Today contributed article, “10 lessons from impact investing in India”, Geeta Goel, Director, Mission Investing, describes the foundation’s role as an innovator and trailblazer in India’s impact investing sector:

“As an impact investor, the foundation catalyses market shifts through pioneering investments, which bridge gaps that have not yet been addressed by the market for a low-income population. Our objective is to create positive impact through market-sustainable models.”

So, what have these experiences taught us? Goel highlights what she believes will continue to drive this work forward:

  1. Sector knowledge is critical: Pioneering institutions will be first in their space and are expected to break new ground. We need to support them as they pilot, pivot and scale.
  2. Execution comes first: Social enterprises typically have low margins as they cater to a market segment where prices are practically capped. This makes it critical for them to scale up and become sustainable.
  3. Talent is important: Most start-up entrepreneurs begin with minimal financial resources and do not always attract the best talent. However, social ventures deal with some of the most complex challenges and good talent can help find viable solutions.
  4. Technology is an enabler, not a solution in itself: Technology is important and can reduce the costs of delivery significantly. However, it is, at best, a facilitator.
  5. Customer protection plays a central role: In this sector, businesses do not cater to well informed high income or middle income customers. Therefore, it is necessary to clearly articulate the terms of business agreements.
  6. Need does not drive demand: Businesses must be conscious of real demand versus customers’ needs.
  7. Surveys are not always reliable: Surveys do not always give businesses a complete picture of the business landscape.
  8. Great promoters demonstrate the 3 Ps: It’s all about the 3 Ps – passion, performance and patience of the promoters.
  9. Know when to stop: Social entrepreneurs are trying to solve complex problems that do not have simple solutions. So, it is important to recognise when a solution is not working.
  10. Everything is part of a larger ecosystem and we are interconnected: Creating new market or shifts isn’t an easy task. Often, we are up against culture, traditions and the practice of business. Success requires alignment amongst different stakeholders.

The work ahead

By leveraging the 10 lessons learned along the way, we hope to continue to open doors to opportunity for those living in urban poverty. And it all begins with the innovative ideas of our partners. As Goel says: “Investing in organisations that have the capacity to radically move the needle on social progress is at the core of our approach to mission-related impact investing.”

Through many successes and failures over the years, it’s essential that we continually learn from our work to ensure we’re doing our best to transform lives. For children now and for many generations to come. In the words of Goel: “While there are no shortages of challenges in this work, we know we are just getting started.”

Stay tuned for Geeta Goel’s blog series that will highlight what we’ve learned as an impact investor, and what is ahead.