YSB India - Enterprise Support Landscape Study

Enterprise Support
Landscape Study:  
India
Authored by Yunus Social Business
About Yunus Social Business

At Yunus Social Business we harness the power of business to end poverty and climate change. Co-
founded and chaired by Nobel Peace Prize Laureate Prof. Muhammad Yunus, we develop market-based
solutions for social or environmental problems. Yunus Funds finances and grows social businesses
while Yunus Corporate Innovation transforms leading corporations into a force for good. To date our
social business portfolio has served over 13 million people in low income countries and created higher
incomes for 50,000+ people. We have supported 1,000+ social businesses to grow. Yunus Social
Business has offices in Sao Paulo, Bogota, Mumbai, Bangalore, Kampala, Nairobi and Berlin.
About IKEA Foundation

The IKEA Foundation is funded by the INGKA Foundation, owner of the Ingka Group of companies. The
IKEA Foundation is independent from the retail business with a sole focus on creating brighter lives on
a liveable planet through philanthropy and grantmaking. Learn more at www.ikeafoundation.org.
About our partnership

The IKEA Foundation and Yunus Social Business share a vision of empowering entrepreneurs in
developing economies. The partnership aims to continuously improve the services to the ecosystem via
research, capacity building and dedicated support to entrepreneurs. Yunus Social Business and IKEA
Foundation together work to better understand the unique needs of social entrepreneurs in selected
markets and generate evidence about what support adds most value and addresses the constraints
social entrepreneurs face.
Enterprise Support Landscape Study | India | Acknowledgments Yunus Social Business
Acknowledgements
Interviewees 
We take the opportunity to thank the people and

organisations who have dedicated their time and
knowledge to this report, namely:
Support Provider Organisations Individual Interviewed
Stanford SEED
P.R. Ganapathy
Village Capital
Joslin Jose
Villgro
Srinivas Ramanujam
Caspian Debt
Sushant Bhatia
Sattva Consulting
Srikrishna Sridhar Murthy
Acumen
Paarag Sabhlok
Upaya Social Ventures

AB Chakravarthy
ANDE Sucharitha Kamath
Research team:
Social Business survey respondents
Manasi Parvatikar, Project Manager India

We want to thank the 60 social businesses that participated in
Nora Praher, Manager Strategic Initiatives the survey rolled out by Yunus Social Business Fund Bengaluru
and Impact Management and shared invaluable insights regarding their perspectives
around barriers and opportunities for accessing financial and
non-financial assistance.
Research support:
Outreach partners
The research team would like to recognize the contributions   Several networks, peers, and industry bodies provided valuable
of members of YSB and the IKEA Foundation for their advisory, support by circulating the survey within their networks and
critical input, and review of this study:     encouraging entrepreneurs to participate in the survey. We
would especially like to thank Villgro, Upaya Social Ventures
and ANDE for helping amplify the survey to their networks.
Suresh Krishna, Founder and CEO YSB Fund Bengaluru;  
Laksh mi Viswanathan, COO Funds;   Graphic Design:
Sipika Nigam, Senior Portfolio Associate;   Julian Boledi, Monica Bernadou, Luisa Lopes (Glitch.me)
Guy Septhon, Global Communications Manager;  

Els Remijn, Program Manager (IKEA Foundation);   Published by:
Lotika Mehta, Strategic Communications (IKEA Foundation) Yunus Social Business GmbH and gGmbH 2021
Enterprise Support Landscape Study | India | Table of Contents Yunus Social Business
Enterprise Support  
Landscape Study: India
Table of contents
Abbreviations
05
Executive summary
06
Report overview
07
Key Definitions
08 
Country context
10 
Section I The social business support landscape in India

18  
Section II Understanding opportunities and challenges
for social businesses – an entrepreneur view

26
Section III Key findings and market gaps in support
services to social businesses

39
Recommendations to the ecosystem

42
Bibliography 45
ⓒ Yunus Social Business 2021. All rights reserved. This report or any portion thereof may not be reproduced or used in any manner
whatsoever without the express written permission of the publisher. Unless stated otherwise, all monetary values in this document
refer to US dollars and all data is valid as of December 2020.

Enterprise Support Landscape Study | India | Abbreviations Yunus Social Business
Abbreviations
ANDE: Aspen Network of Development ITeS: Information Technology Enabled Service
Entrepreneur M&E: Monitoring and Evaluatio
AUM: Assets Under Managemen MFI: Microfinance Institution
AVPN: Asia Venture Philanthropy networ MIT-D Labs: Massachusetts Institute of Technology  
B2C: Business to Consume - Development, Design, and Disseminatio
BMGF: Bill and Melinda Gates Foundatio MMR: Maternal Mortality Rat
CBO: Community Based Organization MSDF: Michael and Susan Dell Foundatio
CGTMSE: Credit Guarantee Fund Trust for Micro and MSME: Micro, small-and-medium-enterprise
Small Enterprise NIC: National Innovation Counci
CIA: Central Intelligence Agenc NITI Ayog: National Institute for Transforming Indi
CIIE: Capital Incubation Insights Everythin NMR: Neonatal mortality rat
CMIE: Centre for Monitoring Indian Econom NPO: Not for Profit Organisatio
CPG: Consumer Packaged Good PE: Private Equit
DFI: Development Finance Institutio PPP: Purchasing Power Parit
FCDO: Foreign, Commonwealth & Development SASIX: South African Social Investment Exchang
Offic SDG: Sustainable Development Goal
FPE: For Profit Enterpris SIB: Social-Impact Bon
FPO: Farmer Producer Organization SLA: Service-level agreement
G.A.M.E: Global Alliance for Mass Entrepreneurshi SME: Small-and-medium-enterprise
GALI: Global Acceleration Learning Initiativ SSE: Social Stock Exchang
GDP: Gross Domestic Produc UNDP: United Nations Development Progra
GIIN: Global Impact Investing Networ UNESCO: United Nations Educational, Scientific and
GiZ: Deutsche Gesellschaft für Internationale Cultural Organizatio
Zusammenarbeit Gmb UNICEF: United Nations Children's Fund
HNWI: High Net Worth Individual USAID: United States Agency for International
IIM-A: Indian Institute of Management Ahmedaba Developmen
IIM-B: Indian Institute of Management Bangalor USD: US Dollar
IMM: Impact measurement and managemen VC: Venture Capita
IRP: Investment Readiness Program VilCap: Village Capita
IT: Information Technology YSB: Yunus Social Business
5
Enterprise Support Landscape Study | India | Executive Summary Yunus Social Business
Enterprise Support
Landscape Study:
India
Ex e cut i ve
India has been no stranger to the social business and entrepreneurship movement. For
Summary
years now ventures have sprung up with a dual mission of creating social and
economic wealth. Correspondingly, the impact-investing ecosystem has evolved over
the last decade; the total impact investments in India moved from micro-finance (30%
of total investments, USD 1.5 billion between 2011 and 2017) to other sectors such as
agriculture and water and sanitation (financial services, including MFI, contribution
shrunk from 76% in 2010 to 43% in 2019). Through this report, we aim to show a
snapshot of the current social business landscape in India.
Key Findings
Investors believe that social innovation will be
centered on technology to deliver essential products

Social Impact oriented
and services to the low and low-middle income
funds play the strongest
population. Social innovators (i.e. individuals driving
role in moving impact
social innovations or new social practices that aim to
capital towards promising
meet social needs in a better way than the existing
business models,
solutions) must keep inclusion central to product
surpassing foundations,
and/or service strategy. Specificially, this means to
philanthropy et al. in terms
reimagine how products and services are distributed
of capital deployed
to the last-mile and reach each and every
underserved individual.
While overall social YSB surveyed over 60 social businesses.
businesses have a higher Among these social businesses of the
ratio of women in fraction that had raised external funding,
24% constituted female-founded

leadership positions – there Traditional debt remains plagued 77% social businesses
businesses and 76% were male-founded.

is still a lot of work to be stated that they found  
with challenges of high demand of
Further, only 33% women stated they
done with respect to it a challenge to find an
collaterals and tedious operational
were confident pitching their business
equitable access to funding investor that can both
and diligence procedures. The
model to investors (as compared to 56%
provide feasible terms  
and other support biggest barrier to raising equity
male founders).
for equity financing and
opportunities. according to social businesses
relevant growth support.
remains investor alignment and fit.
Raising capital is an age-old challenge for social businesses. However, the
more glaring factor is the lack of understanding regarding the question:
”which type of investor is the right one?” 85% of entrepreneurs
When it comes to incubation and surveyed described
acceleration, the biggest access to networks and

With respect to fundraising knowledge, 79% of social businesses surveyed
perceived benefit by entrepreneurs meaningful connections

stated they were able to identify the type of capital required, but only 21%
mentioned they knew where to raise this capital. On the other end, financial is the amplification of social as crucial.
support providers stated that social businesses approaching them for capital networks i.e. getting better access
often lacked articulation around the need for a specific type of capital. to relevant support
Clearly, the funding gap is not just owing to lack of funds but also owing to
an educational gap around fundraising.
6
Enterprise Support Landscape Study | India | Report Overview Yunus Social Business
Report overview
This report’s objective is to shed light on the spectrum of support Research Methodology
offerings, both financial and non-financial, available for social
businesses in India and to uncover the main bottlenecks in their The insights in this report were gathered through consultation of
entrepreneurial journey to growth and scale. The report aims to actors across the social business ecosystem such as impact
bring valuable insights to the social business ecosystem at a investors, accelerators and incubators, technical support
critical moment when the COVID-19 pandemic has increased the providers, policy and advocacy experts, as well as social-business
burden of poverty and inequality and drastically affected the way entrepreneurs themselves. The study relied on a multi-method
we live and do business. We hope that the report will bring strategy to collect data from various sources to ensure the
valuable insights based on a multi-stakeholder research approach perspectives of a diverse ecosystem actors were captured.
to diverse actors in the ecosystem, emphasising any persisting

The Yunus Social Business team conducted interviews with
support gaps and providing recommendations to strengthen and
financial and non-financial support providers to map the
further develop the social business support ecosystem.
ecosystem and support offerings through three lenses:
The research has been structured Investment criteria and preference for stages
around the following objectives: 1
and sectors to fund;
Challenges experienced in taking support

Understand the multi-stakeholder 2
offerings to market;
perspective of the available financia
and non-financial support to Appreciation of innovative financing

3
entrepreneurs in the market mechanisms such as blended finance.
Understand the social entrepreneurs’s The Yunus Social Business team also conducted a survey of
financial and non-financial needs and social businesses from the support providers’ perspective
underlying gaps and mismatches in with the entrepreneurs’ view on challenges of scale and
the market in fulfillinf the same barriers to accessing financial and non-financial support.
The findings gained through this dual approach were put into
context of the existing body of literature.
Understand the potential for patient

All perspectives and insights collected were eventually
financial instruments and other
consolidated both top-down and bottom-up and condensed into
blended finance instruments
this social business support landscape report.
As encompassing as we sought to be in the variety of approaches and breadth of data collection

Research
efforts, several limitations remain. First, all data is self-reported, and we made clear at all stages
limitations   that this study was conducted on behalf of Yunus Social Business. This may have led to some
bias in entrepreneurs' responses to the survey and in the interviewees' responses.

and challenges
Second, as with any research effort, we only had a limited amount of time and resources
dedicated to data collection. Even though every effort was made to attempt to cover different
perspectives from both ecosystem builders and entrepreneurs, there are certainly several
perspectives that were not covered, or not addressed with the depth they deserve.
As we acknowledge these limitations, we are confident that the report can serve as a relevant
title to the growing mosaic of knowledge about the Indian social business ecosystem.
7
Social Business
Key As an emerging field, impact investing and social business
Image by Nandhu Kumar

Definitions is characterised by blurred definitional boundaries.
A social business is a model pioneered by our co-founder Nobel Peace Prize Laureate Prof.
Muhammad Yunus. It is 100% dedicated to solving a human problem like poverty or the climate
crisis. A social business is embedded with a social or environmental mission at its core. It
generates profits to increase its social and environmental impact. "It is a business where profit is a
means to increase the social or environmental impact. Rather than an end in itself”.
“A social business is a company with a social mission at its core. Set up to

Yunus Social solve a specific problem to the benefit of the low-income members of
Business   society, social businesses operate exactly like normal companies except for a
few small differences. Unlike a charity, a social business generates profit and
defines a social aims to be financially self-sustaining. Social business creates income for
business as disadvantaged populations or serves them as its primary customers. 100% of
the company profits are reinvested in continuing the company’s social
follows: mission. Moreover, a social business can be either created by vulnerable
groups to address their own needs or it can serve them as its primary
customers, and it reinvests 100% of its profits in fulfilling its mission”.
Social innovators This is significantly, but not completely, aligned with other nomenclatures used in India, the most
relevant of which is impact business. The main differences are in the need to reinvest all its profits,
We define social innovators as and the focus on addressing the needs of low-income people (compared to those of other
individuals driving social innovations vulnerable groups or the planet's). As relevant as these differences may be when assessing specific
or new social practices that aim to enterprises, they are overlooked when we inquire about the field, as the end goal is the same for
meet social needs in a better way everyone: to use the power of business to tackle poverty, inequality, and other pressing social and
than the existing solutions. Social environmental problems we face as a society.
innovators are a superset and are
building social purpose organisations Enterprise Stages
that are either for-profit (i.e. social
businesses) or are not-for-profit. Similarly, there are several taxonomies used to define the development stages of an enterprise, social
or otherwise, with a varying number of steps. This study considers three developmental stages:
Early stage:  Growth stage:   Mature stage:  

comprises ventures that are ventures at this stage are   businesses that have an
operational and generate some growing rapidly and have a fully established product and
revenue but are not yet profitable. commercial operation. They either are profitable, with
They are typically still testing or are profitable or are close to it and expanding operations.
fine-tuning their business model. are typically testing paths to scale.
YSB's focus is on supporting enterprises in their transition from early- to growth stage and onwards,
which is also a locus of high mortality and scarce financial support. This gap is commonly known as
the "missing middle", as businesses' financial needs at this stage are too large to be met by family
and friends, but they cannot yet access credit from commercial lenders at affordable rates.
8
Key Definitions
Financial Support Ecosystem

Financial support is understood as any allocation of money There are several ways to categorise the many actors who
directly to a social business with the goal of strengthening the operate in the social business ecosystem. The social
organisation and supporting its development. This can be made in business ecosystem comprises, at its core, financial support
the following ways: providers (DFIs, foundations, HNWIs, impact funds), hybrid
support providers and non-financial support providers
Grants and prizes: non-refundable resources, allocated typically by a (incubators, accelerators and more) in addition to social
philanthropic organisation or government. This is more commonly used for businesses.
research and development, or to support ventures in their very early stages
Debt: refundable resource most commonly allocated to enterprises with

recurring revenues and proven or reasonably assumed repayment capacity.
Typically, the enterprise is bound to repay the amount borrowed to its creditors Additional key stakeholders include:
in instalments (at agreed time intervals), with the addition of a previously

agreed interest rate
Equity: financial resource allocated in exchange for several shares in the The national and the state governments.  
company. Since equity investors becomes shareholders, they are commonly Government institutions, in addition to monitoring and
granted a seat at formal decision-making instances, such as the board of developing policies focused on fostering social
directors, depending on the amount of shares they hold. This is most
businesses, are also sometimes engaged in setting up
commonly used to fund higher-risk businesses with a correspondingly high
potential reward, which is realised when investors sell their shares to another venture funds and incubation + accelerator programmes
investor at a profit. This type of funding is most commonly allocated to early-
stage ventures with high potential for growth and revenue generation Academic institutions.  
Several academic institutions support research,
Blended mechanisms or mezzanine financing: The typical mechanisms
described above are often not sufficient to provide the support required by typology, and frameworks, as well as incubation, to
social businesses and some ecosystem builders are experimenting with promote entrepreneurship.
financial innovation to increase the options available to entrepreneurs and
better meet the needs of an increasingly diverse field. These innovative
instruments and mechanisms often blur the lines between the archetypal Domestic and multinational corporate entities. 
definitions presented above, and may include blended finance mechanisms,
revenue-based payment debt and quasi-equity, among others.
These entities engage with social enterprises and other
stakeholders to leverage market development opportunities
and to meet their corporate social responsibility goals;
Non-Financial Support
YSB defines non-financial support across five dimensions, based

on their objective.
Enable the Entrepreneur: Via entrepreneur capability i.e. building individual Organisations that are not devoted to this ecosystem, or even
skills of the entrepreneur through focused, relevant mentorship and educational to a social mission, also play an important role, as they may be
programmes/ training. accessed by social business to supply many of their needs.
Strengthen business fundamentals: Delivery of support services or advisory So, the broader entrepreneurship ecosystem must be taken
around business strategy and financial sustainability, aiming to achieve into account, as must traditional financial institutions, such as
sustainability and growth. This is focused on topics such as business model, banks as well as traditional professional services firms.
financial model and fundraising, new market expansion, stakeholder

engagement and more
Establish robust governance and people management: Support services or In this report, when we mention the social business
advisory that help set up governance structures for board and executive
leadership ecosystem, we specifically refer to the organisations
dedicated to supporting this field. Any reference to the
Impact measurement and management: Delivery of support services or
broader entrepreneurship ecosystem, to traditional financial
advisory around measuring the impact of the social business model
institutions or other relevant actors will name these actors
Professional advisory: Includes delivery of services that are provided by specific explicitly as such.
professionals such as legal, fiscal and sector experts.

1 Report objectives - Link
Intro
India:  
Country
Context
Enterprise Support Landscape Study | India | Country Context Yunus Social Business
Country context
India's growth story has been characterised by quick and dynamic However, socio-economic growth has not been linear; while India
developments across industries, supported by policy advan- has progressed exponentially on trade and business, securing a
cements. The impetus for this was provided by the landmark place in the Top 100 economies for Ease of Doing Business (an
economic reforms of 1991. India’s reforms in 1991 opened up its index prepared by World Bank) and consistently growing GDP
potential for global trade and business, creating millions of jobs (averaging 5-7% in the last 10 years), it has had a staggered
and avenues for entrepreneurship as a result. It goes without growth on its social indicators.
saying that it was the services sector through jobs in sub-sectors
such as hospitality, information technology and telecom, finance & A rapid assessment of India’s impact story via socio-economic
insurance and more, which provided the much required thrust to indicators stated below will help to set the context within which the
the Indian economy, contributing to 54%2 of gross value added,   enterprise support landscape needs to be placed:
as per 2020 estimates from the Ministry of Statistics and
Programme Implementation.
India socio-economic indicators snapshot
Population 1,38 Bn
22 5
65 7 35
. %
% %
ps.com
4%
Poverty headcount
R ural Literacy   Population
ratio at U .
SD 1 90 a
a
© Free Vector M
population rate living in slums day (PPP)
71 . %
t
U
h rig
nemployment rate
y
Cop
2 623 Trillion
.
GDP (USD)
89 . 0 8 9
0. %
gross domestic
GDP PPP   Informal employment as
4.04%
product
(i n In $t tri ll n io ) percentage of total employment
GDP growth
(2019)
66 . % 56 5
.
In fl ation Economic freedom ranking
H ma D v l pm
u n e e o ent I d
n ex (HDI) Ra ki g n n
f rom t h e 2020 H
um an Dev le opme n Rt eport
131 6 5
0. 4 69 7. 12 2 . 65 . 6,681 Ease of doing business
rank score
Rank H I val
D ue (2019) Lf x
i e e
SDG 3
an y
a b h y airt
pect
( e
c
rs)
E
o
(
x
y ae
y a
pected
f h ln
sc
rs)
oo i g
e rs Me
sc
(
an y a
h ln
y a e
oo i
rs)
e
g
rs o f Gross
n
i
ca a
come (G
pit
na tio
(PPP
nal
NI) per
$)
63 71 .0
SDG 3 4. SDG 6 4. SDG 8 5 .
Source: Wor l d B ank; Th H e erit a ge Fou n a

d tio n; n
U ited N a tio n s De v l e opme nt Progr a m; In ter na tio nal Lab our Organ a
is tio n
2 The India Brand Equity Foundation (IBEF), Services sector in India
11
Country context
Over the last ten years, India has seen a steady pace of growth, India’s increasing inequality between economic classes is equally
which has been ‘well-diversified’3 across sectors. Much like other reflected in the country’s inflation rate, which has surpassed the
emerging countries, in India the contribution of agriculture and ceiling of 6%, as set by its federal bank, The Reserve Bank of India.
allied activities to GDP declined (share in gross value added
declined from 18% in 2011-12 to 15.4% in 2015-16)4 and non-
agricultural sectors have increased. That being said, agriculture India, although it is home to the second-largest labour force in
continues to engage the largest chunk of the labour force at 47%. the world (471 million people, with 63% population between 15
This also indicates that productivity of the services sector and and 59)6, has untapped potential for its large youth population.
industry, with 31% and 22% of labour force participation
respectively, has also increased at a faster rate.
Despite being the 5th largest economy worldwide, with USD 2,870
Despite this steady economic growth on a national level, lower to billion (INR 145.66 lakh crore)7 annual GDP in 2019-20, and a
middle-income and other marginalised communities still face growth rate of 4.2%, India remains a low-middle income country
barriers in accessing resources that are essential for livelihoods with per capita income at USD 2,0998, and almost 30% of Indians
due to significant economic ine uality. q live below the poverty line9.
In 2019, the report on Human Development Index stated that India Job-creation has mostly been unequitable across urban and rural
is still home to 28% of the people living in poverty worldwide. India. Close to 70% of Indians live in rural areas and thus, bear the
Poverty becomes a complex cycle to break in a country like India, brunt of lack of jobs.Youth employability is among the top reasons
given the extent of its structural group-based inequalities towards for underutilised the Indian workforce. 22.5% of youth (between
women and girls, caste, religion and other. When it comes to 15-24 years old) are unemployed and it is estimated that 98% of the
education, a 2019 report by the Ministry of Human Resource young people enter the market without adequate skill sets10 -
Development reported a student-to-teacher ratio5 of 24:1, clearly showing that the challenge is extremely decentralised i.e.,
comparably lower than (Brazil and China (who are at 19:1). A low there is a lack of equitable access to education or meaningful,
student-teacher ratio is indicative of the diluted quality of job-focused training.
education provided to students and pedagogical challenges faced
by teachers. At the same time India’s secondary completion rates

have decreased to 83% in 2019 from 85% in 2014. Both statistics

for education viewed together indicate a challenging environment
for improving education at scale. With respect to access to health

care, some indicators such as decreasing maternal mortality rate
(MMR) suggest improvement in maternal health service delivery
across rural and urban locations via efforts of Anganwadi and
ASHA workers (government-appointed community health
volunteers). However, universal health coverage and access to
quality healthcare remain a challenge ; public spending has
stagnated at 1% of total GDP.
3 World Bank. (2018). India Development Update

4 World Bank. (2016). India Labour Market Update
5 Ministry of Human Resource Development., (2019). Education Quality
Upgradation and Inclusion Programme (EQUIP)
6 Economic Survey 2016; Labour Bureau Report 2014-15; Government of
India (2011a); Government of India (2011b); Government of India (2015a);
Government of India (2015b)
7 Ministry of Statistics and Programme Implementation., (2019-20).
8 World Bank Data
9, 10 World Factbook, Central Intelligence Agency (CIA)
12
Snapshot of progress on SDGs
120 /165
SDG Index rank
60.1
SDG Index Score
98 .9
Spillover Score
SDG dashboards and trends
Trends:
On track or maintaining SDG achivement
Moderately improving
Stagnating
Decreasing
*Chart taken from www.SDGIndex.org
trend Information unavailable
Dashboards:
SDG achived
Challenges remain
Significant challenges remain
Major challenges remain
Information unavailable
Where India is Improving Where India is Struggling
SDG 1 - No Poverty
SDG 2 - Zero Hunger
During 2015-16, only 1.8 million Self Help Groups (SHGs) 34% prevalence of stunting in children under 5 years of age.
were provided bank credit linkage. By 2018-19, this

increased to 2.7 million. SDG 4 - Quality education
Secondary-school completion rate falling – currently at 83%.
SDG 3 - Good health and wellbeing
SDG 5 - Gender equality
Improvement in MMR – 145 per 1000 and

Female labour participation rate is 27%.
NMR 21 per 100.
SDG 6 - Urban Sanitation
SDG 8 - Decent work and economic growth
92% population with access to, at least, basic Unemployment rate has increased to 7%.
drinking water services.
13
Impact of the pandemic

The most immediate effects of the pandemic were felt by India’s migrant labour. The unplanned lockdowns in India led to one the largest
forced-migration-led humanitarian crises in India’s history, second to the partition of 1947. On March 24 2020, India's central government
announced a nationwide 21-day lockdown starting from March 25 2020. The lockdown enforced shutdown of all social and economic
activities compelling industries, factories, educational institutions, and offices to shut down operations, without provisions for informal and
migrant workers. Left without means of livelihood and under a health scare, an estimated 10.4 million workers left places of employment
and headed back to their rural villages; the situation aggravated as most transport links such as roadways and railways were shut down,
forcing many families to walk hundreds of kilometres back to their homes.
Due to the suddenness of the lockdown and lack of adequate Between February and April 2020, the share of households that
government provisions for livelihood security, several informal experienced a fall in income was 46%. With no means of
workers and their families were pushed into economic distress. A generating income, many were forced to withdraw their children
mass departure of migrant workers from cities in several states to from schools. Teaching was moved to digital platforms through
their villages raised concerns that the COVID-19 outbreak could online teaching methods, government portals, Direct-to-Home
turn into a livelihood and humanitarian crisis. As anticipated, by (DTH) channels, or remote. However, learning remains a challenge
April 2020, about 121 million blue collar workers lost their jobs as for many students in India given the vast differences in affordability
reported by Centre for Monitoring Indian Economy Pvt Ltd, (CMIE). and access to basic digital infrastructure, including electricity,
devices like smartphones and computers, and internet connectivity.
However, loss of livelihoods of the migrant labour is not the only India is facing the risk of losing an entire generation to pandemic
problem India faced. The lockdown continued to deteriorate the disruption. UNESCO reports school closures have affected 320
condition of salaried jobs. The biggest loss of jobs among salaried million students in India. Further UNICEF reports, only 37.6 million
employees was of white-collar professional employees. CMIE children i.e. 12% across 16 states are continuing education
reported a total of 6 million job losses for white collar workers by through various education initiatives such as online classrooms
August 2020. These include engineers e.g. software engineers, and radio programmes etc.
physicians, teachers, accountants, analysts, etc., who are
professionally qualified and were employed in some private or Overall, COVID-19 has been at the center of the loss of lives and
government organisation. People between the ages of 15 and 39 livelihood on a massive scale. The estimated cost of the full
were most impacted in terms of job loss between April and July lockdown is USD 26 billion. Most of the loss was forecasted to
2020. Those between 25 and 29 years alone accounted for about occur in the third quarter. On a macroeconomic level, all of this
46% of all job losses. compounded the threat of recession and a significant economic
crisis. Early estimates by the Indian government suggested that
The lockdown wreaked havoc for a huge number of small-and there would be a hit of 0.3 to 0.5% to the GDP in the next fiscal
medium-sized enterprises, leading to further loss of jobs, slump in year, and growth in the first two quarters of the next fiscal year
production, and slow demand, exacerbating the vicious cycle of could be as low as 4 to 4.5%. Fitch cut GDP growth forecast for
economic downturn. According to a survey by Dun & Bradstreet, India to 2 per cent for the fiscal year ending March 2021, which
over 82% of more than 250 small businesses suffered from made it the slowest growth India will have over the past 30 years.
massive labour migration, production halt, and cash-flow crunch
during the lockdown, while 70% stated their expectation on pre-
Covid-level recovery to take nearly a year.
14
Enterprise Support Landscape Study | India | Business and investment snapshot Yunus Social Business
Business and investment snapshot

The business and investment environment in India has always been vibrant with diverse sources of foreign investment flowing in over the
last decade. The government has played a crucial role in building a lucrative environment for businesses in India, from the landmark
economic policy of 1991 to the more recent structural reforms such as the creation of NITI Ayog (National Institute for Transforming India)
in 2014, a policy think-tank of the government established to proactively lead federal and state-wise economic transformation. In light of
the pandemic, the Indian government has injected USD 265 billion as a stimulus to revive the economy, with a special focus on the sectors
of power, manufacturing, defence, land, education, mining, and minerals.11
Caspian Debt
Yunus Social Business
Acumen
Grameen Capital
These policy initiatives have been instrumental in India’s Albeit the slow yet steady economic growth, incentives for
improvement in ‘Ease of doing Business’, rising by 79 positions in investment exist across sectors. More specifically, in 2020, the
five years (2014-19) - up from position 63 out of 190 countries. It total deal value in India stood at USD 80 billion across 1,268
is also important to note that the services sector has been a key transactions. Of this, merger-and-acquisition activity contributed
driver for investments in India, singularly contributing to about 54% 50% of the total transaction value. Private Equity–Venture Capital
of gross value added (at current prices). According to the India (PE-VC) companies expanded from USD 36.3 billion (1,012 deals)
Brand Equity Foundation, the services sector has an advantage on in 2019 to USD 39.2 billion (across 814 deals) in 2020.  
two fronts: Firstly, the India IT services export market, which is Post-pandemic, interest has moved towards consumer- 
estimated to grow 6-8% over 2021-24, and secondly, India’s large packaged goods (CPG) FinTech, EdTech, Healthtech, Agritech and
pool of growing young workforce that will flow into the IT and ITeS Pharma companies.
(Information Technology Enabled Services.) sector from low
performing sectors such as agriculture.
11 Ernst & Young India & Confederate of Indian Industries (CII). (2020, November). FDI in India: Now, Next and Beyond: Reforms and opportunities
15
India falls behind on the global competitiveness index despite However, the most progressive step taken by the government was
rating high on macroeconomic stability and a stable financial the recent consideration to introduce a Social Stock Exchange
sector. India ranked 6 8 in the Global Competitiveness Index in 2019 (SSE) in 2020. The SSE will function as a regulated funding
– falling 10 places from the previous year. While the decline in platform, allowing social enterprises and voluntary organisations
ranks is mostly attributable to other economies climbing up, one with a social purpose to raise funds. The key objective of the SSE is
thing stands out as imperative for India s ’ growth : training its to help improve access to capital for enterprises that seek to deliver
workforce on global-market-relevant skills. a positive change in society. The Securities and Exchange Board of
India (SEBI) has set up a working group to bring this idea to reality.
Investments in the impact space have started to be disbursed It is planned that this stock exchange will be housed under the
more equitably across sectors. Impact investments were Bombay Stock Exchange and/ or National Stock Exchange, however
traditionally focused on financial services such as Microfinance nuances such as definitions for 'for-profit social enterprise' are still
Institutions (MFI), representing 76% in 2010 to 43% in 2019 of under discussion.
sector allocation. Investments in sectors such as health,
education, agriculture, energy, and technology have recently In a comparable case, the SASIX (South African Social Investment
increased in share, with a shift away from microfinance to housing, Exchange) in South Africa already functions as a conventional
small-and-medium-enterprises (SME), education, healthcare stock exchange that allows investors to buy shares in social
finance, and new fintech models. enterprises. Investors can browse the SASIX and select social
businesses based on project type, mission, and location. SASIX
The next phase for social entrepreneurship in India will be driven works like a commercial stock exchange applying the same
by the government playing a larger role in promoting and rigorous due diligence considerations to social enterprises.
maintaining competition across social businesses. For the last
decade, the Indian government has been vested in the creation and
promotion of social businesses. A special section was included
within the Enterprise Policy, adopted in 201 5 by the Ministry of
Skills development and entrepreneurship. Besides a definition of
‘Social ’
Enterprises , the Policy specifies support targeted at SEs,
such as higher education courses, fiscal incentives for social
investment, incubation, grassroots technology hubs and
engagement on innovation with existing entities such as the
National Innovation Foundation.
Moreover, India has a National Innovation Council (NIC), which
was created to facilitate and guide the discussions, analysis, and
the implementation of strategies for inclusive innovation in the
country. The NI C was the institution in charge of the formulation of

a roadmap for innovation 2010 –2020. Sectoral Innovation
Councils have also been created to foster local innovation in
specific sectors.
Taking a bottom up approach, as well, the government has eased In conclusion, the Indian investment space has strong tailwinds
several bureaucratic processes for social enterprises. For instance, through increased inflow of private sector stakeholders and an
the number of trademark -filing forms has been reduced from 75 increased public will in scaling up social sector ventures &
to 8. Additionally, enterprises receive a 10% subsidy on filing for initiatives, indicating a holistic strategy for meeting socio-
trademarks, while only paying 50% of the patent cost. economic goals.
16
Setting up the Social

Stock Exchange in India
In Sep 2020, the Securities and Exchange Board of India set up a
technical group. A prior working group had submitted a report on the
recommendations for setting up a social stock exchange in India.
The idea of the Social Stock Exchange (SSE) as a platform for

listing social enterprise, voluntary and welfare organisations so
that they can rise capital was mooted in the Union Budget
2019-20. The aim of the initiative is to help social and voluntary
organisations which work for social causes to raise capital as
equity or debt or a unit of mutual fund.
Recommendations of the Group Eligible Activities:

Social enterprises can engage in activities in such as
Type of the Organisation
Political and religious organisations, trade organisations as well
as corporate foundations should not be allowed to raise funds
through SSEs.
1 Erradicating hunger, poverty,
Eligibility: malnutrition & inequality
For Profit Enterpise (FPE) and Not For Profit Organisation

(NPO) will be eligible to tap the SSE if they are able to show
their primary goals are social intent and impact. 2 Promoting education,
employability & livelihoods
Entities listed on SSE will have NPOs are usually structured as
to disclose their social impact non-governmental organisations,
report on an annual basis Section 8 companies trusts or 3 Gender equality and empowerment
covering aspects such as societies. FPEs can be private of women & LGBTWIA+
”strategic intent and planning, limited companies, partnerships
approach, impact score card”. or sole proprietorships.
4 Promoting livelihoods for rural
and urban poor + smallholders
Different Modes of Fund Raising:
for NPOs
5 Ensuring environmental
fundraising through equity, zero coupon, zero principal sustainability addressing
bond, development impact bonds, social impact fund climate change & conservation
with 100% grants-in grants-out provision, and
donations by investors through mutual funds.
for FPEs fundraising though equity, debt, development impact

6 Slum area development affordable
housing and other interventions to
bonds, and social venture funds build sustainable and resilient cities
17
Section I
The social
business support
landscape  
in India
Enterprise Support Landscape Study | India | Section I Yunus Social Business
The Indian impact investing ecosystem has always had an optimum mix of actors; however the last five
years has seen evolution with respect to new actors as well as diversification of the role these actors
play with respect to funding structures, support mechanisms and collaborations. Moreover, the concept
of social businesses has gained more awareness, as demonstrated by federal initiatives such as the
establishment of the Indian social stock exchange.
One of the key purposes of this report is to break down the support-provider ecosystem for social businesses in India. To do so, we
structure support-providers across a spectrum (Figure 3). On one end of the spectrum are financial-support providers, while on the other
end are non-financial-support providers – both being almost completely divided in the nature of services for social businesses. In the
middle of the spectrum, we find a growing category of actors that are hybrid in nature i.e., work with a dual mission of funding social
businesses and providing capacity-building support.
Figure 3
Spectrum of support providers
Financial Support providers Hybrid Support providers Non-financial support providers
Organisations that are exclusively providing Organisations that are exclusively providing
impact capital or venture capital that is support services that focus on improving a
intended at scaling business operations social business's performance on 4 dimensions
along with societal impact with the target of
achieving financial sustainability Organisations that provide Entrepreneur capability (Building individual
skills of the entrepreneur through focused,
impact capital along with non- relevant mentorship and educational
Note: It is however important to note a

financial support (often termed programmes/trainings
classification between two types of as technical assistance or deep Business and financial sustainability (Business
financiers i.e. 1) Impact funds (primary portfolio support)
model, financial model and fundraising
mission: social + financial return) and 2) Org governance and people (talent, leadership
Commercial PE/ VC funds (they do not development etc.
primarily pursue impact intention, impact is Impact measurement and managemen
a by-product of investment activity) Professional services (legal, taxation and

regulation, HR, policy advocacy etc.)
Impact funds:
Impact funds:
Impact advisory firms (on strategy and IMM):
Caspian Debt, Omnivore Capital, Asha Impact Yunus Social Business, Village Capital, Acumen, Sattva, Dalberg, Intellecap, EY, BCG; Women on
Ajooni Impact Fund, Lok Capital, Unitus WIngs
Commercial PE/VC funds:
Ventures, Social Alpha
Legal firms:
Falcon Edge, Stride Ventures, Siana Capita Accelerators and Incubators:
Nishith Desai Associates, GameChangers Law

Villgro, Upaya Social Ventures, NSRCEL IIM-B,
Advisors
Banks and other public institutions:
Ennovent, Stanford SEED, Native Lead
Indian commercial banks, SIDBI Venture Trust Philanthropy and Foundations:
Ecosystem mobilisers:
MSDF, Gates Foundation, Shell Foundation, ANDE (Aspen Network of Development

Wadhwani Foundation, Omidyar Network, Entrepreneurs, AVPN (Asia Venture
UBS Optimus, Deshpande Foundation Philanthropy network), GIIN (Global Impact
Multilateral and Bilaterals:
Investing Network), G.A.M.E (Global Alliance for
USAID, GiZ, FCDO

Mass Entrepreneurship)
19
Enterprise Support L andscape Study |I ndia | Section I Y unus Social B usiness
Financial support ecosystem:
Impact-first investors are catalysing

inflow of commercial capital
The last decade has been both exciting and volatile for the impact investing ecosystem. According to a recent study by Asha Impact, USD
10.8 billion has been cumulatively deployed in over 550 social enterprises over the last decade from 2010 to 2019. Over a third of this
capital has been deployed by commercial PE/VC funds. One explanation for inflow of commercial PE/VC funds has been the successful
exits of earliest impact capital investments in the microfinance space such as Credit Access Grameen & Ujjivan Financial Services. A
second explanation for this has been the impetus provided by the government through entrepreneurship-focused policies and initiatives
such as ‘Make in India’ and ‘StartUp India’.
Club deals and proactive sector collaborations are incentivising Historically there has been a low concentration of investors
higher-ris k , higher-impact models. Over the last decade both deploying seed-stage, this trend is changing, albeit slowly. The
impact investors and commercial VC/PE funds have reached a GIIN impact-Investor Survey 2020 stated that only about 7% of
mutual understanding that limitations of investing in this space, asset under management (AUM) in Asia in impact were allocated
primarily that of risk-hedging, can be overcome through a towards Seed and venture stage businesses. Over time, this has
collaborative funding approach. According to a recent study by translated into the phenomena of the ‘missing middle’. This is not
Asha Impact, over the period 201 6 -19, club deals contributed to only missing finance, but also missing social businesses which
4 %
8 of the total deals in the impact-investing space. Moreover, have failed to grow.
impact investors have a higher concentration in seed and series
stage of funding, commercial PE/VC funds take the larger chunk of Support providers such as Upaya Social Ventures, Villgro and
the pie in Series B . This suggests that while impact investors are Caspian are some players focusing on seed and pre-seed
taking a lead in social-business-model discovery, commercial PE/ stages of business. However, investors we interviewed also
VC capital is helping scale the business model. More specifically, stated an alternative perspective: that the lack of seed-stage
the aforementioned research also states that commercial PE/VC capital was not uniform across sectors. This suggests that the
interest is biased towards business models that are built on on trend needs to be studied and analysed on a case-by-case basis.
technologies such as Internet of Things, Artificial Intelligence and Investors we interviewed stated that "Large volumes of
Machine Learning. investments in essential sectors such as education are still
targeted at higher-income schools. Impact investing still misses
Samunnati, an agri- fi nance startup has raised several rounds

the target, albeit closely, of addressing affordable private
through club deals. Accel India and Elevar E quity raised a round
schooling and low-income schools.”
of US D4 million in 20 17 for Sammunati ; this funding was used
to expand Sammunati’s loan portfolio. Since 20 1 7, through a
few more club-funded rounds, Sammunati has raised close to
US D 65 million. In 20 19 , Samunnati extended its reach to over

Entrepreneur Perspective
45 0 agri-enterprises, farmer-producer organisations (FPO), and
Investors looking to invest in sustainable businesses

community-based organisations B (C O). More recently, in 20 19
that can deliver impact in education are very few.
1 D 55 D
Focus nowadays seems to be only in B2C edtech
and 202 - samunnati raised US million in Series (led by
D 46
(educational technology) companies targeting the
Nuveen investors) and US . million debt funding from
Symbiotics Group, respectively.

top 1% of the population. Very little money is going
into companies working on foundational learning at
the bottom of the pyramid.
Social business delivering fundational learning &

education, est. 2016
20
Diversification of the overall impact portfolio from microfinance

(MFI) into other sectors. Investors we interviewed stated that prior
2010 they saw financial services and microfinances to play a
catalytic role in unlocking value for the underserved customer
segment. Indeed, access to finances is the first lever to unlocking
value. Unless financial means are provided within these informal
chains, it is very hard to solve for other problems, because
affordability and access to solutions are a constraint. However,
post the Andhra MFI crisis12 investors were actively looking for
models beyond microfinance; this demand was adequately met by
other sectors such as agriculture and healthcare. Asha Impact’s
research states that the contribution of microfinance has reduced
from 64% in 2010 to 7% in 2019.
More investors believe that the locus of social innovation going

forward will be how products and services are delivered to the low-
income and low-middle income segments. Inclusivity is set to play
a central role in how investors refine their investment lenses.
Investors are looking at innovations that, besides solving the
problem of access, deliver social value. In the current post-
pandemic context, healthcare and social entitlements are areas
with a clear need for last-mile delivery.
Haqdarshak, a social business based in Bengaluru ensures

citizens, at the last mile, get access to government and private
welfare schemes and services such as Pradhan Mantri Jan
Dhan Yojana (a financial-inclusion scheme), Pradhan Mantri
Ujjwala Yojana (cooking-gas scheme), Atal pension scheme
and more. In May 2021, it closed a pre-series A round at INR
6.65 crore (USD 0.9 million) by Impact India Investment
Partners, Beyond Capital Fund, Shalini Chhabra, and 3i Partners.
The funds will be used to launch and expand vaccination plus
health-insurance-coverage-focused services at the last mile with
a digital push and invest in plug-and-play tech tools.
12 In October 2010, the state of Andhra Pradesh in India faced a severe crisis, in
which MFIs practiced unethical practices to recover loans. This uncontrolled,
unethical practices by MFIs led to suicides among the BoP lenders. In
December, 2010 Ordinance was enacted as Andhra Pradesh Microfinance
Institutions (regulation of money lending) Act. Following the Act, operations of
MFIs just came to halt. - Kaur, P., & Dey, S. (2013). Andhra Pradesh Microfinance
Crisis and its Repercussions on Micro-Financing Activities in India.
21
Categorisation of financial support providers based

on types of instruments and terms
Type of capital Terms Key Impact Investing players
Duration: Mid to long term (2-7 years)

Caspian Debt
Debt
Terms: Variable interest payments, full repayment.
Acumen
* Patient-and flexible-debt providers are providing easier terms for many Grameen Capital
social businesses (as compared to traditional lenders).
Duration: Long-term (5-7 years only) (or until exit)

Elevar
Equity Village Cap
Terms:
Variable dividend payments (in a lot of cases, impact investors do not Unitus Ventures
take dividends, but may take some coupon payment) Aavishkaar
Exits made with premium earned over principal-investment amount. Caspian
Upaya
Duration: Short-term (1-3 years)

BMGF
Grant
Terms: metric-based financing, no repayments. MSDF
Rockefeller Foundation
Shell Foundation
Venture deb Venture Debt:
Innovative Typically working-and/or growth-capital funding in debt form to InnoVen
tools or VC/ Equity-backed investees Alteria capital
Mezzanine Short-Medium term, variable interest payments. Trifecta capital
financing
Social Success Not Social-Impact Bond (SIB):
A debt instrument based on pay-for-success principles that Multilaterals such as UNDP

leverages philanthropic capital to de-risk interest and/ or provide (United Nations Development
financial incentives (basis achievement of outcomes) Program) and Local
Terms: Lower interest payments, flexible terms for repayment. governments
Social Impact Bond (SIB

Type of capital where the government and/ or public entity pays
for better social outcomes
No-interest payments/repayments (depending on structure).
Categorisation based on social business stage and ticket size targeted
Early-stage Growth stage Mature stage
(includes angel-or seed-stage)

Ticket size: USD 150k to USD 1M Ticket size: > USD 1M
Ticket Size: USD 20k to USD 150k
Upaya Social Ventures

Debt: Yunus Social Business, Lok Capital, Grassroots Business
Villgro
Grameen Capital
Fund,  
Caspian
Equity: Aavishkaar Fund, Indian Bamboo Finance, Aavishkaar Fund
Impact Investment Partners
Angel Network, Elevar Equity
Unitus Seed Fund
22
Non-financial support is essential to

scaling last-mile social impact
Approaches to provide non-financial support are constantly being refined by investors, incubators, and
other professional service providers. Broadly the dimensions for providing non-financial support are:
Focus on An example here is Stanford-Seed, which focuses on
entrepreneur-first two entrepreneur archetypes:
Those who were never exposed to concepts/running

Players providing this support are focused on capability-
business on gut feel
building over capacity-building. These methods involved
Those that despite receiving management education and

high-touch training and mentoring on entrepreneurship
such as refining financial & impact management; and

knowing management techniques, are not able to put this
knowledge in practice.
leadership knowledge of the entrepreneur.
Other renowned players are accelerators such as
Upaya Social Ventures, Villgro and Ammani Institute.
Focus on the  
problem statement first VilCap) focuses on building
Village Capital (
‘communities that are sustainable’. VilCap

Many investors that have a strong investment thesis are identifies sub-sector-level problem statements and
either driven by improving sector outcomes (such as subsequently develops solutions.
healthcare for all, improving smallholder incomes) or
community outcomes (equitable job access; scalable A typical process , once a problem statement has
rural jobs and livelihood models). Keeping a focus on been identified, is for VilCap to launch programmes
the problem statement may tie-up investors with either and to crowdsource applications. VilCap has its own
accelerators or develop internal centres of excellence to accelerator, which then builds capacities of the
problem-solve at scale. selected social businesses.
Focus on business- Sattva Consulting is a non-financial, low-bono support
provider that works on the following aspects:
capacity building   (or technical assistance)

Strategy around business models and developing
impact roadmaps
The third common category of non-financial assistance
Improving governance via organisation diagnostic and

can be broadly classified as technical assistance or, if
board transformation
simplified, any support that optimises operations by
building efficient processes and improving business Marketing and sales: training, marketing and sales staff
functions. in customer segmentation and developing effective
marketing  
and sales tactics; an
Impact measurement and management.
23
Understanding the work of other key actors

Role of philanthropy Role of government
A catalytic and complementary force to impact investing Skilling around entrepreneurship. The Indian government
approved the National Policy on Skill-Development and
The philanthropy layer of the ecosystem (which includes Entrepreneurship in 2015. This policy includes a section that
foundations, high-net-worth individuals (HNWIs) and non-profits) describes how to promote social entrepreneurship and
plays an extremely important and complementary role in the impact grassroots innovations, encourages universities and academic
investing space, as it fills the concessionary capital and expertise institutions to launch social entrepreneurship courses and
gap. More specifically, philanthropy is critical in unlocking wealth outlines ways to offer fiscal incentives to attract investors.
via blended finance and at the same time brings in experience of Venture funding approaches to promote incubation and
long term social impact delivery. Some recent examples include promotion of entrepreneurship:
Channeling catalytic capital for pandemic recovery via Revive, Through the Small-Industries Development Bank-SIBI
an initiative of the Samhita and the Collective Good Foundation. Venture, the government launched a INR 430 Crore (USD
Developed in 2020, Revive offers consumers various financial 57 million) social-venture-capital fund called Samridhi
products, such as returnable grants (zero-interest aid with a Fund in 2011. The fund deploys risk capital into scalable
moral, not a legal obligation to repay), low-interest loans, and enterprises that provide economic, social or environmental
direct-benefit transfers. Individuals borrowing using Revive benefits to the poor in eight low-income states in India.
platform are able to build credit history, eventually helping to
enter the formal financial sector. The anchor funders for Revive Venture-capital fund by Maharashtra State. Created in
are USAID, the Michael and Susan Dell Foundation, and the September 2015, a venture-capital fund targeting profitable
Omidyar Network13.
and scalable business ventures including innovative

business models or new products & technologies which
Driving systemic change in maternal healthcare through the would have potential to provide social benefits (economic
Utkrisht Impact Bond. Established in 2018, Utkrisht Impact Bond and/ or societal and/ or environmental) to the people of the
is the world's first maternal and newborn health impact bond. It state of Maharashtra. Per investee, its investment is capped
aims to reach up to 600,000 pregnant women and newborns in at INR 25 crore (USD 3.3 million), with a target period of four
Rajasthan, India with improved care during delivery over a five to five years.
year period. Outcome-funders for Utkrisht are USAID and Merck
Special alternatives to drive inclusion are the India
for Mothers; investors are UBS Optimus Foundation, Palladium,
Inclusive Innovation Fund, the Venture Capital Fund for
Population Services International, and Hindustan Latex Family
Scheduled Castes or the Credit Enhancement Guarantee
Planning Trust
Scheme for Scheduled Classes. More alternatives are
available for small-and medium-sized enterprises that
social businesses could consider as well. For instance, the
Investor Perspective India-Opportunities Venture Fund, the Kisan Credit Card
Scheme or the preferential treatment that micro-small-and-
Along with philanthropy, the role of the government is medium-enterprises (MSMEs) have on the procurement
crucial for social businesses. Just as the government is system (20% procurement needs to come from MSMEs).
supporting MSMEs via Credit Guarantee Fund Trust for.
Micro and Small Enterprises (CGS), it should inherently Special schemes for MSME such as Credit Guarantee Fund
be done at a larger scale, especially for social enterprises Trust for Micro and Small Enterprises (CGTMSE). The
(if it fits into the government’s definition). If this can be Credit-Guarantee-Fund Scheme for Micro and Small
brought in and that will have a multiplier effect. That Enterprises (CGS) was launched by the Government of India
opens up a new source of capital which will be more to make available collateral-free credit to the micro and
patient than debt and cheaper than equity. This will push small enterprise sector. Both existing and new enterprises
the entrepreneurs to not just chase topline growth but are eligible to be covered under the scheme. In the financial
also make themselves sustainable. year 2020-21, government numbers reported guarantee
approval of 67,171 loan accounts of female entrepreneurs
13 IIC (Impact Investors Council) Newsletter. (2021) for an amount of INR 3,366.63 crore (USD 450 million).
24
Enterprise Support Landscape Study | India | Section I Benchmarking of social business support providers
Financial support N on-Financial support E co-system support

Asset class Asset characteristic Asset ticket size 1 2 3 4 5
Support Provider 
Stage of social
business supported Debt Equity Grant Innovative Patient Convertible Flexible < USD
150,000
>= USD
150,000
Entrepreneur
Business and
financial
Org 
Governance 
Impact
management and
Professional
(Legal,  
Ecosystem
Research
providers archetype Early | Growth | M ature
capital debt Equity /debt repayment terms capability sustainability + HR monitoring taxation, etc.) linkages
Yunus Social Business Debt/Equity Impact Fund 1 2 3 4
Elevar Equity Debt/Equity Impact Fund
Village Capital Debt/Equity Impact Fund 1 2
Caspian Debt/Equity Impact Fund
Acumen Debt/Equity Impact Fund 1 2 3
Unitus Ventures Debt/Equity Impact Fund 2 3
Menterra Debt/Equity Impact Fund
Aavishkar Debt/Equity Impact Fund 1 2 3 4
Omidyar Network Debt/Equity Impact Fund
Oiko Credit Debt/Equity Impact Fund 1 4
Impact Investment Holding Debt/Equity Impact Fund 2 3
Social Alpha Debt/Equity Impact Fund 1 2 3 5
Bamboo Finance Debt/Equity Impact Fund 2 4
Stanford Seed Incubator / Accelerator 1
Villgro Incubator / Accelerator 1 2
Upaya Social Ventures Incubator / Accelerator 1
Ennovent Incubator / Accelerator 1 2 3
Bill and Melinda Gates Foundation Foundation 1 2 3 4
Michael and Susan Dell Foundation Foundation 4
Shell Foundation Foundation 1 2 3
Wadhwani Foundation Foundation 1 4
USAID Multilateral or Bilateral 1 2 3 4
GIZ Multilateral or Bilateral 1 2 4
UKAID Multilateral or Bilateral 1 2 3 4
Ankur Capital Comercial PE/VC 1 2 3
Lok Capital Comercial PE/VC 1 2 3 4
Intellegrow Comercial PE/VC 1
Falcon Edge Comercial PE/VC
Stride Ventures Comercial PE/VC
ANDE Entrepreneur Network 1
Sattva Consulting Impact advisory firm 1 2 3 4
GameChanger Law Advisors Legal advisors 5
Nishith Desai Associates Legal advisors 5
This mapping has been done based on interactions with a small number of support providers along
with desk research conducted. It is purely indicative and should not be understood as exhaustive.
Section II
Understanding
opportunities  
and challenges for
social businesses
– an entrepreneur view
Enterprise Support Landscape Study | India | Section II Yunus Social Business
Understanding opportunities and
challenges for social businesses
– an entrepreneur view
India has been no stranger to the social business and entrepreneurship movement. For years now, organisations have sprung up with a dual
mission of creating social and economic wealth. Starting with the vision of improving incomes of smallholder farmers, as early as the
1940s, the social business Amul (managed by the Gujarat Co-operative Milk Marketing Federation Ltd) paved the way for a cooperative
model for female dairy collectives across the state of Gujarat. Amul is completely member-owned and operates with close to 3 million
milk producers. Another notable business model is the Aravind Eye Care model , launched in 1976 that revolutionised ophthalmic care in
India for low-income communities. Through cross-subsidisation and improving efficiencies in eye-care hospitals, the Aravind eye care chain
performs 400,000 low-cost eye surgeries per year.
Simultaneously, the ecosystem has also started evolving to cater to To understand the social business support ecosystem better,
the growth demands of the social businesses; some of the earliest Yunus Social Business conducted a social business survey of 60
players were the Aavishkar Fund (2002) and incubators such as social businesses with the objective of understanding their
Villgro (2001) and IIM-A CIIE (2002). It is estimated that across challenges when accessing financial and non-financial support.
India, there may be as many as 2 million social enterprises, While the sample does not represent an absolute view of how
according to a study by the British Council.
social businesses function, it does give a perspective of how an
average social business founder is navigating growth from
minimum viable product stage to impact-at-scale stage.
27
Characteristics of social businesses surveyed
Our survey tries to understand the average social business profile and deep dive on the environment they operate in. In the upcoming sub-
sections, the report covers more specific issues with respect to accessing financial and non-financial support.
While overall social businesses fare better  

on female leadership ratios – there is still a Average Social Business in India
lot of work to be done with respect to
equitable access to funding and other 3/4 social business founders are male,
who are also 3x likely to raise external
support opportunities. funding than female counterparts
Our survey suggests that one in every four social businesses is USD 100-150 thousand average  
led/ founded by female leaders (which is significantly better than
annual revenue bracket
global averages, where women only represent 9% of leadership

USD 100 thousand average ticket size
roles in mainstream enterprises). However, representation does
not guarantee corresponding funding opportunities - women still of funding raised (equity, debt or grant)
face challenges when it comes to raising funds and accessing
other relevant support for their business. Of social businesses
that had raised external funding, female founders constituted 56% social businesses fall under the
24%, with the remainder being male founders (76%). Further, only sectors: livelihoods and employability,
33% women stated they were confident pitching their business agriculture and healthcare
model to investors (as compared to 56% male founders). This
* please note these insights are indicative and have been
clearly suggests the proactive and conscious need for support provided based on the responses received in the survey
providers to incorporate a gender lens in their offerings so that conducted by YSB
gender outcomes can be actively managed.
Village Capital (VilCap) has identified approaches to reduce the gender gap in financing and promote
more inclusivity. VilCap’s portfolio has 46% of companies founded or co-founded by women.
Approach 1 |   Approach 2 | Abaca, a platform enabling social

Peer-selected investments: businesses to self-assess from investor lens:
Since 2009, VilCap has deployed a collaborative due- VilCap has developed an app for entrepreneurs to self-
diligence model wherein social entrepreneurs review assess their business from the lens of an investor,
and refer other social businesses into the VilCap thereby better equipping them to approach the right kind
investment funnel. This approach has been of investor with a better understanding of their
undertaken to mitigate investor bias, balance power company’s strengths and weaknesses. The tool aims to
dynamics and build more inclusive portfolios. make the investor-selection process more transparent.
Female-focused accelerators such as the 2021 Scale-ups accelerator hosted by Upaya Social
Ventures and MIT-D Labs housed early-stage women entrepreneurs. The 6-month programme offered
hands-on non-financial support targeted at business strategy, finance, impact measurement and
management along with one-on-one advisory.
28
chart 1
Agriculture and healthcare continue to remain Sources of funding
promising sectors in India provided the % age breakup of category of funding raised
necessary technology pivot occurs. through different channels/institutions
According to the findings of our study, social businesses remain 0 5 1 0 15 20 25 30 35
concentrated in the agriculture, livelihoods, and healthcare sectors

25
– representing 56% of all enterprises surveyed. Agriculture has
been a consistent performing sector with multiple investors Social Impact
involved, not only because of the large scope of business

oriented funds
14 Family and Friends

transactions it offers, but also because of a stark gap in resource
productivity (with 49% of labour-force participation and only 17% 13 Foundations
contribution to GDP). On the other hand, the healthcare space is

actively moving in favor of health-tech innovations and the market 12 Angel Investors
for 'technology democratising healthcare' is projected to grow fast.

10
Venture funding for health-tech innovators doubled over 2019-2020,
Banks/NBFCs
according to a study by Deloitte. 9 Family Offices
8 Incubators/Accelerators
Impact funds play the strongest role in moving 7 HNIs
impact capital towards promising models. 6

Mainstream Venture Cap /  
Private Equity Funds HNIs
41% of the total social businesses surveyed stated that they had 6 Government
raised their first capital from impact funds, whereas only 10%
stated they raised funds from government or commercial PE/VC 4 Others
funds. This trend indicates that impact funds play a key role in 3 P2P Lending
catalysing the investments i.e., often taking the first-investor role

and then streaming in other commercial capital. With respect to the 1 Development Finance Institutions
type of capital raised, 40% accounted for equity, 36% came from
debt and 24% came from grants (chart 1). Equity Debt Grant
Raising capital is an b ut the most glaring factor here is lack of understanding about “who is the right investor”: With respect
to fundraising knowledge, 79% mentioned they were able to identify the type of capital required, however
age-old challenge for
only 21% mentioned they knew where to raise this capital from. This gap is owing to either existing
social businesses, investor networks not working effectively enough or a general lack of platforms to facilitate exchanges
between investors and social businesses (Chart 2).
29
Previously-funded rounds are instrumental in building knowledge
on fundraising, as they require entrepreneurs to go through the Chart 2
rigour of achieving investment readiness. We found that most

Knowledge on fundraising
social businesses deem that they understand what type of capital
they require. The results clearly highlight that the confidence around
‘need articulation for capital’ is higher with founders that have
previously received funding. 94% of social businesses that had 48

I am fully confident
raised capital before said they were confident of which type of I know
79% to pitch the value of
what type
capital their business required; on the contrary 63% of non-funded
my business to
of capital
social businesses’ stated that channels to access investors are far potential investors
we require 40
too few, in addition their inability to identify the right investor also
severely impacts fundraising aspirations. 33% of previously funded 49%

social businesses state that they know who to approach for funding,
compared to only 7% on non-funded social businesses.
24 36%
An incubator that Yunus Social Business interviewed expressed that
I know when to
much is being talked about the ‘missing middle’, which is not just a start fundraising
‘funding gap’ but also a ‘capability gap’ that stunts growth of social
businesses. Social businesses need education on how to self-

13 21% I know where to go  
assess limiting factors to their growth – whether it is because of
to raise this type of capital
capital shortage or because of other missing elements (such as
adequate leadership, talent, sales channels etc). Seeking capital for
the incorrect reasons is the biggest diversion from growth. Source: YSB Research and Analysis
Effective incubation and acceleration is not accessible to everyone. A recent report by ANDE’s Global Acceleration Learning Initiative (GALI)
highlights that acceleration is key in driving more capital towards early-stages – however not all social businesses are equally concerned.
Chart 3 Sources for knowledge on fundraising

Our study found that almost 50% of entrepreneurs
Investors
approach peers for knowledge on fundraising, followed
57% by incubators/ accelerators. This highlights the lack of
Peers (other social businesses)

formal knowledge sources for many social businesses.
56%
It is also worth looking into the geographical spread of
Incubators and accelerators
incubators/ accelerators, as most of them are still
54%
based out of tier 1 and 2 cities. This puts social
Online resources and toolkits
businesses in tier 3, 4 and in rural areas at a bigger

31%
Conferences disadvantage when it comes to access to such
20% programmes (Chart 3).
Further, female founders are often susceptible to bias
coming from investors and accelerator leadership (as

Support providers need to understand the entrepreneur and the
stated in ANDE’s report). A gender lens in incubation is
business and then provide customized support. Not all business  
critical to pave the way for equitable growth.
can undergo the same training and act in the same fashion.  
The local context for each business will vary. 
Social Business providing value chain services for smallholder farmers
30
Understanding how social
businesses access debt financing
Debt funding in the Indian context has traditionally been offered by Social-impact-oriented funds and foundations ranked the highest
banks and other micro-finance institutions. Broadly, only a quarter for preferred sources of raising debt: 59% (those who scored 4 and
of total impact investments are attributable to debt instruments, above) and 44%, respectively.
according to a report by Bridgespan. The same study mentions that
the debt capital deployed is less diverse than equity when it comes This indicates that there is recognition of impact investors’ role as
to sectors; while 90% of debt funding is concentrated in financial debt providers, albeit low availability. On the flipside, support-
services, only 53% of equity funding is concentrated in this sector. providers interviewed stated that entrepreneurs with knowledge on
‘how debt works’ is not sufficient and most providers spend
The perception that 'impact-oriented funds can also be lenders significant effort in building awareness on when and why to raise
just as traditional banks' is gaining prominence among debt. With a lack of supply of patient and flexible debt, and limited
entrepreneurs. However, entrepreneurs still need proactive understanding of it from the entrepreneur's side, traditional lenders
education around debt instruments. such as banks will continue to be more common providers of debt.
Chart 4
Preference for source o f debt funding
Least favourable Most favourable
Development Finance
13% 10% 3% 15% 10% 49%
Institutions
HNIs 16% 20% 15% 10% 7% 32%
Incu bators/
16% 25% 5% 15% 10% 29%
Accelerators
Others 13% 30% 11% 10% 8% 28%
P2P Lending 13% 22% 11% 10% 21% 23%
Mainstream Venture Cap /  

16% 13% 9% 23% 16% 23%
Private Equity Funds HNIs
Family
16% 28% 11% 14% 8% 23%
O ffices
Angel
23% 25% 8% 16% 5% 23%
Investors
Government 16% 20% 18% 13% 13% 20%
Banks/NBFCs 20% 25% 10% 13% 16% 16%
Foundations 26% 23% 10% 15% 10% 16%
Family and Friends 30% 28% 13% 13% 5% 11%
Not sure 1 2 3 4 5 How to read chart: Scoring on scale of 1 to 5, with 1
Source: YSB Research and Analysis being least favourable and 5 being most favourable
31
Traditional debt remains Of the social businesses surveyed, almost 67% stated collateral-ask was a big barrier to
plagued with challenges accessing debt; 61% pointed to the tedious and demanding process to navigate. Debt
becomes an ever more challenging instrument to access via traditional lenders because
such as demand for
lenders are not flexible with offering loans solely based on entrepreneur security or an
collaterals and a tedious
equity pledge; traditional lenders require data on transactions, which is often not available
process of deployment. with early-stage or growth-stage social businesses. (Chart 5)
Chart 5
Barriers to accessing debt
Least challenging Most challenging
Regulatory constraints while securing

13% 19% 6% 13% 16% 32%
financing from international investors
Process to obtain
10% 3% 6% 19% 26% 35%
debt too long
High funding costs / unsatisfatory terms  

10% 6% 10% 16% 25% 32%
(higher interest, inflexible repayment structures)
Mismatch between loan size

15% 19% 13% 23% 10% 19%
required v/s loan size offered
Lack of collaterals 3% 6% 10% 13% 19% 48%
Limited track record/

13% 28% 10% 10% 19% 19%
performance/Credit history
Not sure 1 2 3 4 5 How to read chart: Scoring on scale of 1 to 5, with 1

Source: YSB Research and Analysis being least challenging and 5 being most challenging
The most prominent gap in raising debt is the inability of lenders The ecosystem needs incentivization for hybrid flexible
to understand demand-side social business models and instruments that are suited for early-stage social-business needs.
subsequently structure a relevant debt offering. The multiple Caspian and Villgro partnered to provide collateral-free debt.
barriers stated in Chart 5 above point towards one challenge that Announced in January 2021, the partnership aims to make
every social business founder faces: the inability to convince collateral-free debt accessible to social enterprises at industry-
lenders of their dual objective: financial gain and meaningful social standard interest rates and help them maintain a good credit
impact. The limited understanding of dual-purpose businesses is history. The ticket size of these loans is between INR 25 to 50 lakh
due to several reasons: the lack of evidence, the comparably longer (USD 30,000 to 60,000). These quick-to-disburse instruments
time taken for time-to-market and lack of knowledge at the lender's address a pertinent need, which is working capital requirements of
end on how social business models work. Investors we spoke to high-growth social businesses. The first social business to receive
stated that flexible and patient debt is very low in supply, and debt funding is Bharat Rohan, a Lucknow-based precision-
structures are still evolving to build up more risk appetite; the agriculture provider; it received INR 25 lakh/ USD 33,000.
barrier lies in the demand and supply mismatch.
The challenge with social entrepreneurship and social ventures is the perception that all such institutions are inherently
non-profit and are not-sustainable without grants and donations. This perception needs to be tackled first and
foremost, and only after that one can expect the same provisions and recognition for ’social business’. The fundamental
concept of social business and entrepreneurship among individuals needs to be built from as early-on as possible.
Social Business providing livelihoods under gig-economy, est. 2019
32
Debt ends up being a preferred instrument for early-stage social

businesses; moreover, convertible debt is considered ideal in the
early stages when organisations lack sufficient credit and
operational history. As per the social businesses survey response,
56% of organisations that responded positively to a current debt
requirement were early-stage social businesses (i.e. having a fiscal
revenue below INR 1.5 Crore/USD 200,000); a majority of these
early-stage organisations (81%) have a requirement of less than
INR 1.5 Crore/USD 200,000.
However, across all stages of social businesses, one out of

three (33%) social businesses state that their current debt
requirement is ‘Below INR 75 lakh/USD 100,000.’
It is also interesting to note the preference towards convertible

debt as 56% of social businesses that responded positively to a
current debt requirement stated that they preferred convertible
debt; this compares to 32% who expressed a preference for non-
convertible debt. This trend points to a founder’s preference for
an instrument that lets them retain control over decision-
making, which mostly is not the case in traditional equity
investments.
Chart 6
Amount of debt required by social businesses based on revenue
n=37 Graph reflects debts needs of the social busineses that were
looking to raise debt at the moment of the survey (37 out of 60)
46%
Above 
1M
500k  
to 1M
19% 250k  
Photo by Waste Ventures
to 500k
14%
11% 11% 100k  
to 250k
Up to 
100k
Up to  100k   200K   400K   Above 

100k to 200k to 400K to 1M 1M Debt required
[USD]
Revenue brackets [USD]
Source: YSB Research and Analysis
33
Understanding how social

businesses access equity financing
Commercial VC/PE firms mainstreamed equity structures over the challenging for social businesses as the specificities of their
last decade. Hence, the entrepreneurs perceived the familiarity to business models are misunderstood. Social businesses surveyed
navigate through associated barriers and access this type of stated that their time to market is more prolonged than traditional
finance marginally better; the entrepreneurs surveyed validated this businesses, representing a barrier to raising equity. A perception
sentiment. However, raising equity financing comes with its own set among social businesses is that social impact ends up being a
of challenges for social businesses. As stated at the beginning of trade-off to achieve toplines. Another common perception is that
the report, while impact investors come in at early stages, most the valuation methodologies of investors are often not transparent
post-seed financing comes through club deals with commercial or adapted to a social-impact focus, impacting the terms of capital
PE/VC funds. This highlights an inherent challenge, like the they receive. As stated by some social businesses in the survey, a
predominant private-equity approach of investing, which has an conjecture is that being previously funded by an impact investor is
unbalanced view on financial and social outcomes. The social often a cause for scepticism among commercial PE/VC funds.
businesses surveyed stated that social impact-oriented funds are Commercial PE/VC funds are sceptical of the firm's ability to
the preferred institutional sources for equity financing (80%), pursue high-growth, high-revenue expectations while having an
followed by commercial PE/VC funds (61%). Raising equity in a equal focus on social impact. As a result, offering equity for less
space dominated by commercial PE/VC funds is even more   favourable terms. (Chart 7)
Chart 7
Preference for source of equity funding
Least preferred Most preferred
Incubators /
Accelerators 13% 25% 5% 11% 5% 41%
HNIs
16% 16% 20% 11% 11% 27%
Family office
14% 23% 14% 11% 11% 27%
Government
20% 38% 11% 13% 5% 14%
Crowdlending or
18% 27% 13% 23% 9% 11%
crowd equity
Angel investors 5% 11% 9% 18% 13% 45%
Mainstream Venture Cap /

4% 11% 5% 20% 9% 52%
Private Equity funds
Family and friends 13% 34% 11% 16% 4% 23%
Foundations 14% 14% 7% 9% 13% 43%
Development Finance 20% 16% 5% 11% 13% 36%

Institutions (DFIs)
Social impact 5% 13% 2% 7% 73%

oriented funds
Not sure 1 2 3 4 5 How to read chart: Scoring on scale of 1 to 5, with 

Source: YSB Research and Analysis 1 being least preferred and 5 being most preferred
34
The most significant barrier, however, to raising equity remains investor alignment and fit. 77% of the
social businesses in our study stated that finding an investor that offers feasible terms for equity
financing and providing relevant growth support was a challenge. It is essential to highlight that while
social businesses may have determined what funding matches their requirements, they often don’t
know whom to approach. This inability to find the right capital fit from the right investor can lead to
wrong or premature business choices. (Chart 8).
Chart 8
Barriers to accessing equity
Least challenging Most challenging
Demanding reporting 9% 17% 23% 29% 14% 9%

requirements
Low valuation 6% 11% 14% 26% 14% 29%

from investors
Investor allignment 3% 3% 17% 43% 34%

and fit
Low access to investors 3% 6% 17% 17% 14% 43%

due to limited networks
Not sure 1 2 3 4 5 How to read chart: Scoring on scale f 1 to 5, with 1
Source: YSB Research and Analysis being least challenging and 5 being most challenging
Accelerator Perspective
In our experience of guiding social businesses, one stark observation is that founders
lack knowledge on how to leverage financial data for decision-making on fundraising.
As accelerators & incubators, it is critical to enable founders on understanding and
leveraging financial data to make the right decisions on the type of finance to raise
and on how to optimize different types of finance to grow their operations.
35
How social businesses access 

non-financial support
The Indian ecosystem lacks focused support providers for non-financial support; therefore, social businesses still defer to board
members or peers. Most survey respondents sought business advice from board members (72%), followed by peer entrepreneurs (54%).
This highlights a critical support gap. Further, almost half of the respondents noted that they would be ready to pay low-bono rates for non-
financial support, and nearly a third stated they would pay market rates for this kind of support.
Chart 9
Preference for seeking technical assistance/ advice
Board Members 7% 13% 5% 3% 15% 57%
Other Enterpreneurs 10% 11% 25% 16% 38%
Existing Investors 16% 21% 5% 10% 11% 36%
Accelerators 10% 15% 16% 20% 13% 26%
Accounting firms 8% 16% 12% 16% 32% 16%
External consultants 7% 13% 15% 28% 21% 16%
Ecosystem building   13% 16% 18% 31% 10% 11%

organisations (e.g. ANDE, GIIN, etc)
Not sure 1 2 3 4 5 How to read chart: Scoring on scale of 1 to 5, with
When it comes to incubation and acceleration, the most significant

benefit perceived by entrepreneurs is the amplification of
networks, i.e. gaining access to relevant support networks. Access
to networks and meaningful connections is of prime importance to Curriculum-design in
accelerators should be
Indian social businesses. 85% of entrepreneurs surveyed
dynamic rather than
considered 'access and connection to investors and funders' as the classroom-oriented
most critical area of non-financial support, suggesting that one of
the most significant perceived barriers is navigating one's way to
Research by ANDE’s GALI Data Initiative (data collected over 5
the right investor. This also indicates that many social businesses
years from 360 acceleration programmes, 20,000 entrepreneurs)
probably fall through the cracks if not provided acceleration
suggests that while the training curriculum for accelerators is
support or networking platforms at the right time. Another key
paramount, it is just as essential to consider how accelerators
finding of the survey is the emphasis entrepreneurs place on peer-
facilitate networking and mentorship among programme
education or the lack thereof; 74% of social businesses mentioned
participants. This is important not only in terms of designing
connections with like-minded entrepreneurs as crucial for non-
activities but also in selecting a cohort that can benefit from
financial support, enabling peer-learning and knowledge exchange.
transparent and collaborative peer interactions.’14
14 ANDE (2021). Does Acceleration Work? Five years of evidence from

the Global Accelerator Learning Initiative.
36
Chart 10
Preference for non-financial support

Access and connections to 3% 4% 8% 10% 75%

potential investors/funders
Gaining access to a group of 5% 2% 4% 15% 18% 56%

like-minded entrepreneurs
Business skills development   2% 13% 7% 15% 20% 44%

(e.g., finance and marketing skills)
Mentorship from business 2% 15% 5% 13% 25% 41%

experts (e.g. strategic advice)
Impact measurement & 5% 3% 10% 16% 33% 33%

management
Not sure 1 2 3 4 5 How to read chart: Scoring on scale of 1 to 5, with 

How social businesses are measuring and managing impact
Chart 11
Impact measurement and management (IMM) is a functional area
that is characterized by complexity as well as lack of accountability. IMM Challenges
Not all impact investors expect social outputs and outcomes to be
routinely monitored and evaluated, while more commercial PE/ VC
funds and other traditional lenders entering the space further dilute 34% 31%
the focus on IMM. The fraction of ‘social-impact oriented investors’ 47% 47%
that do tie up for social outcomes via stakeholder involvement (i.e.

Lean Data approach or in-field data collection) rather than top-down 25%
28%
estimations of the expected outcomes, continue to face 13% 13%
challenges. Besides the extra costs incurred, these lack an uniform 1 9%

25% 22% 16%
application of standards on ‘what to measure and how to measure’; 3%
lack alignment; lack available resources and have low awareness at 3% 6% 13% 16%
6% 6%
the leadership level of social business. 6% 6%
6% 6%
3%
Operational Financial Availability of Different

Social businesses surveyed stated the most significant barriers in burden set up burden to set guidance for reporting
an IMM system up and operate impact requirements
having an IMM framework was the availability of guidance and (e.g. time and an IMM system measurement from different
capability and monitoring investors
education around it (62%); Nearly half named the operational required)
burden to set up a system and the financial burden to set up and
Not sure 1 2 3 4 5 Scoring on scale of 1 to 5,  
with 1 being least challenging
operate such a system as most challenging. The findings indicate
Source: YSB Research and Analysis
that social businesses have an intent to set-up efficient IMM and 5 being most challenging
systems but are limited by guidance and dedicated resources that
can be allocated to IMM capability building.
Social businesses lack internal accountability and motivation to
A mandatory aspect to impact investing is impact
set impact goals from the get-go. The foundational education on measurement and management (IMM) - however IMM
how to create and measure social value is inherently lacking in processes lapse among most investors. A significant number of
most social businesses. Moreover, it is perceived as a reporting impact investors do not hold social businesses accountable
requirement and not a tool for value creation. Due to the perception, with respect to social impact targets; this is a disservice to
IMM is often not designed and set up as a coherent internal impact investing. Every impact investor should demand
practice but instead developed to cater to investor requirements. reporting on impact targets and hand-hold social businesses,
where required. Rigour in IMM practices is a sureshot pathway
for effective financial and social returns.
37
Effect of the pandemic on social businesses
As the global economy still reels from the antagonizing impact of Secondly, the preparedness i.e. having existing infrastructure for
the COVID-19 pandemic, the compounded impact on lives and timely delivery relief and essential goods and services to
businesses is still unknown. For social businesses, while some stakeholders such as customers or suppliers.
challenges were common across the board such as delayed cash
flows disrupting operations and payroll, there were challenges that In the survey conducted by YSB, 81% respondents stated that they
were more sector specific. For instance, many education sector had to change their business models to adapt to the new market
social businesses either had to pivot to 100% digital delivery and demands, whereas 55% reported that their revenues were
most are still struggling to achieve pre-COVID operation levels as negatively impacted during the pandemic.
schools continue to remain closed across India. research by Dun &

Bradstreet found that 82% of small businesses had a negative How Covid has impacted social businesses has often been a
impact on their business and 40% remain disrupted until February matter of the sector the business operates in, the makeup of its
2021. Alternatively, 82% small businesses digitized their daily supply chain and workforce as well as whether it already had
operations during this pandemic15. The pandemic drove recognition existing investors and thus a support system around them at the
of social businesses in two ways.First is having ears on the ground, time of the outbreak of the pandemic.
i.e. having a nuanced understanding of acute social challenges.
Understanding the implications of the pandemic on social businesses
The downside The upside
Our organic produce agri-business was extremely disrupted We adopted a dynamic approach to serve the community i.e.
because of the shutdown of export and even some domestic hybrid model telemedicine platform leveraged the scarce health
markets. Further, even procurement of raw material care resources to reach out to our beneficiaries. Our COVID-19
procurement (agricultural inputs) was on a halt for a delayed emergency response program included strengthening
period of time. operations through mass screening interventions, innovating
supply chain pathways with essential medicines and supplies at
– Social business operating in organic food supply
patient's doorsteps.
Manufacturing sectors were impacted mostly owing to labour – Social business delivering primary  
shortages. The national lockdown led to reverse migration of healthcare and diagnostics services
workforce and that directly impacted our operations. Despite
having cash flow runway we were forced to halt operations With schools closing, all our efforts and resources have been
owing to labour shortage. spent developing processes for online delivery of class
– Social business manufacturing sustainable textiles modules. Additionally, the onus of training teachers along with
parents has been largely on our shoulders. The pivot to online
We were due for a pre-series A funding round, however mid has forced us to think dynamically and make our business
due-diligence our funding round was cancelled. This has been future-proof.
a huge blow to our growth plan despite receiving grant funds – Social business delivering edtech products
for relief work for our smallholder farmers. & services at preschool level
– Social business providing market 

linkages to smallholder farmers
15 Dun & Bradstreet (2021, April). Impact of COVID-19 on Small
Businesses in India and the Way Ahead.
38
Section III
Key findings  
and market gaps  
in support services  
to social businesses
Common themes emerge when it comes to barriers to accessing financial and
non-financial support, both from a provider perspective as well as from a social-
business perspective. While access to finance generally represents a barrier for
many social businesses, more effort and initiative regarding education on the
specification of different asset classes and instruments appears to be a solution
to lower the first hurdle. This is where the role of non-financial support providers
becomes more prominent. They can bridge that gap, through acceleration models
or other mechanisms.
Enterprise Support Landscape Study | India | Section III Yunus Social Business
Image credit: Images of Empowerment

The gaps in the ecosystem need to be examined from both top-
down and bottom-up perspectives, i.e. from the demand-side -
the social businesses - and the supply side - the support
providers (financial and non-financial). We will consider the
bottom-up gaps deriving from social businesses first:
Awareness (and education) around statutory financial instruments and fundraising is not nuanced
enough and thus unable to address the subjectivity in the barriers that social businesses face.
Knowledge of types and specifications of financial instruments and related investor terms and criteria is
limited only to those social businesses that are either a part of accelerator programmes or have
previously raised funding rounds. The gap here is to 'refine the knowledge that social businesses have
access to regarding fundraising. Specifically, how to combine different kinds of capital, when to seek
what type based on the business's maturity and intended use of funds, and whom to approach and how.
Social businesses should seek out investors that will not only understand their business
model but also be able to guide them on whether they need to raise debt, equity, grant or
nothing at all. In a lot of growing social businesses, more capital may not always solve all
problems. An effective investor or support provider is the one that can guide the
entrepreneurs to ask pertinent questions around scale and impact: What is the axis of
change for their social business: people, capital, or lack of innovation.
Social businesses also demand more predictability from investors and lenders. Social entrepreneurs
surveyed stated that in addition to the challenge of ‘whom to approach for funding, the lack of clarity on
the process of fundraising or basic service-level agreements (SLAs) decides approaching an investor/
lender even more challenging. Many social businesses have a time-bound requirement for capital, and
the lack of clarity from investors/ lenders can hamper their growth track.
For social businesses trying to seek out investors to fundraise - the primary challenge is
the lack of publicly available research around what are the funding structures available
and who to approach for them. Further, investors own material, which is available on the
website, does not always give accurate information on their investment thesis, theory of
change, fund availability, appetite for risk, etc.
Rural agribusiness, est. 2017
40
Enterprise Support Landscape Study | India | Section III Yunus Social Business
Key findings and market gaps in

support services to social businesses
While the intent to pay for non-financial support exists, the Indian Impact capital is concentrated within accelerator and incubator
ecosystem lacks an accessible pool of players and awareness (i.e. circles; investors seldom look beyond these circles for their
a nascent ecosystem for low-bono or pro-bono non-financial pipelines. The penetration of impact capital remains focused on
support). While the hybrid category of support providers provide social businesses headquartered out of tier 1 and 2 cities (these
technical assistance to their investees or incubation/ acceleration social businesses may be servicing tier 3, tier 4 or rural areas). This
cohorts, the ecosystem lacks technical assistance providers (non- is mainly because acceleration and incubation are yet to be
financial) that provide affordable business advisory and mentoring. mainstream in tier 3 or tier 4 centres; technology and
Most entrepreneurs are primarily dependent on board members or entrepreneurship hubs, such as Bengaluru or Mumbai, by default,
other peers regarding support and advisory services. The provide the environment to scale and better opportunities for
ecosystem needs impetus to make this layer of support-providers fundraising, customers and users and more. Native entrepreneurs
accessible and more affordable to social businesses. that operate in smaller towns and cater to their population lack
avenues to gain knowledge and funding by a large margin
The gender equity gap prevails from the acceleration and The limited understanding of how social impact is delivered is one
incubation phase and is further exacerbated during the funding of the most undermined gaps in designing relevant support
phase. The growth curve for female founders versus male founders offerings. The impact-investing space is still nascent, with solid
of social businesses is significantly different. Many published growth driven by commercial PE/VC firms that don't have a
reports, global - as well as India - focused, have highlighted the strategic intent to fund social-impact models. Social-impact-
barriers women founders face. One of these is investor bias, which oriented investors often bear the burden of taking the higher risk
leads to an inability to raise equity funding and thus to scale at the early to prove a model. If proven for scale, commercial investors
right time. This challenge needs to be addressed systematically. may trickle in. Despite this ecosystem showing some sharp growth
Women co-founders also face certain biases in getting access to in the last five years, it is still very nascent in more collaborative
acceleration, either by design or by panel bias. Adequate offerings that offer high-impact, high-risk capital such as flexible-
acceleration and funding are two sides of the same coin; gender- patient debt, debt syndicates or other blended mechanisms. More
based strategies must be knit into the fabric of impact investors, work needs to happen around the investing continuum. The
incubators and accelerators alike. products available for social businesses today are still limited in
their risk appetite; further, commercial PE/VC investors models
dilute the impact-focus that social businesses have.
Investor Perspective
In the impact investment space, at the earliest stages of debt, banks and angels are the most crucial and probable
lenders to come in. If the social business is lucky, seed stage investors such as Upaya, Yunus Social Business or
Villgro will come in and raise rounds downwards of INR 1 Crore. However at the growth stage, albeit impact
investment funds come in with ticket sizes > INR 1 Crore, these funds are also looking at meaningful exits i.e. in
most cases impact investors will exit to commercial investors. This is the point where mission drift is highly
probable. Today, Indian ecosystem does not have large enough funds that make social businesses accountable to
continue pursuing social impact.
Across the board, there is a lack of accountability and consensus on accepted standards around impact measurement and management.
The non-profit space has evolved over years to create best practices in terms of impact measurement and management (IMM), or in this
space mostly referred to as Monitoring and Evaluation (M&E), around programmatic social interventions. The impact-investing space seems
to align on concepts of IMM, however fails to align on practices fow now. In simpler terms, investors do not have the same understanding of
what is expected from a social-business model in terms of financial and social metrics to provide a transparent view on whether the desired
change has occurred. The lack of consensus around social-impact goals also makes it difficult to kickstart collaborative funding models.
41
Enterprise Support Landscape Study | India | Recommendations for the ecosystem Yunus Social Business
Recommendations for the ecosystem
Ecosystem Gaps Recommendations
Low awareness (and Proactive development of investment readiness programmes (IRPs

education) around financial Making social business education affordable and acessible via pro-
instruments & fundraising bono or low-bono platforms and/or resources
Integrate gender lens and approaches in acceleration and IRP

Lack of inclusive lenses   Support local incubators that promote entrepreneur education in
for financial and non- vernacular medium
financial support delivery Leverage power of academic institutions in Tier 3 and 4 markets
to train and promote local entrepreneurship
Limited pro-bono and Establish Hybrid models through collaboration - make  

low-bono non-financial non-financial support more effectiv
support providers Invest in unlocking mentorship networks
Low emphasis on Build IMM focus from the get-go: Engage with social businesses
impact measurement on topic of IMM so that they move from conceptual
and management understanding to practical implementation
Recommendation
Bucket 1:
Build awareness and drive educational
programmes focused on social businesses
Proactive development and implementation of investment Make social-business education accessible and affordable via
readiness programmes (IRPs). A critical measure that can help pro-bono and low-bono platforms. Formal entrepreneurship
bridge the gap between supply and demand of impact capital is education today is either academic or available to those social
making education and training on financial instruments and businesses that have been selected for incubation/ acceleration
fundraising accessible to social businesses. IRPs serve the critical programmes. Foundational tools are scarce or not consolidated for
purpose of enabling the demand side to refine their business and entrepreneurs to pick-up and apply. Also in a world that is moving
financial models for sustainability. IRPs should have three critical towards virtual learning, it is critical that social-business education
components: adapts fast to this need. Support-providers, as well as, industry
bodies should work collectively to build a body of knowledge and
Exhaustive and practical curriculum around the role of different financial
practical tools for entrepreneurs.
instruments that serve not only the objective of scaling the business, but
also to stabilize operations, conduct research and development (R&D), Available resources: online tools such as DIY Tooklit and Board of
react to shocks and assure business continuity (in crisis situations such Innovation offer simple templates and frameworks that can be applied by
as the recent global pandemic) social entrepreneurs to develop their key business components such as
theory of change, stakeholder maps, go-to-market strategies etc
Dynamic mentoring and proactive feedback mechanisms driven  
ANDE provides a rich knowledge resource for entrepreneurs who seek
by experts, but equally enabling peer-to-peer problem solving
research for self capacity-building and strategy
Active involvement of investors at every stage i.e. from preparation   Yunus Social Business offers a social-business specialisation in partnership with
to pitching. Coursera, on strategy and finance for the lifecycle of a social business. This
online educational programme is a low-bono (only if social businesses wish to
get certified, they are free to access) business specialization that is accessible to
social entrepreneurs and students, globally.
42
Enterprise Support Landscape Study   Yunus Social Business
India | Recommendations for the ecosystem
Recommendation
Bucket 2:
Develop inclusive lens for
supporting social businesses
Integrate a gender lens in IRPs and acceleration programmes.
Adopt approaches during acceleration and IRPs that mitigate
gender bias. It is critical to address it at all levels:
Top-down, ensure that there is a gender balance in panels and
investment committees so that an unbiased view is taken on
selection, lending and investment decisions
Ensure access to women mentors and trainers who are able to
guide women entrepreneurs to solve for acute challenges
Build in peer learning components and mechanisms that help
women collectively problem-solve
Develop special lenses for accelerators and incubators such as
women-run enterprises, especially in low-income communities;
self-help-group, or cooperative enterprises; etc.
Support rural incubators and promote entrepreneur education in
vernacular and easy-to-access formats. A subset of social
businesses is the type 2 social businesses i.e. a profit-making
company owned by low-income individuals, either directly or
through a trust that is dedicated to a predefined social cause.
Profits go to alleviating poverty in the communities they operate in.
These categories of “self-made” entrepreneurs lack fundamental
business education. There is a massive need to build capacities of
such social businesses using local resources; resources that can
be developed by working with local non-profits, investors and other
non-financial support-providers to drive basic education and
capacity-building interventions.
Leverage the power of academic institutions to unlock local
entrepreneurship. Social businesses in tier 3 and 4 cities and
towns often lack the right channels to access mainstream impact
capital and support services. Collaborating with local academic
institutions can help unlock the pipeline of local entrepreneurs
outside the “accelerator/ incubation centres?” around tier 1 and tier
2 cities. Investors and lenders, specifically those who fall under
hybrid support-providers, can partner with academic institutions on
multiple fronts:
Partnership for incubation and acceleration - cost sharing
model, also offering investments/ lending to promising models
Mentorship access and one-on-one guidance to social
entrepreneurs (virtual sessions)
Training of trainer: mentor and train personnel who can deliver
further training to local social entrepreneurs.
43
Enterprise Support Landscape Study | India | Recommendations for the ecosystem Yunus Social Business
Recommendation Unlock pro-bono and/or low-bono

Bucket 3:
non-financial support services
Work via hybrid models to make social and financial returns more Curate and unlock mentorship networks. Mentorship is a highly-
effective. Not being able to access the right mentorship and valued and highly effective form of non-financial support that social
advisory at critical stages is a sure way for social businesses to fail businesses can receive. Most impact investors and lenders bring in
to scale. Impact investors and lenders need to make non-financial mentors on-demand. However, there is a need to make mentorship
offerings a non-negotiable/ strategic part of their overall offerings. more accessible and proactive. Investors and lenders should invest
Without compromising on their core competencies and the need to in building a mentorship pipeline that covers most horizontal and
increase headcount, investors and lenders need to leverage non- vertical areas/ sectors of focus, as per their respective investment
financial support providers more and more to build a holistic theses.
offering for their portfolio.
Women on Wings launched a virtual mentorship and business support platform in 2021. The platform is essentially a virtual
matchmaking space here businesses can seek mentors and advisors along with funders.
Recommendation Value creation through an effective

Bucket 4:
IMM approach and IMM support
Build an IMM focus and IMM support structures from the outset.   business can reap the impact insights, which the impact-investing
The perception around IMM among social businesses needs to space requires for a growth that is underpinned by constant
change from ‘a reporting mandate’ to ‘a value creation tool’. learning about impact models and the accountability thereof. Some
Investors and lenders need to work together with social businesses approaches that investors and lenders can apply to build a
from the get-go to formalize their impact goals, jointly define constructive IMM focus.
indicators that speak to their impact model, identify and map key
stakeholders, and finally to identify support needs with respect to Implement impact considerations along the investment lifecycle
their IMM practice. Without a realistic assessment of the IMM and proactively account and plan for involvement of the
maturity of a social business upon investment, expectations on entrepreneur. This helps to confirm assumptions regarding the
data and quality more often than not do not align with reality. The impact model and related practices, as well as, to build IMM
increased understanding and capabilities of portfolio companies capability. Work with social businesses to co-create with them
that results form such a focus on IMM translate into benefits to the their theory of change, and eventually chart out their relevant
social business itself, the investor as well as any follow-on and material metrics that bring clear impact insights
investors that can piggyback on the ground work in terms of IMM
that has been achieved. A collection of relevant and material Provide access to tools and systems for data recording, or
metrics adapted to the IMM capabilities of a portfolio social   alternatively help social businesses access special grants for IMM.
44
Enterprise Support Landscape Study | India | Bibliography Yunus Social Business
Bibliography General Bibliography

Bertelsmann Stiftung & Intellecap, Ganesh, U., Menon, V, Kaushal, A, & Kumar, K. (2019).
The following publications and The Indian Social Enterprise Landscape Study
resources have been integral in
GIIN. (2019). State of Blended finance.
developing this report.
Asha Impact. (2020). The India Impact Investing Story.
The British Council. (2019). The state of social enterprise in India.
The India Brand Equity Foundation, Services sector in India
World Bank. (2018). India Development Update
World Bank. (2016). India Labour Market Update
Economic Survey (2016); Labour Bureau Report (2014-15); Government of India (2011a);
Government of India (2011b); Government of India (2015a); Government of India (2015b).
Ministry of Human Resource Development. (2019). Education Quality Upgradation and

Inclusion Programme (EQUIP)
Kaur, P., & Dey, S. (2013). Andhra Pradesh Microfinance Crisis and its Repercussions on
Microfinancing Activities in India.
Ernst & Young India & Confederate of Indian Industries - CII (2020, November). FDI in
India: Now, Next and Beyond: Reforms and opportunities.
IIC (Impact Investors Council) Newsletter. (2021)
ANDE. (2021). Does Acceleration Work? Five years of evidence from the Global
Accelerator Learning Initiative.
Dun & Bradstreet. (2021, April). Impact of COVID-19 on Small Businesses in India and the
Way Ahead.
45
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Enterprise Support

About Yunus Social Business

About IKEA Foundation

About our partnership

We take the opportunity to thank the people and

Support Provider Organisations Individual Interviewed

Upaya Social Ventures

ANDE Sucharitha Kamath

Social Business survey respondents

Manasi Parvatikar, Project Manager India

Guy Septhon, Global Communications Manager;

Landscape Study: India

Section I The social business support landscape in India

Section II Understanding opportunities and challenges

for social businesses – an entrepreneur view

Section III Key findings and market gaps in support

services to social businesses

Recommendations to the ecosystem

refer to US dollars and all data is valid as of December 2020.

economic wealth. Correspondingly, the impact-investing ecosystem has evolved over

snapshot of the current social business landscape in India.

Investors believe that social innovation will be

centered on technology to deliver essential products

While overall social YSB surveyed over 60 social businesses.

businesses have a higher Among these social businesses of the

ratio of women in fraction that had raised external funding,

24% constituted female-founded

businesses and 76% were male-founded.

Raising capital is an age-old challenge for social businesses. However, the

more glaring factor is the lack of understanding regarding the question:

”which type of investor is the right one?” 85% of entrepreneurs

When it comes to incubation and surveyed described

acceleration, the biggest access to networks and

perceived benefit by entrepreneurs meaningful connections

an educational gap around fundraising.

to diverse actors in the ecosystem, emphasising any persisting

Challenges experienced in taking support

perspective of the available financia

and non-financial support to Appreciation of innovative financing

context of the existing body of literature.

Understand the potential for patient

As encompassing as we sought to be in the variety of approaches and breadth of data collection

bias in entrepreneurs' responses to the survey and in the interviewees' responses.

Image by Nandhu Kumar

“A social business is a company with a social mission at its core. Set up to

Early stage: Growth stage: Mature stage:

Financial Support Ecosystem

Debt: refundable resource most commonly allocated to enterprises with

in instalments (at agreed time intervals), with the addition of a previously

YSB defines non-financial support across five dimensions, based

financial model and fundraising, new market expansion, stakeholder

professionals such as legal, fiscal and sector experts.

saying that it was the services sector through jobs in sub-sectors

as per 2020 estimates from the Ministry of Statistics and

India socio-economic indicators snapshot

population rate living in slums day (PPP)

SDG 3 4. SDG 6 4. SDG 8 5 .

Source: Wor l d B ank; Th H e erit a ge Fou n a

2 The India Brand Equity Foundation (IBEF), Services sector in India

allied activities to GDP declined (share in gross value added

Guy Septhon, Global Communications Manager;  

Early stage:  Growth stage:   Mature stage:  