Social Impact created by Investing in small business

Group Impact Report 2020

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When conflict destroys livelihoods…
…I am an entrepreneur. I conquer adversity.

I am Thanusha.

When poor maternal care and infant mortality endanger motherhood…
…I nurture. I am life-saving natal care.

I am Muzalema.

When the underserved need a champion…
…I rise to the challenge. I provide capital.

I am Chaitali.

$1.1b

Group Assets Under Management

100m+

Underserved customers supported through our Group investments and engagements

55m+

Underserved women customers supported through our Group investments and engagements

6500+

Employees across the Group; 20% Women in management

The past two decades at Aavishkaar Group have been characterized by grit, innovation and learning. Our entrepreneurs, investors, team, and collaborators have shown an unparalleled passion towards building an inclusive and sustainable future. As we embark upon our third decade of impactful business, we’re excited to herald in a new future; one where impact is the new mainstream.

Our next decade of work includes expanding to several South East Asian and sub-Saharan African countries. Building upon the foundation of our past, we will work on scalable and synergistic business models, products and service across multiple sectors, full spectrum financial assistance, digital microfinance, phygital MSME finance, digital insurance, advisory and analytics, and impact investing with enhanced focus on environmental & social governance and management.

I started out trying to impact the life of one entrepreneur. Today, as a Group we have positively impacted over 100 Million lives. We are building a unicorn which will change a billion lives.

Vineet Rai, Founder and Chairman, Aavishkaar Group

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Our Impact Overview 02

Our Impact Measurement and Management Thesis 03

Evolution of Our Impact Thinking

2.3m

Microfinance clients served directly; 98% Women MFI clients

3810

MSME clients served directly, 28% women-led MSMEs

59

Enterprises Disbursed Equity Capital directly; 29% Women-led Enterprises; 80% Enterprises received Institutional Capital for the First-time

3800+

Enterprises and MSMEs supported across sectors

1.5m+MT

CO2 emission reduced

28m

People provided with essential services including healthcare, sanitation, and education

12.5 Mn People Provided with Microfinance (98% women) by Group companies and via Investments

6.2 Mn farmers supported with livelihoods, products, and services (27% women) via engagements and investments

2.1 Mn People provided with affordable healthcare (56% women) via investments

3.15 Mn students provided with affordable, quality education (49% girls) via investments

1,468 Women-led MSMEs supported directly with finance and capacity building services

15 Mn people provided with sanitation facilities via Group companies and investments;

6.9 Mn people provided with potable drinking water via investments

1.1 Mn people provided with clean cookstoves via Group investments

600k+ jobs and livelihoods created (300k+ women) via investments and clients

Industry, Innovation, and Infrastructure

1534 Early-stage enterprises incubated and supported

52k+ MSME Provided with Financial Services, Products and Services

1.5 Mn MT of C02 Emissions Reduced

USD 2.1 Bn Disbursed in Microfinance, MSME Finance, and Equity Investments to enterprises and individuals in developing countries by the Group

20,000+ People Provided with Financial Services to Build Houses via Group investments

85K metric tons of waste recycled via engagements and investments

267 artisanal fishermen provided with fair-trade market access

14 initiatives and national and global industry bodies founded and participated in

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Aavishkaar Group’s vision is to Bridge the Opportunity Gap for the Emerging 3 Billion.

We have been realizing this vision through each of the Aavishkaar Group businesses - Aavishkaar Capital, Arohan, Ashv, and Intellecap – that individually support various parts of the journeys of low and middle-income entrepreneurs. Together, we have been able to create a platform that leads to exponential impact across entire ecosystems. We strongly believe and promote ‘Impact’ in the DNA of all our group businesses. By leveraging capital, knowledge and networks, we provide a strong differentiated capability as an Impact platform, with each business rooted in strong fundamental and common principles of access, inclusion and sustainability.

All businesses make an Impact. But not all investments are Impact Investments

We believe that most businesses make an impact. However, it is difficult to make certain kinds of impact and commercial capital is shy to deal with such challenges that they fully don’t comprehend; therefore, impact investing has a pioneering role associated with it. We also believe that while all companies make impact but not all investments are impact investments. And we strive to understand the distinction between the two and this remains a challenge in our journey.

Our IMM Framework looks at impact in all its dimensions

Our interpretation of Impact is highly contextual and driven by our deep understanding of the local context. Our framework considers the obvious and direct impact that is visible and can be measured quantitatively. In addition, we look at the depth of impact that go beyond the obvious impact due to its ability to generate significant leverage on the sector or the market.

Our Core Impact Areas

Bridge the Opportunity Gap for the Emerging 3 Billion

Providing both B2B and B2C products and services – either directly or through our equity investments and the businesses we provide growth support to – for the emerging three billion; people who fall within the low income and lower middle-income segments of the population in Global South markets.

Contextually Appropriate Solutions

Supporting only contextually appropriate solutions that meet entrepreneurs where they are, and by entrepreneurs that understand, intimately, the needs of their clients to address the gap of geographic accessibility (rural or remote areas), demographic inclusion (gender, disability or other vulnerabilities) or affordability of an essential service.

Improving ESG Practices

Improving Social and Environmental Governance (ESG) practices both within the Group companies, as well as within the enterprises we support.

Creating an Impact Ecosystem

Building and nurturing supportive ecosystems around impact investing in Asia and Africa.

The Aavishkaar Group's first Impact Investment Fund was conceptualized right at the turn of the 21st century. The creation of the Fund was based on our understanding that businesses can drive significant impact in the lives of the economically excluded. Creating a supportive ecosystem and investing in entrepreneurs willing to combine profit with purpose, would impact lives positively. This is our core impact thesis.

PHASE I (2002-2009) The Beginnings: Improving Access and Opportunities for Rural India

Our initial hypothesis emphasised on specific demographics for impact, such as farmers and artisans who were economically active yet unable to participate in the progress. We gravitated towards the idea of creating companies rather than investing in established ones, thereby becoming the first investor in almost all our companies. We focused on sectors like Agriculture, Dairy, Healthcare, Education, Rural Distribution, Artisanal work and Microfinance.

Phase II (2010-2019) Evolution of Aavishkaar Impact Thesis - Impact and Scale and the Inter-Relationship

By 2010, it became evident to us that the idea of creating impact through investment was more complex than we’d imagined. Our approach, which by now was globally recognised as ‘Impact Investing’, pushed us to be an interim capital provider. So, we started looking at scale as a critical metric to attract other investors.

PHASE III: 2019 onwards

Our next phase of impact evolution was linked to our questioning of the attribution and ownership of impact. Is the impact owned by us or the entrepreneur? How do we make a distinction? Whose impact are we reporting? The decision to not interpret enterprise impact as our impact helped us to largely resolve the discussion about impact and its ownership. Here, we decided to look at ‘Our Impact’ from the perspective of the contribution by the fund investment team in identifying entrepreneurs, ideas, geographies, demographics and anything that was credit to the vision and hard work of the investment team.

Our role is to support and not to lead.

This distinction has ever since been a critical and unique attribute of Aavishkaar’s Impact Reporting principle.

The evolution of India's demographic profile has seen a reduction in absolute poverty, and the emergence of a resource rich and highly aspirational middle class. Our impact lens has now evolved to take into account the ambitious investments that are looking at the demand of low and middle income segment population in domains like pre-school education, access to finance, better health and even safety nets like insurance, pensions etc.

Thus, after engaging in a robust sector wide debate at the India Impact Investor Council, we expanded the demographic definition in this phase of our impact to include 87% of India (Families earning more than 10 USD per day).

Our Impact Overview

2.3m

Microfinance clients served directly; 98% Women MFI clients

3810

MSME clients served directly, 28% women-led MSMEs

59

Enterprises Disbursed Equity Capital directly; 29% Women-led Enterprises; 80% Enterprises received Institutional Capital for the First-time