Impact investing is one of the prominent career options in the social sector. But, firstly, what is impact investing. According to Global Impact Investing Network, Impact investments are investments made into companies, organisations, and funds with the intention to generate social and environmental impact alongside a financial return. Thus, impact investing challenges one of the biggest misconceptions about the social sector that argues that the sector only runs on charity or philanthropic donations.
Many firms in India are trying to support early-stage social enterprises that are focused on creating a better world for people from low-income communities. They fund social organisations that are working to provide solutions in healthcare, K-12 education, and agriculture amongst others. One such company is Menterra Venture Advisers, a leading social impact fund in India.
Sudhanshu, an impact investor at MVA, says that his workday focuses on talking or meeting entrepreneurs and creating a pipeline of enterprises to be funded. Researching on the company is the next task on his list – this includes talking to customers, beneficiaries, references of founders, interacting with experts or analysing market potential and competition. Lastly, supporting some of the portfolio companies alongside working on investor relations and fund accounting. Sudhanshu’s workday highlights some of the necessary skills required for this job – knowledge of finance, risk analysis, a basic understanding of legal terms and a fondness for networking.
Many argue that educational qualifications don’t matter in the social sector. But as the hiring in the industry has increased, there has been visibility of degrees and courses focusing on the social development sphere. Sudhanshu, for example, is an MBA Graduate but took a few elective courses such as the Entrepreneurial Finance, Social Finance and Private Equity. However, there are a few courses designed for social entrepreneurs, not-for-profit management and so on.
The market for impact investing is expanding.
Prediction says the global market for impact investments will grow by $300 billion or more by 2020. In fact, according to a McKinsey article, India alone has attracted over 50 active investors that have collectively invested over $5.2 billion in the last ten years, and almost $1.1 billion in 2016.
Impact investing is an excellent role for those who are passionate about problem-solving, enjoy data analysis and meeting new people. If you are someone who hates networking, being an impact investor could be a challenge for you.
It is a great time to be an impact investor, especially in India. There are enormous social problems waiting to be solved, and a considerable market for it. Global investors view India as one of the lucrative locations with a growing social sector The demand for impact investments in India has the potential to grow until 2025, and the growth has already started.