Driven by stalwarts like ‘Father of Social Investment’ Sir Ronald Cohen and UNDP’s Karan Chaudri, the knowledge session on social impact investment and sustainability goals at the TiE Global Summit saw an enigmatic discussion around Startups and their role in the society.
When startups are changing the world, it is incorrect to limit their roles to just businesses. Entrepreneurs are the primary force changing the world today and a knowledge session on the second day of the TiE Global Summit 2020 was dedicated to guiding young entrepreneurs on how to take up bigger roles in their lives, ones that span outside their workplaces.
The TiE session on “Sustainable Development Goals and Social Impact Investment” was moderated by Sanjay Kadaveru, Founder and President of Action for India. The keynote speaker was Sir Ronnie Cohen, Chair, The Global Steering Group for Impact Investment and Co-founder, director of Social Finance, UK. He is known as “the father of British venture capital” and “the father of social investment”.
Sir Ronnie Cohen identifies this period in history as a revolution in business models and the beginning of the next frontier of capitalism. This change was brought about by consumers and people who refused to shop and work with companies who were causing environmental and social damage. He took up the example of Procter & Gamble, where the investors and shareholders rebelled against the company in the light of the environmental damage the company was causing. Cohen believes that there is tremendous growth potential in SDG startups and impact investment. He said, “Companies have to pay for the damage they have cost. Industries and businesses shifting our economies have to create solutions”. He advises future entrepreneurs to collaborate and work with people as solutions don’t pop up in vacuums. There will be a shift to markets which have been underserved till now.
Watch: TiE Global Summit 2020 – Day 2
Sustainability and Startups
The session moved to a panel discussion over the way forward for SDG Startups. SDG startups are ventures which work to achieve the 17 Sustainable Development Goals set by the UN. Karan Chaudri, who works with the United Nations Development Program (UNDP) on Social Impact Investments, commented, “There needs to be increased expenditure towards SDGs in order to utilise their full potential. India needs to decrease the funding gap and allocate a good percentage of its GDP to SDG Startups to bring in real change.”
The Panelists then deliberated on another key point in making the social entrepreneurship system work – humility and collaboration. This point was brought forward by Audrey Selian, Director, Artha Impacts. She advised on the need of ‘systematically finding leverage to collaborate against any challenges’ and making use of local think tanks to find the extent of the problems that are being addressed.
As any business, SDG startups require funding. So, what drives the investors? Vikram Gupta, Founder & Managing Partner at IvyCap Ventures Advisors Private Limited said, “If one compares the revenue earned by companies to the resources destroyed by it, the results are astounding. Another reason which draws investors is the potential of specific actions in tackling huge problems. It has also been observed that investment from an SDG lens gives better results.”
Impact versus Revenue
Startup founders often get stuck in a dilemma of whether focusing on impact might cost in revenue. Sir Cohen says both impact and revenue are correlated, “If entrepreneurs deliver impact today, it will help them turn customers and investors tomorrow. There are several investors out there who are ready for low financial returns if high impact is delivered.” He suggests that a wave of almost philanthropic investment has started.
The session also provided insights into how impact driven business helps a startup. Mr. Chaudri says such startups invite a more diverse set of investors. He said, “Once companies start measuring their impact levels, it becomes easier to work with them.”
SDG startups have a prosperous future in India according to Ms. Selian. She said, “The good will in the Indian society prefers impact at the cost of muted returns. The sector is a ripe playing field in India and SDG startups have the potential to be as profitable as private equity.”
Choosing the right sustainability Goal
As the panel nears its conclusion, a question was raised as to, what goals should a startup choose. Mr. Gupta gave a brief yet comprehensive answer, “Gender equality, economic growth, industry innovation and infrastructure, and reduced inequalities are essentially part of any SDG startup no matter the sector. Some sector specific goals that are scalable and invite investments are zero hunger, good health and well-being, and affordable, clean energy.”
Finally, the panellists shed light on how governments can help SDG startups. The panel agreed on government support in form of mandating figures published by SDG startups, devising a framework to study the impact and harmonisation and simplification of legal aspects.
Aiming to inspire entrepreneurs to look at their ideas and ventures as much more than just a businesses, the panel on Sustainable Development Goals for Startups at the TiE Global Summit put out some interesting insights and encouragement for entrepreneurs in the field as well as those looking to venture into SDG.