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Gates' Investment In India-centric Impact Fund Is A Boost for Impact Investing

This article is more than 9 years old.

Bill Gates’ first investment into an impact fund, India’s Unitus Seed, is expected to boost the early-stage impact funding sector and drive more philanthropists to fund scalable and profitable social enterprises to serve the world's poorer millions.

Microsoft’s co-founder and co-chair of the Bill and Melinda Gates Foundation has already funneled a billion dollars in grants into projects that fight disease and poverty in India. But in a first, he joined several Indian-origin technology entrepreneurs such as Vinod Khosla and Romesh Wadhwani to back Unitus Seed. Gates’ pledge is in his personal capacity. The amount is unspecified but Unitus Seed, which supports start-ups in areas like healthcare, education, energy and farming, said it was substantial and it expects Gates to channel more funds.

Unitus Fund quoted Gates as saying, “Impact investing is a powerful model with the potential to build markets and drive change for the people who need it most.” Founded in 2012, the $25 million Unitus Seed Fund is part of the Unitus Group, a financial services group which works in India and other emerging markets.

Impact investing has its share of skeptics, including even high-profile philanthropists like Warren Buffett, who question a for-profit model in social enterprises for the poor. But Gates’ backing, though small, validates the model and should get more wealthy individuals to embrace impact investing. Impact investing is the only type of investment that has a double bottom line – a financial return as well as social impact, say its supporters.

“It is an idea whose time has come, Bill Gates’ investment is a vote of confidence for impact investing,” said Ravi Venkatesan, venture partner at Unitus Seed. “In a country like ours with huge social needs, it is very important to look beyond the government, corporate sector funding or non profits to fix things.”

The idea of backing entrepreneurs who are working on for-profit solutions for India’s education, healthcare, water and farming challenges is still new in India. The funds available for early stage and growth stage start-ups are particularly deficient and there are just a handful of early stage impact investment funds. Unitus Seed has 14 investments in India, mainly in early stage ventures where it is toughest to secure risk capital.