impact partners
A venture capital firm that puts street kids on the Magic Bus to betterment has significant success not only in Mumbai, but in New York City
By Shailaja Neelakantan
(This article appeared in the January/February 2003 issue of Span Magazine, published by the Public Affairs Section of the American Center on behalf of the American Embassy, New Delhi).
In March 1999, U.K. national Matthew Spacie had a life-changing experience. Spacie, then chief operating officer at Cox & King, Indias largest travel company, took some children from Mumbais slums and pavements for a weekend at a local hill station.
The children, most of whom had never been anywhere beyond their immediate environs, were overwhelmed with joy and that was a revelation for Spacie. He had already been volunteering with street children and coaching them in rugby, and so had become familiar with their issues and problems, but he only understood the magnitude of their poverty-stricken surroundings on that trip. "For those children it was a journey away from their current existence. All it took was a bus ride away. It was a life changing moment for me," he says.
Spacie started to organize monthly trips in association with Mumbai-based educational agency Akanksha, but wanted to become more involved. "It wasnt convenient because of job pressures. It made me realize that this was a common restriction that potential volunteers from corporations faced."
In February 2001, a public service venture firm, Impact Partners, then recently started by New York-based venture capitalist Ramanan Raghavendran, persuaded Spacie to give up his for-profit job and concentrate exclusively on setting up Magic Bus. "A decision I will never look back on." Magic Bus, one of Impact Partners first social investments, now helps more than 3,500 marginalized children in Mumbai. It has collaborations with 15 other NGOs and over 250 volunteers.
Impact Partners found Spacie, rather than the other way around. "They were looking for innovative and sustainable models to grow on and I think our particular niche inspired them. They have been fully instrumental in the early stages of development in many ways," says 32-year-old Spacie.
Impact Partners encouragement has paid rich dividends. Maru, a two-year-old abandoned girl spoke her first words, an expression of joy, on a Magic Bus camp in the middle of a swimming session at the paddle pool. "She surprised not only the volunteers but also all the other girls with her enthusiastic outbursts to all the fun she was having on Marve beach! She made us all realize the value of just letting her play and grow up with a smile," says Spacie.
This is the kind of success story that Impact Partners cherishes. Founder Ramanan Raghavendran, 33, prefers to call what he does "societal venture capital." Raghavendran has been a venture capitalist for 11 years and is currently Chairman and Chief Executive of Connect Capital (India). His unique perspective on aid and social work has informed Impact Partners activities from its inception.
Sitting in on a board meeting of Impact Partners is like watching a corporate board meeting in progress. Performance metrics, investment return ratios and accountability are just some of the issues being discussed. This could be a board meeting of Infosys, except, Impact Partners isnt a corporation. It is a public service venture firm, the first of its kind in India, that manages investors and investments in the social work field in a "for-profit" manner, with no expectations of financial returns.
Just like in any corporation, Impact Partners looks for transparency, innovation, effectiveness, and scalability. It holds one-on-one meetings, round-table discussions, conducts regular site visits, and, as necessary, participates as a board member of organizations involved in Impact projects.
When Raghavendran decided to start a venture capital firm in India in early 2001, he decided to found a public service venture capital firm as well. "When I created Connect Capital in India I knew I would be spending a lot of time here and since I had always wanted to focus on the Indian community, the time seemed just right. I have a hard core for-profit background and I know what it takes to scale an organization," he says. "At the same time, I met some people who had quit high profile jobs at global investment banks to immerse themselves in non-governmental voluntary work. They had built a wealth of experience in that field so I decided it would be a great combination of my skills and theirs."
The main financial backer of Impact Partners is Connect Capital a venture capital firm that is New York-based Insight Partners Asia investment vehicle. There are three other investors who are non-resident Indian entrepreneurs based in the U.S. "They wouldnt want their names disclosed but what I can say is that Impact started with a pool of over a million dollars and that was two years ago," says Raghavendran.
Having grown up in India, Raghavendran is acutely aware of how hard it is for the least privileged of society to eke out a living. "For the most part, Impact Partners is focused on children women, literacy and hunger. We are not involved in anything to do with any of the middle classes. We want to provide the infrastructure for the implementation of ideas that will lead to positive and systemic social change in India," he says.
"We believe we must earn the right to advise or invest in social entrepreneurs. Whether that means strengthening their strategic planning, accessing talented individuals, building sector networks, or assisting in fundraising beyond our own commitment, we know it takes more than money to build successful, groundbreaking organizations," he says.
Raghavendrans first serious exposure to philanthropy came in 1992 when he worked at U.S. venture capital firm General Atlantic Partners, which set up an NGO called Echoing Green, a pioneering effort in venture philanthropy. "It was very successful, but they were very focused on individual founders. They gave the founder a stipend and said Dont worry about your bills, do what you have to do. At Impact I have taken that several steps further. From my venture capital work Ive come to the conclusion that organization building is important. To that end, we actually go on the boards of organizations we fund, just like we do when fund a business entrepreneur. That is why Impact partners doesnt have huge volumes, we just fund a few organizations but our commitment is total," says Raghavendran.
Impact Partners invests capital, calls down capital and reports back to investors on performance. "I cant report back to my investors unless I drive my NGOS in a for-profit, metric manner. We have driven NGOs on concrete metrics on performance; things like, the number of children served, the cost-per-child and other NGO-specific metrics that we have derived. We work with the NGO to help them define their own metrics. So they dont produce numbers merely to satisfy investors," he says.
Impact Partners also believes in building a visible brand around Impact and select portfolio organizations so they can mobilize creative and young people to consider social entrepreneurship as an exciting and serious career option.
Another unusual approach is Impact Partners proactive "outbound" approach to identify capable and distinguished social entrepreneurs. For example, an organization looking for financial help could well approach Impact Partners, but what is more likely is that Impact Partners will pick out the best NGOs in their space. "We pick the sectors we want to operate in, do a detailed review of NGOs working in that sector and narrow down who suits our needs best. This ensures we get the best NGO in that space and I dont mean the largest or most visible one. I mean (we get) one that has all the ingredients for being scalable and effective."
Mumbai-based Akanksha was one of those investments that had the right ingredients.
The organization, which provides under-privileged children with a balanced education that focuses on both intellectual and emotional development, was founded eleven years ago by Shaheen Mistri, then a college student. "We saw around us thousands of slum children who needed and wanted to be educated. We were part of the thousands of college students who had the energy, enthusiasm and time to teach these children. And we noticed the pockets of available spaces located in schools that seemed ideal teaching environments. The simple idea then, was to bring together the three kids, student volunteers and spaces. And the first Akanksha center was born."
Today Akanksha reaches out to as many as 1500 children in 27 centers in Mumbai and Pune. While it built a great product, Akanksha was having problems retaining teachers and good volunteers. Impact Partners for-profit vision pushed Akanksha into building itself up as a brand and improving its metrics to determine how to retain teachers, and volunteers and to change its operating model, if necessary. Impact Partners urged Akanksha to consult with McKinsey to develop Akanksha-specific metrics like teacher performance and drop-out rates.
"We plan to further refine our metrics, increase the number and quality of our teacher training programs, redesigning our curriculum with more focus on employability, and focusing on moving each center closer to our vision of the Akanksha model center," says Mistri.
Raghavendran says Impact Partners will always be on the lookout for organizations focused on children. "The ripple effect of changing one childs life is huge. Catch a child in his or her teens, or younger, change the life of that child, and that child could change a thousand lives," he says.
Suruchi Foods, with a Mumbai based kitchen run by street adolescents, is another Impact Partners project that is children-focused. Impact Partners is developing this homegrown organization into a profitable business that caters quality food to leading corporate clients. The street adolescents are trained by experts in the catering business and in hotel management and they graduate from Suruchi Catering College as qualified professionals with entrepreneurial skills. "We ensure that they find good jobs that allow them to grow professionally as well as individually," says Raghavendran.
Impact Partners is also looking to assist the South Asian community in other countries. Its first overseas investment is New York-based South Asian Youth Action, or Saya, founded in 1996, that provides support services to newly immigrated South Asian children from the ages of 11 to 19, to ease their entrance into the American school system and American society. "They (Impact Partners) contacted us, they just cold-called us, and said wed like to help," says Annetta Seecharan, Saya executive director. The timing couldnt have been more opportune.
"When I joined SAYA in September 2001, I didnt know that just one week after starting my job, the community with which I work would be facing one of its biggest collective crises. The events of September 11, 2001 had a devastating impact on the lives of South Asian youth and their families. Following the initial sock many South Asian youths and their families, found themselves subjected to bias attacks, employment and housing discrimination and racial profiling," says Seecharan. Saya had to strengthen and expand its programs. "But the need for our services is larger than what we are able to respond to. Our ability to reach every needy South Asian youth in New York city, will depend on organizational development and a strong individual donor base in South Asian American community, both of which Ramanan and Impact Partners have begun to help us strategize."
Impact Partners provides funds, experience and even the manpower to many of the organizations it invests in. It is on the board of several of its investments and has played a role in recruiting and promoting people who can take a lot of administrative burden off the founders of these organizations. "Most agencies stop their involvement once the check is written. We dont. We get involved at the board level of these investments and thats why we dont make 25 investments. We just make a few," says Raghavendran.
And like any other venture capital project, Impact Partners has an exit strategy too, but without the financial payoff of a venture capital investment in business. "We dont want our investments to only depend on us for financial assistance. We are a majority of the NGOs budget for the first couple of years, after that our funding commitment becomes a matching commitment."
Like in business, Raghavendran believes this strategy strengthens the organizations it invests in.
By Shailaja Neelakantan
(This article appeared in the January/February 2003 issue of Span Magazine, published by the Public Affairs Section of the American Center on behalf of the American Embassy, New Delhi).
In March 1999, U.K. national Matthew Spacie had a life-changing experience. Spacie, then chief operating officer at Cox & King, Indias largest travel company, took some children from Mumbais slums and pavements for a weekend at a local hill station.
The children, most of whom had never been anywhere beyond their immediate environs, were overwhelmed with joy and that was a revelation for Spacie. He had already been volunteering with street children and coaching them in rugby, and so had become familiar with their issues and problems, but he only understood the magnitude of their poverty-stricken surroundings on that trip. "For those children it was a journey away from their current existence. All it took was a bus ride away. It was a life changing moment for me," he says.
Spacie started to organize monthly trips in association with Mumbai-based educational agency Akanksha, but wanted to become more involved. "It wasnt convenient because of job pressures. It made me realize that this was a common restriction that potential volunteers from corporations faced."
In February 2001, a public service venture firm, Impact Partners, then recently started by New York-based venture capitalist Ramanan Raghavendran, persuaded Spacie to give up his for-profit job and concentrate exclusively on setting up Magic Bus. "A decision I will never look back on." Magic Bus, one of Impact Partners first social investments, now helps more than 3,500 marginalized children in Mumbai. It has collaborations with 15 other NGOs and over 250 volunteers.
Impact Partners found Spacie, rather than the other way around. "They were looking for innovative and sustainable models to grow on and I think our particular niche inspired them. They have been fully instrumental in the early stages of development in many ways," says 32-year-old Spacie.
Impact Partners encouragement has paid rich dividends. Maru, a two-year-old abandoned girl spoke her first words, an expression of joy, on a Magic Bus camp in the middle of a swimming session at the paddle pool. "She surprised not only the volunteers but also all the other girls with her enthusiastic outbursts to all the fun she was having on Marve beach! She made us all realize the value of just letting her play and grow up with a smile," says Spacie.
This is the kind of success story that Impact Partners cherishes. Founder Ramanan Raghavendran, 33, prefers to call what he does "societal venture capital." Raghavendran has been a venture capitalist for 11 years and is currently Chairman and Chief Executive of Connect Capital (India). His unique perspective on aid and social work has informed Impact Partners activities from its inception.
Sitting in on a board meeting of Impact Partners is like watching a corporate board meeting in progress. Performance metrics, investment return ratios and accountability are just some of the issues being discussed. This could be a board meeting of Infosys, except, Impact Partners isnt a corporation. It is a public service venture firm, the first of its kind in India, that manages investors and investments in the social work field in a "for-profit" manner, with no expectations of financial returns.
Just like in any corporation, Impact Partners looks for transparency, innovation, effectiveness, and scalability. It holds one-on-one meetings, round-table discussions, conducts regular site visits, and, as necessary, participates as a board member of organizations involved in Impact projects.
When Raghavendran decided to start a venture capital firm in India in early 2001, he decided to found a public service venture capital firm as well. "When I created Connect Capital in India I knew I would be spending a lot of time here and since I had always wanted to focus on the Indian community, the time seemed just right. I have a hard core for-profit background and I know what it takes to scale an organization," he says. "At the same time, I met some people who had quit high profile jobs at global investment banks to immerse themselves in non-governmental voluntary work. They had built a wealth of experience in that field so I decided it would be a great combination of my skills and theirs."
The main financial backer of Impact Partners is Connect Capital a venture capital firm that is New York-based Insight Partners Asia investment vehicle. There are three other investors who are non-resident Indian entrepreneurs based in the U.S. "They wouldnt want their names disclosed but what I can say is that Impact started with a pool of over a million dollars and that was two years ago," says Raghavendran.
Having grown up in India, Raghavendran is acutely aware of how hard it is for the least privileged of society to eke out a living. "For the most part, Impact Partners is focused on children women, literacy and hunger. We are not involved in anything to do with any of the middle classes. We want to provide the infrastructure for the implementation of ideas that will lead to positive and systemic social change in India," he says.
"We believe we must earn the right to advise or invest in social entrepreneurs. Whether that means strengthening their strategic planning, accessing talented individuals, building sector networks, or assisting in fundraising beyond our own commitment, we know it takes more than money to build successful, groundbreaking organizations," he says.
Raghavendrans first serious exposure to philanthropy came in 1992 when he worked at U.S. venture capital firm General Atlantic Partners, which set up an NGO called Echoing Green, a pioneering effort in venture philanthropy. "It was very successful, but they were very focused on individual founders. They gave the founder a stipend and said Dont worry about your bills, do what you have to do. At Impact I have taken that several steps further. From my venture capital work Ive come to the conclusion that organization building is important. To that end, we actually go on the boards of organizations we fund, just like we do when fund a business entrepreneur. That is why Impact partners doesnt have huge volumes, we just fund a few organizations but our commitment is total," says Raghavendran.
Impact Partners invests capital, calls down capital and reports back to investors on performance. "I cant report back to my investors unless I drive my NGOS in a for-profit, metric manner. We have driven NGOs on concrete metrics on performance; things like, the number of children served, the cost-per-child and other NGO-specific metrics that we have derived. We work with the NGO to help them define their own metrics. So they dont produce numbers merely to satisfy investors," he says.
Impact Partners also believes in building a visible brand around Impact and select portfolio organizations so they can mobilize creative and young people to consider social entrepreneurship as an exciting and serious career option.
Another unusual approach is Impact Partners proactive "outbound" approach to identify capable and distinguished social entrepreneurs. For example, an organization looking for financial help could well approach Impact Partners, but what is more likely is that Impact Partners will pick out the best NGOs in their space. "We pick the sectors we want to operate in, do a detailed review of NGOs working in that sector and narrow down who suits our needs best. This ensures we get the best NGO in that space and I dont mean the largest or most visible one. I mean (we get) one that has all the ingredients for being scalable and effective."
Mumbai-based Akanksha was one of those investments that had the right ingredients.
The organization, which provides under-privileged children with a balanced education that focuses on both intellectual and emotional development, was founded eleven years ago by Shaheen Mistri, then a college student. "We saw around us thousands of slum children who needed and wanted to be educated. We were part of the thousands of college students who had the energy, enthusiasm and time to teach these children. And we noticed the pockets of available spaces located in schools that seemed ideal teaching environments. The simple idea then, was to bring together the three kids, student volunteers and spaces. And the first Akanksha center was born."
Today Akanksha reaches out to as many as 1500 children in 27 centers in Mumbai and Pune. While it built a great product, Akanksha was having problems retaining teachers and good volunteers. Impact Partners for-profit vision pushed Akanksha into building itself up as a brand and improving its metrics to determine how to retain teachers, and volunteers and to change its operating model, if necessary. Impact Partners urged Akanksha to consult with McKinsey to develop Akanksha-specific metrics like teacher performance and drop-out rates.
"We plan to further refine our metrics, increase the number and quality of our teacher training programs, redesigning our curriculum with more focus on employability, and focusing on moving each center closer to our vision of the Akanksha model center," says Mistri.
Raghavendran says Impact Partners will always be on the lookout for organizations focused on children. "The ripple effect of changing one childs life is huge. Catch a child in his or her teens, or younger, change the life of that child, and that child could change a thousand lives," he says.
Suruchi Foods, with a Mumbai based kitchen run by street adolescents, is another Impact Partners project that is children-focused. Impact Partners is developing this homegrown organization into a profitable business that caters quality food to leading corporate clients. The street adolescents are trained by experts in the catering business and in hotel management and they graduate from Suruchi Catering College as qualified professionals with entrepreneurial skills. "We ensure that they find good jobs that allow them to grow professionally as well as individually," says Raghavendran.
Impact Partners is also looking to assist the South Asian community in other countries. Its first overseas investment is New York-based South Asian Youth Action, or Saya, founded in 1996, that provides support services to newly immigrated South Asian children from the ages of 11 to 19, to ease their entrance into the American school system and American society. "They (Impact Partners) contacted us, they just cold-called us, and said wed like to help," says Annetta Seecharan, Saya executive director. The timing couldnt have been more opportune.
"When I joined SAYA in September 2001, I didnt know that just one week after starting my job, the community with which I work would be facing one of its biggest collective crises. The events of September 11, 2001 had a devastating impact on the lives of South Asian youth and their families. Following the initial sock many South Asian youths and their families, found themselves subjected to bias attacks, employment and housing discrimination and racial profiling," says Seecharan. Saya had to strengthen and expand its programs. "But the need for our services is larger than what we are able to respond to. Our ability to reach every needy South Asian youth in New York city, will depend on organizational development and a strong individual donor base in South Asian American community, both of which Ramanan and Impact Partners have begun to help us strategize."
Impact Partners provides funds, experience and even the manpower to many of the organizations it invests in. It is on the board of several of its investments and has played a role in recruiting and promoting people who can take a lot of administrative burden off the founders of these organizations. "Most agencies stop their involvement once the check is written. We dont. We get involved at the board level of these investments and thats why we dont make 25 investments. We just make a few," says Raghavendran.
And like any other venture capital project, Impact Partners has an exit strategy too, but without the financial payoff of a venture capital investment in business. "We dont want our investments to only depend on us for financial assistance. We are a majority of the NGOs budget for the first couple of years, after that our funding commitment becomes a matching commitment."
Like in business, Raghavendran believes this strategy strengthens the organizations it invests in.
posted by Shailaja at 11:33 PM
