ABSTRACT
This chapter describes impact investing in India, the evolution of the sector over the last decade, dominant approaches to impact investing, and the role impact investing has played in catalysing the social enterprise sector from a fringe movement to the mainstream market. Microfinance institutions—the first formal social entrepreneurial sector—emerged as a response to the failure of conventional, urban-focused financial institutions to provide credit for rural users. Impact investors play an important role in demystifying the business model risks of impact enterprises for mainstream investors. The growth of the impact investing sector signals that private sector capital can be directed towards enterprises that are striving to meet the needs of those at the base of the economic pyramid in a contextual and financially sustainable way. In addition to innovative debt financing and the continued prevalence equity financing, the impact investing sector will address the growing need for financing with alternate methods that are uniquely tailored to the needs of enterprises.
