The rise of impact investment in India is driving the growth of e-governance platforms, leading to better transparency, accountability and governance in some regions, according to venture capitalists, government officials and citizens.
The rise of impact investment in India is driving the growth of e-governance platforms, leading to better transparency, accountability and governance in some regions, according to venture capitalists, government officials and citizens. Impact investment firms like Omidyar Network, Asha Impact, Village Capital, Acumen say they have increased their impact investments in the country with a special focus on e-governance.
“There are more firms, more high network individuals who earlier just wrote a cheque to a shelter or an NGO, are now putting money into start-ups that improve governance,” said Deepak Menon, regional director, emerging markets at Village Capital. He also believes strategic investors like Sequoia Capital, SoftBank Vision Fund and Tiger Global are also adding such start-ups in their portfolios.
Impact investments, which so far have been mostly focused on financial inclusion, are increasingly showing interest in e-governance and civic tech.
Impact investment is different from strategic investments in the sense that it aims to generate specific beneficial social or environmental effects in addition to financial gain. Such investment seeks to make a positive impact by investing in non-profits that benefit the community.
Some VC firms say that they also make not-for-profit investments. Bharath Visweswariah, director of investments at Omidyar Network, said that Omidyar Network’s total investments worldwide have a 50-50 split between for-profit and not-for-profit. Omidyar has made investments in urban governance platform, e-governance foundation and Janaagraha, a civic advocacy and reform group, and in total, made $9 million in investments in the civic tech space.
“When we look at the experience that we have had with both these entities is that the momentum for such investments is increasing. Both these platforms have expanded well,” he said. “We are very conscious of the impact our investments will have on the underprivileged or people who are excluded from typical governance processes,” he added.
Visweswariah says both e-governance foundation and Janaagraha have made a tremendous impact on people and for governments. E-governance foundation has developed an open source, a platform called DIGIT where citizens and city governments can manage, monitor and interact in a transparent, effective and efficient manner. E-governance foundation has partnered with over 600 urban local bodies in India and amongst its clients are the Andhra Pradesh and Karnataka governments, and NDMC. “A lot of things in the urban system are broken. But part of the problem is also that the number of civic employees per 10,000 population in India is one of the lowest in the world. Moreover, you have to be patient with government employees,” said Viraj Tyagi, CEO of e-governance foundation.
Tyagi says one major inflexion point for the platform was in 2015 when e-governance foundation partnered with the Andhra Pradesh government but this happened 11 years after the platform was founded. E-governance foundation now works with 110 ULBs in the state and Visweswariah says over the last few years the property tax in Andhra Pradesh has gone up over Rs 240 crore, which he attributes entirely to e-governance’s software which allows citizens to pay their taxes easily. Viraj hopes to reach 2000 UBLs in the next two years.
“It’s very easy and simple to pay taxes through the online platform and that’s the reason, at least here, people are more compliant with taxation,” said Madhukar Kodati, a resident of Hyderabad. Janaagraha is an NGO who is aiming for more citizen involvement in civic matters. It was one of the 23 civic tech platforms featured in the World Bank’s report of Civic Tech in the Global South. The NGO has several initiatives in forms of apps and campaigns. It has a web platform called IChangeMyCity (ICMYC), where residents can assess civic problems. It has over 7,00,000 users in Mumbai and more than 4,00,000 registered users in Bengaluru. Eight million citizens use that app to register 27 million complaints.
In June, Omidyar Network launched its first civic tech accelerator programme in India, in partnership with Village Capital. This six-month programme will help entrepreneurs to develop solutions for civic and social sectors. It has received over 100 applications till date. Few selected ventures will receive support and training for scalability, refining their business models and increase impact. Omidyar plans to incubate about 10-12 early stage start-ups for the programme.