Credit and Finance for MSMEs: Investments in early-stage enterprises catering to technology adoption among small and medium enterprises (SMEs) in 2020 increased to $51 million across nine deals from $6 million in 2019 as investors jumped onto the opportunity involving digitisation of SMEs to enhance their business efficiency in the Covid period. Investments in such startups focusing on enhanced usage of technology among SMEs accounted for 16 per cent of the total tech investment in 2020 up from 3 per cent last year. The total investments stood at $331 million across 34 deals in 2020 in comparison to $188 million across 43 deals, according to a report on impact investments in 2020. Among top startups, which focused on the SME technology sub-segment, raising capital in 2020 included PagarBook, FloBiz, and Salesken. Overall, impact enterprises raised around $2.6 billion across 243 equity deals and saw 13 successful exits in 2020, the report titled India Impact Investment Trends by India Impact Investors Council (IIC) added.
Similarly, investments in startups catering to access to finance for SMEs saw 17 deals involving $310 million accounting for 44 per cent of the total deal value in 2020 up from 31 per cent in 2019. The SME finance sub-segment saw enhanced interest with investments both at early-stage and late-stage enterprises such as Khatabook, MoneyTap, and Setu. Among top startups in the sub-segment raising capital in 2020 included Incred, Aye Finance, Veritas, Lendingkart Finance, Finova Capital, SMEcorner.
“The Indian impact investing sector is clearly coming of age. Notwithstanding the pandemic, Indian impact enterprises have proved to be resilient: we see continued interest from investors in investing in a variety of innovative tech-led impact ideas,” said Ramraj Pai, CEO, IIC. The not-for-profit industry body IIC aimed to strengthen impact investing in the country through advocacy and policy support, research, and publications. The body was supported by over 40 investors and partners such as Aavishkaar Group, Omidyar Network India, Michael and Susan Dell Foundation, Elevar Equity, and Caspian Investment Advisors, etc. Out of $2.6 billion invested in 243 deals, 26 per cent was poured into financial access of enterprises followed 25 per cent in the education sector, 17 per cent towards agriculture businesses, 8 per cent in the healthcare segment, 13 per cent towards technology development, and 11 per cent for other sectors.