The SGB Sector in 2017

2017 Trends in India

1. Development agencies are driving gender lens programming gains. Several gender inclusive initiatives were supported by bilateral and multilateral development agencies in 2017. The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) launched a three-year program on Women Entrepreneurship, specifically focused on supply and demand-side activities. In addition, the United Nations Development Programme, GIZ, IFC, and several other organizations launched the Indian Women Impact Alliance, aimed at strengthening the business environment for women. However, on the capital supply side, taking action on gender lens investing is still low, even though awareness is increasing. This may be because many of the businesses oriented towards gender impact are often not yet in the position to raise or absorb capital.
2. Fintech and AgTech start-ups are beginning to receive long-awaited later stage financing. Most sectors in India, especially those leveraging technology, received increased investor interest. However, many of the tech-focused business models have not been able to secure more than Angel and Series A investment until now. The increased mobile penetration across India, including in rural areas, is the driver for the tech-based models. An increasing number of business models are tapping into this opportunity and the topic of digitizing rural value chains is gaining momentum.
3. Indian corporations are forgoing early-stage SGB partnerships for later-stage businesses. Some corporations are recognizing that early-stage start-ups are not the right partner for collaboration, as they often cannot deliver on the scale required. These corporations look to post-Series A start-ups for investment and acquisition purposes. The past year has seen more mergers and acquisitions by corporates in the start-up space, especially in the financial sector. However, many traditional Financial Institutions are continuing to engage with start-ups through incubator and accelerator programs. Overall, corporates still struggle to find the right collaboration partners, as start-ups also have the freedom to forge partnerships and are becoming selective. The need to help corporates navigate the start-up landscape is high, as best practices for engaging with the start-up economy vary significantly across institutions.