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Tuesday
Sep292015

Big business? Investing in businesses with social benefit

A recent article in the Guardian observed that there is a growing trend of impact investors  funding services for new consumers moving towards the middle class.

These investors look for businesses that have a social or environmental benefit while also turning a profit. One such investor, Leap Frog, estimates the market that includes those who are moving out of absolute poverty and seeking goods and services amounts to 4 billion people, meaning there is tremendous potential in this space.

This potential is translating into rapid growth for companies like Bima, which means “insurance” in Swahili. Started just five years ago, it has grown to nearly 18 million customers in Asia, Africa and Latin America. Bima sells life insurance through mobile phone network operators – a kind of loyalty program that delivers gains for the operator, and an insurance safety net for people long locked out of financial services.

Still, even as the UN prepares to move forward with a new development agenda that calls on greater involvement from the private sector, some have concerns about the actions and impact of private equity in developing markets.

We are interested in your thoughts -- do you have an example of businesses that do well by doing good? And what are the best tools for building businesses with social benefits?

-- Jay Jakub

 

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