

The Need for Capital Aligned with Purpose
Sustainable development hinges on the synergy of capital and purpose, especially for impact-driven entrepreneurs tackling global challenges. Despite growing recognition, these enterprises often face barriers such as limited access to mission-aligned funding and operational challenges that hinder scaling. This white paper delves into strategies for bridging these gaps, enabling entrepreneurs to achieve transformative impact while maintaining financial sustainability.
The Investment Landscape for Impact Entrepreneurs
India’s reputation as a hub for innovation is bolstered by its robust engineering capabilities and a thriving ecosystem of mission-driven enterprises. However, the funding landscape often misaligns with entrepreneurial missions, creating a challenging environment.
Prashanth Prakash, Founding Partner at Accel Partners India, emphasized the importance of leveraging
existing R&D resources, such as those from IITs and IISc, to build impactful products. “The key lies in
merging India’s scientific ingenuity with global market needs, creating solutions that deliver tenfold impact locally and internationally,” he noted.
Prakash also stressed scalability as a critical factor, arguing that scale transforms impact from an
incidental benefit into a core outcome. He advised entrepreneurs to design businesses that are simple
and incorporate embedded intellectual property (IP) to attract mainstream capital.
Challenges in Aligning Capital with Purpose
One persistent challenge for entrepreneurs is finding investors whose goals align with their mission.
Many investors focus on measurable outcomes, often overlooking the nuanced objectives of impact-
driven businesses. To overcome this, entrepreneurs must excel as storytellers—not only to secure
funding but also to inspire their teams around a shared vision.
Ankit Agarwal, Founder of Phool.co, shared his experience of aligning purpose with business
fundamentals. By transforming floral waste into incense and other products, Phool.co created a circular
economy model that provided jobs for over 250 women while addressing environmental concerns.
Agarwal attributed his success to prioritizing product quality and market fit, allowing the impact narrative to emerge naturally.
Innovative Funding Pathways
Saurabh Garg highlighted the need to address large-scale problems that inspire widespread impact. He
encouraged entrepreneurs to leverage compelling narratives to attract top talent and investor attention.
Funding for impact-driven enterprises must transcend traditional grants and venture capital. While
grants provide initial momentum, they can foster short-term thinking if relied upon excessively. As
Prakash warned, “Grants can become a ‘drug’ that distracts from building scalable and sustainable
models.”
Agarwal advocated for a balanced approach, using grants strategically to build credibility and industry
connections before transitioning to equity or debt financing. Entrepreneurs with strong research
components could also tap into academic partnerships and competitions to secure initial resources
without compromising long-term goals.
Defining and Measuring Impact
The divergence between investor and entrepreneur definitions of “impact” remains a challenge. While investors prioritize scalability and financial returns, entrepreneurs must communicate broader social or
environmental outcomes.
- Women Empowered: Phool.co’s employment of women from marginalized communities.
- Environmental Restoration: Reduction of floral waste through circular models.
- Community Assets: Improved livelihoods for farmers and microentrepreneurs.
Building a Collaborative Ecosystem
Collaboration is critical to overcoming systemic barriers. Investors can play a transformative role by offering mentorship, strategic guidance, and access to networks. Raksha Kothari of Go Desi highlighted the importance of having investors who align with an entrepreneur’s mission to ensure long-term sustainability.
Entrepreneurs, in turn, should seek partnerships that extend beyond funding. Collaborations with research institutions, corporates, and peer enterprises unlock opportunities for innovation and shared learning.
Building a Collaborative Ecosystem
- Embed Simplicity and Scalability: Design business models where impact is a natural outcome of operations.
- Leverage Grants Strategically: Use grants for credibility, transitioning to equity or debt for
- sustained growth.
- Align Metrics: Develop impact metrics that resonate with both investors and beneficiaries.
- Foster Partnerships: Build networks that offer mentorship, strategic support, and collaborative opportunities.
- Think Global, Act Local: Combine India’s engineering capabilities with global market opportunities to create scalable solutions.