Letter to our Readers
We are proud to share with you Lok Capital's Annual Report Microsite 2016. In this report, we present to you a brief of Lok's journey thus far and invite you to join us as we grapple with core lessons and themes emerging from our past twelve years of work, particularly as we have opened a new chapter with the launch of our third fund in June 2016: Growth Catalyst Partners LLC.
The success of the Impact Investing model is becoming more and more evident through its work in the financial inclusion space. At Lok, our first fund (Lok Capital LLC) underscores this initial success having demonstrated tangible impact and profitable exits through a full-fund cycle, as well as continued investor support of future funds and a core team that has now stayed together for over a decade. Our second fund (Sarva Capital LLC) further strengthens the case, as over 70% of our committed capital is already realized via exits from the financial inclusion space.
Investors are always looking for "scalable" and "replicable" models, but when it comes to broadening the scope of Impact Investing to other critical sectors (health, agriculture, education, etc.) these are the exact challenges the investor community is facing today. We believe that delving deeper into the success factors of the financial inclusion space sheds light on the steps needed to propel the development of the other key sectors as well:
of our committed capital is already
realized via exits from the financial
1. Decade long efforts by early movers laid the groundwork for microfinance.
This is exactly what seems to be taking place in Agriculture and Healthcare sectors
2. Commercial viability and impact on the daily life of a borrower are inherent in the lending business.
The pipeline of other business models that can offer this key duality is growing stronger
3. Access to talent (always a high need for burgeoning start-ups) was readily available from banks.
The availability of human capital to our sectors of focus is at an all-time high and the interest is growing
4. On the flip-side, lack of progressive regulatory mindset led to major pitfalls.
Entrepreneurs today must leverage potential regulation and political environment to catalyze innovation
The timing of our third fund, Growth Catalyst Partners LLC, could not be better as we are already working to address the above insights head-on through active investing and a strategic sector focus in agriculture, healthcare and financial inclusion. Specifically, a common thread we apply across sectors is our “relationship-centric” investing philosophy. We put great value on the strength of our promoters and look to bring about real synergies through deep engagement, most recently exemplified through our work with OSAM Dairy, fine tuning procurement and sales functions to increase integration with the farmer community, even prior to investment.
As always, we are thankful for your continued support and look forward to continuing to engage with you as thought partners in the year to come.
Vishal Mehta & Venky Natarajan