Top Trend #9 for 2011: Local Investors Step Up to the Plate

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In December, with significant publicity, JP Morgan and GIIN announced that impact investing now qualifies as an “emerging asset class,” with more than $3 billion dollars under management. The Center for Global Development published a report on impact investing in December, too, and the South African Chamber of Commerce in America just released a list of over 200 of what they call “missing middle” funds investing in emerging markets.

Interestingly, of the six firms listed as having launched funds in 2010, only two have offices in the West, compared to eight out of ten in 2009. Until 2011, US and northern European firms have led the field, comprising (according to a survey by your humble correspondents) over 75% of the impact investing firms worldwide.

In 2011, expect that to change. In Latin America, some of the participating funds in February’s Inversion de Impacto forum are so fresh that they are still designing logos. In Africa, indigenous funds have yet to develop, but indigenous incubators such as Kenya’s iHub and South Africa’s Heart Global are hopefully creating the infrastructure for local investors will follow. In India, indigenous funds are exploding: Aavishkaar is raising a second fund; and Varun Sahni, previously with Acumen, is raising a health-focused fund.  To complement these funds, indigenous incubators such as Dasra and, more recently, Villgro are building a strong pipeline and infrastructure.  Local investors are in many ways better able to support and sustain businesses over the long-term, so keep an eye on this encouraging trend.

We are sure that there are new funds out there that we haven’t heard of yet. If you know of any, comment here and let folks know!
By Ross Baird and Mark Hand. Photo credit: Hashir Milhan. Check out our other top trends here.

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