Innovation is essential to disrupt the status quo and solve India’s entrenched developmental and social challenges. Yet, early-stage social enterprises in our country, building such innovations, especially those focused on low-income and climate-vulnerable communities, often struggle to survive, let alone scale. Despite their potential for transformative impact, these businesses often face a critical gap – their lack of access to affordable, timely capital, which severely curtails or even eliminates their capability to sustain and grow and to provide impactful solutions to communities that need them most.

To address the pressing financing gap for social enterprises, renowned social enterprise incubator Villgro, in partnership with 360 ONE Foundation – the CSR arm of 360 ONE Group, designed ‘Capital for Impact’ – a program focused on catalytic blended finance, aiming to unlock debt for high-impact enterprises working on climate-resilient agriculture, rural livelihoods, and environmental innovations. In a testimony to the program’s trailblazing success, it has, to date, utilized ₹2.35 Crore in philanthropic capital to unlock ₹17.9 Crore in debt funding for 11 enterprises currently being supported under the program, thereby achieving a 7x multiplier of funds into sectors where traditional credit would not have stepped in.

Traditionally, social enterprises, both in India and across the globe, have struggled to raise debt. Often caught in the “missing middle”, they are considered:

• Too large or complex for microfinance
• Too early, unproven, or asset-light for commercial debt
• And far too mission-driven for venture capital to prioritize

According to International Finance Corporation (IFC) and Intellecap studies, 70-80 per cent of early-stage social enterprises are turned away by formal lenders. Over the past few years, Villgro’s various blended finance programs showed that most applicant enterprises were being rejected by the mainstream financial institutions due to their early-stage risk, lack of profitability and collateral. Additionally, limited credit histories, nascent business models, and unconventional innovations that don’t fit standardised risk templates are a few other key reasons why lenders routinely reject these enterprises for credit. This is where the Capital For Impact program stepped in, striving to make a game-changing transformation – de-risking loans’ disbursal to these underserved ventures, and enabling lenders to say “yes” where they otherwise would have said “no”.

Over the next two years, Villgro and the 360 ONE Foundation’s Capital For Impact initiative will strive to positively benefit over 23,000 marginalised farmers across India by expanding access to income- and livelihood-enhancing, climate-resilient solutions. In addition to improving farmers’ incomes, the program aims to create a meaningful impact across multiple areas – climate resilience (promoting sustainable inputs and regenerative practices), enhancing women’s economic participation, improving market access and productivity, and achieving environmental benefits (reduced chemical usage and similar practices).

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Vibha Sharma Tilwalli, Lead - Impact Finance, Villgro, commented, “At Villgro, we’ve witnessed how impact-first enterprises frequently struggle to access affordable debt or aligned equity, especially at their seed and early growth stages. However, when blended finance is rooted in deep sectoral expertise and tailored to the realities of early-stage enterprises, it can change the rules of lending, and has the power to turn the ‘unbankable’ into investable, giving social innovations ample breathing space they need to grow. Leveraging our proven blended finance approach, the Capital For Impact initiative mobilized catalytic philanthropic capital, which acted as first-loss coverage guarantee through cash collateral — a structure that has successfully unlocked ₹17.9 crore in loans, thus making viable lending a reality for several impactful social enterprises without diluting their enterprise equity or mission. More importantly, it has created a scalable and replicable model to address the chronic under-financing challenge of today’s impact-first ventures”.

Saumya Lashkari, Director & Board Member, 360 ONE Foundation, added, “Capital for Impact is a groundbreaking program that is shaping how the ecosystem thinks about risk, innovation, and financial inclusion. It is serving as proof of concept to demonstrate that even relatively smaller amounts of catalytic funding can unlock significantly larger sums of debt funding and create a massive last-mile impact. This financing model enables early-stage impact enterprises to grow, scale, and serve underserved communities at a much faster pace. We see Capital for Impact as a pivotal step towards a more responsive and resilient impact investing landscape that truly supports bold ideas solving complex social and environmental challenges”.

The Capital For Impact program uses CSR-compliant grants to fund Villgro, a DST-recognized incubator, supporting this livelihood-focused initiative. It combines this with an innovative blended finance approach to boost the creditworthiness of impact-first startups and facilitate access to concessional loans, helping them sustain, scale and drive real impact where it’s needed most. By partnering with impact-aligned lenders like NABKISAN, Caspian, and FWWB, Villgro enabled the enterprises to take loans without traditional collateral, at affordable rates and enhanced the flow of funds for the impact causes. Villgro also extends technical assistance and mentoring support to ensure repayment readiness of the borrower enterprises.