Global impact investment firm Capria is now looking actively to stretch its reach in Asia beyond India, where it currently operates through early-stage investor Unitus Seed Fund.
The US-based investment firm is scouting for fund managers in Southeast Asia and an additional fund manager in India to strengthen its presence in the region, from where it aims to get almost a-third of its business in the next few years. There are eleven fund managers in emerging markets in Capria Network at present, that are aiming to collectively raise $200 million in funding by December 2018. Capria itself is in the process of reaching the first close of its $100 million fund, for its investments as a general partner and a limited partner.
In an interview with DEALSTREETASIA, Will Poole, Co-founder and Managing Partner, Capria talks about the company’s plans for its further expansion in Asia. Edited excerpts.
Q. Can you elaborate on Capria’s investment model?
Capria is a global investing firm. We have a mission to find and invest in and support next generation of fund managers in emerging markets and we are particularly focussed on those that have both a profit and impact motivation. The one thing that is unique what Capria does is that we make investments in the fund managers themselves. We also are just about to have the first close of a $100 million fund, where we we will make LP investments as well. There are many funds of funds that make only LP investments, but we’re unique in the sense that we make a combination of GP and LP investments and that helps second or third time fund managers that are fairly advanced in their investment programmes and help them become a top performing manager in the region.
Q. Is this fund a global fund or specific to some region? Also, by when do you expect to close it?
It is a global emerging markets fund, although we do not invest in either Russia or China, but all other emerging markets and we expect to have the first close in the second quarter.
Q. Do you also do direct investments?
Like many other fund of funds, we will also do some amount of direct investing as a co-investment with our fund managers.
Q. What is the leaning that Capria has towards Asia, given that you have a global fund?
The very first member of the Capria Network was the Unitus Seed Fund, and we see a further development of our network in India and in Southeast Asia also has very high priority. We are looking to add over the next 12 months, three more managers from the region. The reason for this is two-fold one is that there is an exceptionally large population here, much of which qualifies as low or middle income and there is an opportunity for a significant impact and second is that there is excellence in the entrepreneurs here and therefore there is an opportunity to make investments and make good money.
Q. Any particular countries or sub-regions that you are interested in?
We are looking for another fund manager, maybe a later stage investor or maybe one that specialises in education or healthcare or another sector. We are looking in Indonesia, we have visited there several times. We’re looking at Philippines, Singapore, as well as Vietnam, Bangladesh and Mynmar.
Q. Why do you find the need to find another fund manager in India?
India is a big market and also our partner Unitus is very specifically focussed on seed investing and so there is a big opportunity for us to partner with a Series A investor, or potentially with an investor that has a sectoral focus related to energy or healthcare or education.
Q. How do you view this region from an investor’s point of view?
Clearly the economic story here is quite strong and that’s very attractive along with the large populations. We’ve seen that fewer of our applicants for Capria, maybe about 20 per cent, have come from the region and so that’s one reason why we’re trying to build up our presence in the region and we’re trying to find more managers who would be a fit for the Capria Network.
Q. Right now do you have any other presence in Asia apart from India?
India is the only country where we have a manager in Asia so far. We have evaluated over 500 fund managers over the last two-two and a half years who have applied to us and around 100 of them have come from Southeast Asia and other parts of Asia. So, there are certainly managers here and we are looking to find the the ones that would be a right fit with for our network.
Q. Are there any particular sectors or niche that you are looking to invest in?
We are sector agnostic, we just target impact investments. So those could be in healthcare, education, financial inclusion, environment and many other areas that can be included. We also, recognise that the cause of impact varies from market to market. So, in markets that have very high unemployment a company that simply creates lots of good quality jobs could create a strong impact. In countries that have a nascent entrepreneurial environment, a startup that really supports or grows the entrepreneurial activities would have an impact. Our view on impact is very much customised and tailored to the specific markets in which our partners operate.
Q. Where does Asia rank right now as compared to the other markets that you invest in for Capria?
From prioritisation perspective, it’s our highest growth priority market and our anticipation is that we will have up to a third of our business from Asia over the next couple of years. Right now it would only be about 10 per cent.
Q. Could you also consider a region-specific or Asia focused fund?
Because our global fund enables our investors to target any given region that it wants, we are therefore able to take an investment from Asian family office and offer that this fund only invests in companies that are in Asia. So we have a global fund but it’s geographically aligned with the interest of our investors.
Q. Impact investment was seen as a niche area, is that slowly becoming more mainstream?
It is, in fact if you look at companies that have followed on to our investments include Sequoia and Jungle Ventures and IDG and Google Ventures among others that are mainstream investors that are investing in the same companies that we picked for them having interesting social impact. So you are seeing that the two go hand in hand. We take a little more risk at early stage, but as those companies prove themselves, they are very attractive to the more conventional venture investors.
Q. How do the next couple of years look like for Capria?
Our overall network of 11 companies right now are looking to raise a total of $200 million this year and that number will more than double in the following year. So, between Capria’s $100 million fund and another $400 million to be raised by our network over the next couple of years, you’re going to see over half a billion dollars of capital which is going to be committed to impact in emerging markets through our network, which is a sizeable corpus to make a difference and help grow the market to everyone’s benefit.
This article was originally published on DealStreetAsia.
