How the Funds Community is Tackling the Impact of COVID-19

Date

May 5, 2020

3 min read

The COVID 19 pandemic has triggered what is being referred to as the ‘Great Cessation’. 

We are not only dealing with its health consequences, but also its profound economic and social impact as economies grind to a halt and countries slip into recession. There is increased anxiety as to when this will end, but the impact is greatest amongst the world’s poorest and vulnerable. 

We have witnessed numerous impact funds rising up to support their investees to ensure that they are putting their employees’ health first. For instance, Jinesh Shah, the Managing Partner at Omnivore, shared the approach his portfolio companies are taking where “instead of firing people across board, some companies have resorted to reduction in salaries at the senior and top management, while maintaining the salary levels of people at entry level. Everyone across the board makes some sacrifice, instead of removing a few people”. Likewise, Alexander Remy at Oikocredit is in constant communication with investee companies to ensure there is adequate liquidity and business continuity planning. Chiratae Ventures has also launched the Chiratae Thrive Fund to give economic relief to low-income gig-workers associated with its portfolio companies, whose income has been adversely affected. 

Impact funds know that now is not the time to focus on short term financial outcomes; instead, they are adopting a patient outlook and focusing on the social impact first. Global Innovation Fund and KOIS India Investment Advisors have emphasized that they are prepared to amend their investment strategy and reallocate capital to support their portfolio companies during the COVID-19 pandemic.

Times of crisis can also generate new thinking. One such opportunity is the potential to set up a parallel vehicle for emergency funding of investees.  Prabu Thiruppathy, the Principal at KOIS, explained the debt vehicle that KOIS set up for existing and new investors who would like to support businesses that are solving COVID-19-related challenges during the pandemic. What’s unique about such a structure is its ability to quickly raise funds for deployment during this time of need. This allows portfolio companies in need of a life line to receive timely and flexible funding.

On the other hand, governments have released additional capital to support businesses during the pandemic. For instance, Merry Year Social Company (MYSC) CEO, Jeongtae Kim, is in dialogue with government agencies in South Korea to see if they can get further grant funding to support the start ups in their portfolio during this period. Garreth Spillane at Global Innovation Fund also mentioned that in addition to some government agencies who are providing their funds for domestic aid, other international aid agencies have made additional capital available, including USAID who has announced that $500 million in funding was made available to combat COVID-19.

But is this enough? Where governments’ stimulus packages fall short, how can investors do more to supplement efforts? As highlighted by Vidya Chandy, the Vice President of Impact at Chiratae Ventures, there is already a growing collaborative movement across investors. “Some VCs, including Chiratae Ventures, have banded together in record time to offer grants for innovations that can fight COVID at scale,” says Chandy. Moving forward, private capital will need to be organised to get to targeted areas rapidly and we are looking for innovative ways that the impact investment community in Asia can do so.   

While many investors are focusing on providing support to their investees to remain in business during the COVID-19 pandemic, LeapFrog Investments is going one step further to support vulnerable local communities through their investee companies. According to Michael Fernandes, Partner at LeapFrog Investments, the firm is “mobilising the global team so that they can work day and night to rally support through the portfolio companies, who are on the front lines”. One such company is BIMA, an award winning telemedicine company, who has increased its telemedicine provisions across Asia by 200%. 

How have you been supporting your communities to mitigate the impact of COVID-19?  Share with us your investment story, and jointly we can mobilise investment capital to create greater impact during this trying time. Explore how other funders are collaborating or support existing initiatives across Asia. 

 


About Author
Komal Sahu
Komal Sahu Chief of Sustainable Finance AVPN

Komal serves as Chief of Sustainable Finance at AVPN. She leads AVPN’s engagement with family offices, HNWIs, private wealth holders, corporations and financial institutions across Asia. In this capacity, she helps these stakeholders achieve their objectives of investing within a framework of impact and sustainability.

Komal brings over two decades of diverse work experience in Europe and Asia to her role. She began her career as an investigator with the British Civil Service and was focused on the SME sector in London. She subsequently worked for KPMG where she specialized in the fund management industry. Komal has completed numerous assignments at top tier banks and insurance companies in the UK. She has tax expertise in structuring entities and funds and taking companies and funds to listing on the London Stock Exchange.

Over the last decade, Komal has provided support to a number of social enterprises and charities across Asia. She is an angel investor and an LP in early and late stage funds. Many of her investments have focused on generating societal good. Komal has served as a mentor at a number of incubators and accelerators and has worked with startups including at A Star, a Singapore government led accelerator for science and technology companies that are improving lives through innovation and discoveries.

Komal is a Fellow of the Institute of Certified Accountants and Associate of the Institute of Taxation. She has an FT certification as a Non-Executive Independent Director. She has a BA Honors in Economics.