Case Study

Caspian Impact Investment Adviser – IA in Financial Services, Agribusiness & Food and Affordable Housing in India


Measuring the outputs and outcomes of a social mission are crucial to understand how and if social impact is achieved. While there are now an abundance of tools and frameworks, the conversation between funders and social purpose organisations is the crucial foundation for impact assessment. In this conversation, the following parameters are being discussed: the nature of the social cause and how it can be measured; the criteria that could be selected; whether the assessment should be customised or standardised (with external impact assessment criteria such as IRIS); and finally what is the purpose of the IA and what actions follow different results.

For Caspian Impact Investment Adviser (Caspian), founded in 2004, its impact assessment processes are defined at the outset of engagement with its portfolio companies – beginning with Caspian’s due diligence activities – as well as constantly improved throughout the monitoring period.  First, Caspian in collaboration with industry experts defines an ‘impact thesis’ which is a culturally and geographically contextualized hypothesis for change and maps the landscape of how impact could be achieved and the dynamics of the sector that could affect the impact. From here, broad outcomes and more specific indicators for each of Caspian’s four focus sectors (see below) are formulated.   The result of these steps is that Caspian’s outcomes and understanding of how impact is made are heavily tailored to relevant geographic, cultural and economic contexts across the Indian communities it works in.

Furthermore, Caspian’s active involvement in the greater impact investing community (internationally and regionally) has allowed it to participate in the development of several impact assessment databases that has helped Caspian keep its finger on the pulse of global reporting practices while developing better tools and practices for its Indian context.  As one of the first Indian impact investors, Caspian’s history early on reflects a gradual, exploratory process of first, acting on intuition, then rationalizing the results after the fact – an approach that eventually evolved into Caspian’s current attitude of “starting with the end in mind,” or using a broader understanding of an entire target industry and “what makes a difference” to identify investments, investment parameters, outcomes and indicators.  Caspian’s IA is also notable in that it is championed and backed from the top-down, from its leadership to its on-the-ground employees.

Background on Caspian

Caspian runs three impact investing funds – two equity and one debt – in India. Caspian has four focus sectors: Food and Agriculture, Small Business Finance, Affordable Housing, and Microfinance, with the following target objectives:

  1. Food & Agriculture: Increase in number, capacity & outreach of small producers, improved value of output, cost effective access to better quality inputs and adoption of responsible / sustainable practices
  2. Microfinance: Access to financial services for low income households enabling them to better manage their financial resources and attain financial stability
  3. Small Business Finance: Access to credit allowing micro and small entrepreneurs to grow their business and to generate employment opportunities
  4. Affordable Housing: Enable opportunities for home ownership by low-income families and upgraded living conditions leading to improved standard of living.[1]

Caspian, with a team of 13 staff in Hyderabad, India, invests in debt in all of these sectors across the country and invests equity in all sectors (except Food and Agribusiness).  In 2015, its three funds (Bellwether Fund – since 2005, India Financial Inclusion Fund – since 2008, and Caspian Impact Investments – since 2013) collectively had equity holdings in 12 companies, debt relationships with 24 portfolio companies,[2] and made a total of 28 loans to 24 institutions across its target sectors.[3] (For breakdown of outreach by sector for 2015, please see Appendix A.)

Caspian’s active participation in the impact investment ecosystem

Caspian believes that “greater transparency of data and shared information greatly strengthens and supports the industry as a whole.”[4]  To this end, over the past decade since its inception Caspian has been involved in furthering industry knowledge in key ways, including: as one of the first funds to receive a Global Impact Investing Rating System (GIIRS)[5] Impact Rating[6] (and thus becoming one of the first GIIRS Pioneer Fund Managers in 2010); by co-founding and being active in the Executive Council of the Indian Impact Investment Council; and as one of the original signatories to the UN Principles for Investors in Inclusive Finance[7]. Based on these initiatives, Caspian has been repeatedly at the forefront of initiatives to strengthen and improve the impact investing space, internationally and within India itself.

In 2014, Caspian’s knowledge-sharing activities included working with the Wharton Social Impact Initiative as the Initiative surveyed and collected data on impact investing funds and the greater ecosystem; continuing its work as a member of the Indian Impact Investors Council to foster a “common identity and awareness about impact investors in India”; providing feedback as an industry practitioner to a new impact assessment tool tailored to the Indian market, PRISM (Portfolio Risk, Impact and Sustainability Measurement), during PRISM’s development phase;[8] and forming a new debt relationship with the Overseas Private Investment Corporation (OPIC, the US development finance arm) and a new risk sharing program with RaboBank Group on the agribusiness sector.[9]

Caspian has been driven to engage with these projects because of its understanding that, while global standards and frameworks may be useful in standardizing and comparing diverse data, it is also necessary to balance this global outlook by “incorporating the local context in a meaningful way.” Capturing the nuances of the communities Caspian functions in – as the IIC strives to do – helps ensure that the standardizing effect of global frameworks do not detrimentally dilute the local context.[10]

For instance, PRISM has been a beneficial localized framework for Caspian compared to GIIRS, which is often perceived as comparatively westernized. Caspian notes that it is also looking forward to seeing what comes of B-Lab’s current work in developing an India branch.[11]

Caspian’s IA Philosophy: evolving over time and differing in equity and debt

Caspian’s impact measurement philosophy is to encourage companies to collect data for their own good – not to satisfy Caspian or other funds – and to use their impact data to make better decisions internally about their mission and activities.  While Caspian works alongside the companies to gather data, it is aware of the risk of overburdening companies with reporting requirements. It also notes that it would moreover not be helpful to require companies to report large amounts of data that Caspian itself would not necessarily be able to analyze in depth nor learn from[12].  To this end, Caspian starts with the data that the portfolio company already collects and then complements using external standards to enable (i) the company and (ii) the fund to better measure mission and objectives.  At times, Caspian encourages companies to adopt impact measurement procedures as early as possible in their growth, since in its experience companies that wait until they are at a more mature stage to measure may not have the time or resources to think about a new, distinct measurement procedure. Overall the impact assessment is a compilation of observations and efforts from all of the Caspian team, although Caspian’s investment managers are responsible for attending board meetings and for most of the day-to-day monitoring.

As an impact investor providing debt services Caspian holds “finance first.”[13] Yet, Social Performance Manager Anna Kanze adds that in the end “it is impossible to disentangle” Caspian’s considerations of social and financial performance. This approach grew from Caspian’s experiences as an early player in the impact investing field in India, beginning with their first fund (Bellwether Fund) in 2004: without much precedence to turn to for this sort of hybrid social investment in their geography, Caspian’s team adopted an intuitive approach to choosing ‘social’ investments, largely relying on their existing knowledge of a company’s culture and familiarity with target industries to define ‘social’ potential in their own words and on a case-by-case basis. In these early years, the social impact potential and nature of an investment was thus often only proven in retrospect.

Caspian’s equity funds (Bellwether, 2004, and India Financial Inclusion Fund, 2008) enabled it to occupy a board seat in each of its investments and monitor impact more closely, which it found helped companies to “institutionalize their impact” more readily, and make sure that intentions were followed up with actions.  As Caspian matured, this time moving to open a debt fund (Caspian Impact Investments in 2013), it was conscious that it would need to set more explicit social objectives and measurement standards for its debt-driven investments, as it felt its influence in companies could decrease without such board representation.

Capturing output, outcome and impact definitions

Key performance indicators that define the target population, inputs, and outputs provide the foundation for measuring social performance and, when tracked over time, provide the longitudinal data to show how the companies and – when aggregated – the portfolio are advancing towards their social goals.

Caspian sees impact assessment as a perpetual learning exercise through experiences and outside practices which evolve IA processes constantly. For instance, while Caspian is comfortable defining the outputs of its companies’ activities, there is an ongoing struggle with measuring outcomes, largely due to the challenges of standardizing and extrapolating the data it gathers on impact and deciding whether to venture causality and attributions.  Overall, while this data is currently sufficient to mark general trends, Caspian remarks that it is still working to reach its desired level of analysis.  Similarly, Caspian describes how its perceptions of what beneficiaries’ well-being was changed and then changes matching it to the relevant data and indicators: whereas in 2008, well-being was most closely linked to indicators like ‘increased income level’, now Caspian uses a wider range of indicators that include ‘perceptions of health’ and ‘control over personal finances’ in the recognition that well-being could be represented by a much richer and more tangible set of indicators.[14]

Caspian also has been active in contributing to various initiatives that identify and standardize indicators to help assess how its portfolio companies affect the lives of their clients and communities. To date, these metrics have been related primarily to inputs (e.g., loans disbursed) and outputs (e.g., number and demographic of clients served). While this is a significant first step, representing significant progress from even five years ago (when there were few non- financial measurements), translating this into measuring outcomes has been more of a challenge. Caspian has benefited from the GIIRS framework for measuring “intentionality” as a starting point, but notes that intent is “not the end of the road… We are still working with our companies on tools to measure the outcomes, which tend to vary by mission, business model, etc.”[15] Impact, which compares results to a control group to determine casualty, is more costly to measure and requires more time and approaches that may be better suited to research/academia.

Using an Impact Thesis to define outcomes

Caspian derives its outcomes for each engagement directly from its ‘impact thesis’ for that sector. The ‘impact thesis’ is a culturally and geographically contextualized hypothesis for change that attempts to address the complexities and ambiguities at the core of each industry as designed by experts with sector-specific knowledge and experience.

For instance, Caspian’s impact thesis for its Agribusiness portfolio centers on investing in three “value levers” of the agriculture supply chain (increased productivity, better value addition and waste reduction) in the hope of adding positive value across the entire supply chain. Using this thesis, outcomes identified for companies in this portfolio are: [16]

  • Increased number, capacity and outreach of producers
  • Improved value of output and bargaining power for producers
  • Adoption of responsible practices
  • Improved and cost-effective access to better quality inputs

Following from these outcomes, certain indicators were identified to track progress, such as changes (over time) in the number of farmers/producers supplying portfolio companies; the area under cultivation; the cost of goods sold; the revenue from sales; the income earned by farmers; number of employees; the number of third party certifications on responsible practices; and the number of relationships with banks and financial institutions.[17]

In Microfinance, another focus sector, Caspian’s impact thesis balances on the assumption that, in order to address the “multi-dimensional” needs of beneficiary populations, an equally diverse set of interventions and services – both financial and non-financial – are needed.  This involves product diversification, extension of geographic accessibility, and providing a range of literacy and health services that augment the inclusion process.[18]  From here, the overall outcome was defined as “Increased number of clients in Target Population with access to financial services,” and indicators were identified like change in volume of disbursals; portion of portfolio that was at risk for more than 30 days; at more than 90 days; the number of active clients split by, respectively, rural/urban location and gender; the average loan size; and additional equity raised.[19]

For Caspian’s other two focus sectors – Small Business Finance and Affordable Housing – outcomes were defined as:

Small Business Finance portfolio:[20]

  • Increased number of SME entrepreneurs in Target Population with access to financial products.
  • Increased employment generation by MSME enterprise.

Affordable Housing:[21]

  • Increased number of households in Target Population that have access to affordable homes and mortgage finance that would enable home ownership.

Process of IA

With significant support from Caspian’s leadership, the organization’s IA process is “baked into Caspian’s organization and the credit committee,” meaning that IA begins early on, in the due diligence process. [22]

The focus on outcomes is best perceived in these early stages (intake, due diligence, and credit assessment) with Caspian placing expectations on its portfolio companies to track, measure and report performance data “on a set of key outcomes” on a quarterly basis. (For more info on Caspian’s intake and DD approach, please see AVPN’s Pre-Engagement Case Study on Caspian.[23])  These sets of key outcomes are identified by Caspian and the portfolio company; the maturity and “nature” of the company and its functions are also taken into account when forming these outcomes and expectations for reporting behavior.[24]

Credit officers use a template questionnaire, to which site visit observations and qualitative analysis are added. These results inform the credit committees’ decisions, along with social considerations.  During the onboarding process Caspian agrees on a monthly and quarterly reporting format with the company (including an annual GIIRS analysis for the equity portfolio companies). Caspian notes that its objective with these IA processes is to encourage its investment companies to think about their internal processes and practices and improve where possible.

As previously mentioned, the Investment Managers monitor the on-the-ground activities, with the Social Performance Manager monitoring best practices in IA and translating the “jargon” into daily practices.  Investment Managers manage the gathering of data for the GIIRS rating, oversee changes in company processes if needed, and in the case of the equity fund’s portfolio companies, attend board meetings as part of their responsibilities.  The Managers used to issue a pre-meeting questionnaire to the board on impact related to how certain company practices and products affect its social impact, but found that this was “quite paper heavy and formal.”[25]

In the case of partnerships or investments, there is alignment in terms of due diligence and monitoring.  In the recently formed partnership with RaboBank Foundation and Rabo Rural Fund (RRF), Caspian provides guarantee agreements for the sustainable agribusiness SMEs. Similarly, when OPIC invested in Caspian it conducted thorough due diligence into Caspian to see if their standards are incorporated, but in the end found that it did not need to ask for many changes. [26]

Challenges to IA

One of Caspian’s challenges has been monitoring its outcomes over the long term, as most results are only perceptible after one or more years, and can even extend past the investment period.  Thus, as Kanze remarks, IA becomes a balance between “measuring what matters and what can be measured”; practical considerations motivate Caspian (as a business that, by nature, cannot devote itself to the rigorous research methods of say academic or government bodies) to seek “lower cost yet valid methods” that can monitor outcomes over time, paint a more complete picture of a client’s experience, and suggest improvements.[27]

Overall, Caspian lists its top three challenges as:

1) Identifying relevant outcomes (described above);

2) Collecting data accurately; and

3) Standardizing and aggregating data across a portfolio.

In Sum

Caspian’s IA process is characterized by its history as a first mover in the Indian impact investing space since 2004, its efforts to keep up with international best practices and standards tempered by the recognition that better localized templates are still needed, and its approach that moderates financial performance monitoring with interpretations of social impact in its diverse forms.






Appendix A – Outreach of Caspian’s Portfolio in 2014

Source: Caspian Annual Social Performance Report 2014-15, pp. 4
Source: Caspian Annual Social Performance Report 2014-15, pp. 4






[1] Caspian Impact Investment website, accessed on 11 April 2015 at http://cii.caspian.in/about-cii.html

[2] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 4.

[3] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 2.

[4] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 3.

[5] The GIIRS impact rating system, built and expanding upon B Corp impact scores, provides a rating of the social and environmental impact of an individual company or fund on a one-to-five scale in the four areas of Governance, Workers, Community, and Environment. Intended for use by investors to evaluate the impact of their investments in for-profit companies, GIIRS intends to strengthen and standardize the “capital markets infrastructure” needed to define, measure and compare positive social and environmental impact. For more information on GIIRS, see http://b-analytics.net/giirs-ratings.

[6] http://giirs.nonprofitsoapbox.com/for-funds/pioneer.

[7] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 4 and http://www.unpri.org/press/40-global-investors-launch-inclusive-and-responsible-finance-principles-2/.

[8] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 5.

[9] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 7.

[10] Call with Anna Kanze (Business Development and Social Performance Manager) on 17 December 2015.

[11] Call with Anna Kanze (Business Development and Social Performance Manager) on 17 December 2015.

[12] Call with Anna Kanze (Business Development and Social Performance Manager) on 17 December 2015.

[13] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 9.

[14] Call with Anna Kanze (Business Development and Social Performance Manager) on 17 December 2015.

[15] Call with Anna Kanze (Business Development and Social Performance Manager) on 17 December 2015.

[16] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 17.

[17] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 18.

[18] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 25.

[19] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 26.

[20] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 34.

[21] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 40.

[22] Call with Anna Kanze (Business Development and Social Performance Manager) on 17 December 2015.

[23] AVPN Pre-engagement Case Study on Caspian, available at https://avpn.asia/2015/08/11/caspian-making-due-diligence-work-through-pre-launch-work-low-costs-and-testing-the-relationship-in-negotiations-2/

[24] Caspian Impact Investments. “Annual Social Performance Report 2014-15,” pp. 9.

[25] Call with Anna Kanze (Business Development and Social Performance Manager) on 17 December 2015.

[26] Call with Anna Kanze (Business Development and Social Performance Manager) on 17 December 2015.

[27] Call with Anna Kanze (Business Development and Social Performance Manager) on 17 December 2015.



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A. Environmental Stewardship
To protect the environment, we organize programmes like mangrove nursery and Reforestation, Coastal and River Clean-Up, Community Based Environmental Solid Waste Management, Environmental IEC Campaign and Eco-Academy

B. Food Security and Sustainable Livelihood
To ensure a sustainable livelihood for the community, eco-tourism include Buhatan River Cruise Visitor Center Buhatan River Mangrove Boardwalk are run by the community. Others include Organic Vegetable and Root crops Farming, Vegetable and Root crops Chips and by-products Processing and establishing a Zero waste store.

C. Empowered Communities
To empower the community, we provide product and Agri-Enterprise Development Training, Immersion and Learnings Exchange Program, Earth Warrior Training and Community Based Social Entrepreneurship Training

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