Impact investment firm Omidyar Network India made headlines with its unexpected decision to exit the Indian market by the close of 2024, putting a pause on new investments. This development coincides with a noticeable dip in funding for India's tech startup ecosystem in 2023, impacting the country's global ranking from third to fourth place.
The local unit, backed by eBay founder Pierre Omidyar, has been a prominent investor in Indian startups such as Kiwi, Tata 1mg, CloudSek, DealShare, Otipy, Doubtnut, and others. Last month, it led a Series-A funding round for homegrown fintech startup Kiwi, contributing $13 million (around Rs 108 crore).
Omidyar winding India operations
In an official statement, Omidyar Network India expressed its intent to conclude operations in the country next year. The organization stated, "After several months of deliberation, it has been decided that Omidyar Network India will stop making new investments and will completely transition out of the market by the end of 2024."
Over the next two months, the board and leadership team will evaluate the best approach to manage the organization's portfolio while acknowledging the longstanding partnerships established by the Omidyar Network India team.
What is Omidyar Network?
In order to understand impact of Omidyar's exit from India, we need to understand what it does as a company.
Omidyar Network, a social change venture, focuses on reshaping societal systems for inclusivity. Originating from business and technology backgrounds, it collaborates with diverse stakeholders. The organization centers its efforts on three core areas:
- Responsible Technology: Aiming for a balanced, inclusive global technological ecosystem, Omidyar Network supports ideas and policies promoting a safe, fair, and compassionate digital world.
- Reimagining Capitalism: Recognizing the flaws in capitalism, the organization believes in its potential for good and supports entities addressing structural challenges, aiming for a more equitable, sustainable, and inclusive economic system.
- Building Cultures of Belonging: Promoting inclusivity, Omidyar Network invests in fostering a sense of belonging within diverse societies, emphasizing healthy relations, cultural infrastructure, and healing practices for a connected 21st century.
Omidyar Network's exit and impact
Omidyar Network's exit from India would likely have several implications for the social impact and venture landscape in the country. Let's explore the possible impact of Omidyar Network's exit from India.
Starting with the obvious, startups and groups that got money from Omidyar Network will need to find new sources of funding. This might slow down their plans and force them to find different ways to attract investors.
Since Omidyar Network has been helping fund projects in India that aim to use technology responsibly, rethink how capitalism works, and build inclusive communities, there could be less money available for these kinds of projects. Omidyar Network leaving might make other investors rethink their plans for India. They might start looking for different places or projects to invest in, changing the competition for funding.
Omidyar Network's exit could shake up how social investing works in India. Other investors might step in to fill the gap, or new investors might come in to support the same things Omidyar did.
In short, Omidyar Network's decision to leave India could affect the plans of organizations they supported, reduce funding for social projects, change the focus of other investors, impact how social investing works, and spark discussions about how to make a difference in India.
According to reports, the investment firm holds cumulative assets worth nearly $673 million in India. "Today, there is more Indian-led philanthropic and venture capital than ever before, the country has a vibrant start-up sector, and several funds now have a middle and lower-middle income focus as part of their investment strategy," noted the Omidyar Network India team.
This strategic shift occurs as ZestMoney, a digital EMI financing platform backed by Omidyar Network, faces closure after unsuccessful attempts to secure a buyer. Omidyar Network India, operating on a dual-chequebook investment model, exits India after a decade of operations, recording investments of over $500 million. The move aligns with the entity's primary objective of catalyzing impact in the region.
In an internal blog post, the Omidyar Group explained, "This decision was heavily informed by the significant change in context and the growth in the economic landscape that the India-based team has experienced since first making investments there in 2010."
Omidyar Network India's legacy includes critical contributions to the impact investment sector, focusing on the Next Half Billion. While it won't make further investments, the organization is committed to closing follow-on rounds for previously committed investments. The blog post emphasized the importance of recognizing the evolving investment landscape and fostering a smooth transition for both the organization and its portfolio companies.
