Investors’ Preference for Creating Impact: (A study to understand impact investors’ preference while making investment in India)

Abstract

The main aim of this article is to analyse the preference of impact investors when it comes to the selection of ventures for investment. The study has been conducted with the sole objective of trying to evaluate the choices of impact investors in the Indian market. In addition to this, the present study strives to find out how a certain venture turns out to be the most preferred area of investment and what instrument is preferred to invest in for impact investments, and the criteria that guide investors to arrive at their choice of investment portfolios in Indian impact investment market. A choice-based conjoint experiment has been done in which respondents have to rank the different options which were generated by orthogonal arrays based on their preference. The preference function was computed by using OLS regression. It has been revealed through this study that while deciding to invest for impact, first preference is accorded to stage of investment in terms of highest importance value which was ensued by their behavioural penchant to do impact investment. Impact investors are inclined to invest in social ventures having the most innovative ideas in response to addressing social problems. The most preferred area of investment is the healthcare sector which is ensued by agriculture and education. The real behaviour of an individual cannot be predicted through an online survey, which restricts the generalization of the study. This study presents a simple yet empirical tool that will undoubtedly aid social entrepreneurs, impact investors and other investors to understand the leanings of impact investors and allows them to understand in a better way, how investors’ behaviour differs while making investment decisions in India. The findings will also help policymakers to create a more conducive environment for impact investing in India. The article is unique in the sense that it endeavours to analyse the impact investors’ preferences and choices with the application of conjoint analysis in the Indian perspective.