Through this financing initiative, over USD 4 million will be mobilised towards scaling up 15+ high impact health solutions, targeting to improve healthcare services for vulnerable communities in India
Caspian Debt and SAMRIDH Healthcare Blended Finance Facility have joined hands to offer loans to impact-led healthcare enterprises using an outcome-based payment model called “Social Success Note.” Through this financing initiative, over USD 4 million will be mobilised towards scaling up 15+ high impact health solutions, targeting to improve healthcare services for vulnerable communities in India.
Impact-led health enterprises and innovations invariably struggle to build commercially viable business models to scale and sustain the impact of solutions over the long term. This is due to various challenges, including difficult areas of operation, low profit margins, poor market access, and most importantly, inadequate access to affordable capital. As a result, these enterprises raise capital through excessive equity dilution or rely on grants which are short-term and not steady sources of funding.
Through this partnership, Caspian Debt, provider of collateral-free debt to impact-led Small and Medium Enterprises (SMEs), and USAID-supported SAMRIDH initiative managed by IPE Global, will offer debt capital in the form of “Social Success Notes” to SMEs in the health sector. With this outcome-based payment model, healthcare enterprises will receive a collateral-free loan from Caspian Debt (acting as a “risk investor”). The enterprise will scale its solution to achieve social impact outcomes. Based on the achievements, the social enterprise will receive an “outcome payment” or an incentive amount (from SAMRIDH), thereby reducing the overall interest cost for the enterprises.
Commenting on the initiative, Avishek Gupta, MD & CEO, Caspian Debt, said, “We are excited to partner with SAMRIDH on this innovative blended finance program. This program enables Caspian Debt to support companies in making healthcare accessible and affordable. With help from SAMRIDH, we are able to “reward” companies in the form of reduced interest rates if they are focused on achieving meaningful impact goals. We have been able to simplify complexities associated with a typical outcome-based payments program and shall be able to drive growth capital to ~15 companies within six months. We hope to scale this program and replicate it in other high-impact sectors we operate in.”
Emphasising the importance of partnerships, Sangita Patel, USAID/India Health Office Director, said, “At USAID, we support the development of strong public-private partnerships that leverage affordable debt capital for high-impact healthcare businesses. This new partnership, which ties together the power of philanthropic funding with the risk-taking ability of financial institutions, can play a significant role in driving greater investments toward healthcare reforms. We strongly believe these efforts to harness the strengths of the private sector can play a crucial role in improving healthcare services for vulnerable communities in India.”
So far, eight social enterprises, including Collateral Medical, Clensta, Gramvaani, Haqdarshak, Labournet, Neurosynaptic, Sevamob, and Virohan have received affordable debt capital through the initiative. The continued success of this partnership will reinforce the need to adopt innovative financing to solve complex socio-economic challenges.