Essmart, a last-mile distribution company for socially impactful goods in India, has closed US$1.2M in financing. The round was a mix of equity, debt, and grant funding from elea Foundation for Ethics in Globalization, Partners Group Impact (Verein), DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbh, and Swiss Re Foundation.
Based in southern India, Essmart builds an innovative last-mile distribution channel that enables socially impactful goods, such as improved agricultural tools and efficient household devices, to reach and impact their intended end customers. Essmart does this by connecting a catalogue of over 150 life-improving products to the local, mom-and-pop, “kirana” retail shops that account for 90% of India’s retail market. By providing local shop owners with appropriate marketing, quick distribution, and reliable after-sales service, Essmart helps local shop owners become active selling points of innovative, impactful technologies in their communities.
Essmart aims to build the world’s largest network of kirana shops selling socially impactful goods, and currently has a network of 600 kirana stores that reaches deep into rural areas. Manufacturers and suppliers leverage this shop network to distribute their impactful products, to gather valuable customer data on end customer needs, and to test new products. “We are connecting a broken supply chain,” said Jackie Stenson, Chief Executive Officer at Essmart. “Rural businesses and end customers should be able to access goods that improve their lives and livelihoods, while at the same time their voices should be heard up the supply chain so engineers can design better products that meet real needs.”
“Rural distribution of useful products is a key challenge for improving livelihoods at the base of the pyramid,” Adrian Ackeret, CFO of elea, noted. “Essmart’s well-conceived and efficient approach has convinced elea from the beginning. Creating a network of existing mom and pop shops generates impressive economic and social value for shop owners and for end consumers alike, and at the same time spearheads the transformation of informal retail in India. We are excited to add another innovative model in last-mile distribution, one of our investment focus areas, to the elea portfolio. As an active investor, we are very much looking forward to working alongside Essmart’s founders and management team in the years to come, providing strategic support and sector-specific insights.”
To date, Essmart has enabled life-improving products to impact over 185,000 people living in peri-urban and rural India. These products range from efficient cookers to solar lighting to organic pest control devices for farmers, and have helped local businesses and end users increase productivity by 37M hours and generate 79M Indian rupees in cost savings. Essmart’s innovative logistics and supply chain software, which addresses the unique complexities of moving unfamiliar durable goods into rural markets, and strong relationships with local shops has been key for creating life-improving technology access at the last mile.
With this new funding, Essmart will embark on a phase of growth and expansion throughout southern India. “This funding is a key milestone that allows us to begin scaling our operations while also implementing the operational structures that will let us continue to operate efficiently and effectively at scale,” said Prashanth Venkataramana, Director at Essmart. Tobias Bidlingmaier, Development Programs and Business Support at DEG, which provides funding from its Up-scaling program, says: “With the Up-scaling program, DEG finances innovative pioneering investments of local small and medium-sized enterprises (SME) in developing countries that are in the start-up phase. We are happy to partner with Essmart and help them boost their performance and increase growth.”
“PG Impact is very happy to partner with Essmart’s management team to help the Company define and execute a growth and governance strategy that will optimize and accelerate both the commercial growth of the Company, and as a result – the social impact on rural base-of-the-pyramid (BoP) customers (kirana owners) and end users,” said Krysten Crainshaw, Global Head of Partners Group Impact (Verein). “As the charitable entity of a global private markets investor, we are committed to creating non-financial value alongside our patient capital.”
DEG: More than finance
For more than 55 years DEG has been a reliable partner to private-sector enterprises operating in developing and emerging-market countries. We provide our customers with tailor-made solutions, including financing, promotional programmes and advice tailored to individual needs. They can thus develop successfully and sustainably, while generating local added value and creating qualified jobs. With our portfolio of around EUR 8.3 billion in over 80 countries we’re one of the world’s largest private-sector development financiers. Learn more: www.deginvest.de
elea Foundation for Ethics in Globalization
elea Foundation for Ethics in Globalization fights absolute poverty with entrepreneurial means. As a professional and active philanthropic impact investor, elea supports social enterprises and entrepreneurial organizations in creating sustainable and measurable impact. Guiding its partners towards achieving self-reliance and autonomy, the foundation not only invests financial capital but also provides them with business know-how, coaching and access to its network. As such, elea is a growing community of committed entrepreneurs and philanthropic investors. Learn more at elea-foundation.org
Partners Group Impact (Verein)
Partners Group Impact (Verein) is the employee foundation of global private markets investment manager Partners Group. Founded in 2006 and funded by employee donations, it aims to support entrepreneurial projects and organizations that create positive, high-impact and measurable social and/or environmental benefits. Since inception, the foundation has invested in 50+ grants and impact investments to social enterprises addressing issues including, but not limited to, hunger, education, and healthcare.
Swiss Re Foundation
The Swiss Re Foundation reflects the social and humanitarian values of Swiss Re. We partner with social entrepreneurs, aid organisations, researchers and Swiss Re clients and employees to help communities increase their resilience. Our initiatives address the causes and effects of risks in four areas – climate, natural hazards, society and water – both in emerging and developing countries and in regions where Swiss Re has offices. For additional information, visit www.swissrefoundation.org