“Aavishkaar India Micro Venture Capital Fund” (“AIMVCF”) is a fund created to promote inclusive development in rural and semi-urban regions in India. The fund’s mission is based on the premise that promising micro, small to medium -sized enterprises (MSMEs) will help drive positive changes in the underserved regions of the country. Aavishkaar was incorporated in the form of a Trust in October 2001 and was registered with SEBI as a Venture Capital Fund in May 2002. The fund achieved its First closing in August 2007 at USD 6 mn followed by a Final closing in January 2009 at USD 14 mn. Aavishkaar helps establishment of entrepreneurial ventures by providing equity financing in the range USD 50,000 and USD 500,000. Aavishkaar has received subscriptions from both domestic and global financial and development institutions like CARE Enterprise Partners, CORDAID, NABARD etc. The key investment criteria for the fund are - scalability and the potential to make strong positive social impact on rural or semi-urban India. The fund management team further provides active operational & strategic support in growing the businesses.
Aavishkaar’s investments create sustainable changes by increasing economic activity at the bottom of the pyramid, boosting entrepreneurial spirit and establishing socially motivated VC- funding as a new financing mechanism in India. These efforts were recently acknowledged when Aavishkaar received the World Business Award 2006 sponsored by the International Chambers of Commerce, United Nations Development Program (UNDP) and Prince of Wales Foundation in recognition of service towards fulfillment of the Millennium Development Goals, L-Ramp Awards of Excellence 2007 presented by Dr. A.P.J. Abdul Kalam, Former President of India. Aavishkaar along with social benefit to the society aims to provide returns to its investors in the range of 12-15% IRR over 10 year investment horizon. Aavishkaar generally adopts innovative modes of financing – that facilitate reducing the risk of dilution in promoters’ equity, while protecting Aavishkaar’s interests in the ventures. The various instruments made use of normally are: Common equity, CCPS (Compulsorily Convertible Preference Shares), Mezzanine funding, bridge loans, working capital loans etc.
Till date, Aavishkaar has made 16 investments across industries, which include renewable energy, waste management, information and communications technology, agro-based technology, handicrafts, healthcare and rural innovations. The fund’s first investment was in 2002 - in a Chennai-based firm called Servals Automation that has developed innovative new products to serve the rural markets. Servals’ ‘blockbuster’ product is a stove burner that uses 30% less kerosene than traditionally used stove burners. One of the fund’s recent investments is in ‘Vortex Engineering’ that has developed a pioneering cost-effective ATM suited to rural markets. Vortex, with its’ tie-up with various banks will serve rural markets across India by rolling out these cash machines.
Aavishkaar’s portfolio companies today have the potential to generate direct employment for thousands of people in addition to providing value for the end-beneficiaries.
Armed with a successful business model, Aavishkaar has scaled up in order to accomplish its twin objectives of maximizing benefits for rural populace and generating commercial returns for its investors. Aavishkaar would invest its corpus in a portfolio of around 35 more scalable, socially relevant micro-enterprises across India. Aavishkaar, with the help of its network in social space as well as in the mainstream markets network brings valuable inputs to the portfolio companies to scale up the impact across a larger section of society. It intends to act as a facilitator towards linking the rural entrepreneurs with the mainstream markets.
Further as an illustration of value creation, two of Aavishkaar’s portfolio companies are looking towards raising funds in subsequent round to fuel their further growth and to scale up impact across rural healthcare and rural technology sectors.
(For more information on Aavishkaar, please visit us at www.aavishkaar.in.)