A VENTURE capital fund with a difference. Quite removed from the world of IT start-ups, Aavishkaar India Micro Venture Capital Fund or Aavishkaar India concerns itself with rural enterprises and grassroots innovations that have the potential to improve the quality of life in the interiors of the country.
It hopes to do so by encouraging and supporting the rural entrepreneur who may have a workable idea or invention, but not the funds to turn it into a marketable proposition. Set up by a couple of NRIs in 2002, this `for-profit' venture capital fund has so far invested over Rs 26 lakh in two basic technology projects. The first, a Rs 18-lakh ($36,000) equity investment in the Gujarat-based Shri Kamdhenu Electronics Pvt Ltd, helped it pick up a 26 per cent stake in the company, which has developed an automatic milk collection system and a milk analyser for dairy co-operatives.
The second investment of Rs 8.81 lakh ($17,620) saw it pick up a 49 per cent stake in the Chennai-based Servals Automation Private Ltd, which has developed and distributed an energy efficient burner and a water-conserving rain gun irrigation product.
Explaining the equity investments made in these companies, Mr Roy Dias, a trustee with the fund, said small, grassroots ventures often did not have the finances to pay the collateral required to draw a bank loan. It was, therefore, necessary to pick a stake in the companies or extend funds through the growth phase.
The fund targets an ownership of 26 per cent or more with a holding period of five years through such equity and quasi-equity investments in micro ventures. It has pegged its investments at $20,000-$100,000 in order to achieve a diversified portfolio by limiting the maximum amount of any single investment to 20 per cent of the corpus fund. He added that unlike many organisations with a social upliftment agenda, Aavishkaar India was a `for-profit' fund, which was expected to instil a measure of accountability in the fund's administration, while at the same time involving its managers in the day-to-day operations of the fund. With no links to Government or institutional funding, the organisation hopes to source funds from the two Singapore based founders, Mr V. Anantha Nageswaran and Mr Arvind Singh, and their global network of friends. It has raised Rs 1 crore so far and has targeted a fund size of $2 million or Rs 10 crore in 10 years. Both Mr Nageswaran, who is an investment banker with Credit Suisse, and Mr Arvind Singh, who is an ex-banker, graduated from IIM Ahmedabad in the 1980s.