12/21/13
Social enterprises: Doing good while making money is an alluring prospect - Economic Times
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Social enterprises: Doing good while making money is an alluring prospect |
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Biswarup Gooptu & Vasumita S Adarsh, ET Bureau Sep 6, 2013, 04.00AM IST
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Aavishkaar Venture
In April, when Somak Ghosh quit Motilal Oswal Private Equity to set up his own venture fund that backs businesses focussed on low income communities, the veteran fundmanager was taking a calculated bet. Ghosh, 45, was leaving behind a slowing market in private equity to join a nascent industry where growing pools of risk capital are seeking to generate profits and do good.
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Ghosh's $50-million fund (Rs 332.4 crore), Contrarian Capital India Partners, will invest in companies that provide financial services, affordable housing, livelihood and energy, largely for consumers in non-urban markets. "Impact investment creates returns for investors by delivering social value to consumers," said Ghosh, a former group president and cofounder of Yes Bank. His fund expects to close its first lot of investments over the next few months. In the past three years, impact investors like Ghosh have backed numerous companies that bring services ranging from healthcare and energy to education and agricultural inputs to low-income communities. Termed as social enterprises, these ventures have so far raised close to $800 million (Rs 5,318.4 crore) of risk capital, according to research firm Venture Intelligence.
Novemb er 14, 2012
Investors commit over Rs 400 crore for funding new ventures... March 28, 2013
More VC funds on cards for social enterprises this year January 24, 2012
IN-DEPTH COVERAGE Business Process Risk Capital Social Enterprises
articles.economictimes.indiatimes.com/2013-09-06/news/41835095_1_social-enterprises-venture-fund-lok-capital
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12/21/13
Social enterprises: Doing good while making money is an alluring prospect - Economic Times
Apart from the growing market, investors are also drawn to the steady returns. India's first social venture fund, Aavishkaar Venture, which began investing in 2001, has made nine exits, with returns of between 18% and 42%. It has returned 33% of its capital to investors in the past four years. "The notion of returnable capital is gaining traction and hopefully it will become the sweet spot for social impact investing," said Rajiv Lall, founder and chairman of Lok Capital, which manages assets of about $87 million (Rs 578 crore) and has invested in companies such as small business provider Vistaar and rural business process outsourcing firm Rural Shores. Research firm Monitor estimates the global impact investing industry will have assets of $500 billion by 2019. Commercial Interest In India, social ventures are also gaining because of attention from mainstream commercial investors. Bangalore-based Vaatsalya Healthcare, which got seed capital from Aavishkaar, raised followon capital from Singapore-based Aquarius India Fund. "Companies such as Vaatsalya have demonstrated their ability to serve as role models for social enterprises to an extent where valuations are not really much of a concern," said Vineet Rai, founder of Aavishkaar Venture. Last month, the Mumbai-based fund closed its latest $94 million (Rs 625 crore) fund and now manages total assets of $160 million (Rs 1,064 crore). Other investors, such as The Omidyar Network, founded by eBay founder Pierre Omidyar, expect to pour in about $200 million (Rs 1,330 crore) in Indian social ventures over the next three to five years. As the flow of capital into the sector rises, more entrepreneurs are being emboldened to try their hand at building social enterprises. "When we started babajob more than five years ago, I could count on one hand the number of funding agencies for such a social venture," said Vir Kashyap, 33, chief operating officer of babajob, an online portal that connects blue-collar workers with prospective employers.
articles.economictimes.indiatimes.com/2013-09-06/news/41835095_1_social-enterprises-venture-fund-lok-capital
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12/21/13
Social enterprises: Doing good while making money is an alluring prospect - Economic Times
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Kashyap partnered with former Microsoft executive Sean Blagsvedt to launch the company in 2009 and has since raised `7 crore from venture fund Gray Ghost Ventures. Registrations at the company recently crossed one million. Consumer Pull Experts are of the view that rising aspiration levels of low-income consumers is also boosting social entrepreneurship and capital flow into the sector. "There are massive opportunities to invest in ventures that offer skill development and livelihood while offering attractive returns," said Krishnamurthy Vijayan, a former executive chairman of JP Morgan Asset Management India. Santanu Chattopadhyay, 46, who founded Nationwide Primary Healthcare Services, worked with impact investment consultancy Intellecap to raise Rs 25 crore from global venture firm Norwest Venture. "Being a social startup does not reduce our operational and logistical cost. But we have to distinguish between profit making and profiteering," said Chattopadhyay, who expects his company to earn revenue of `6 crore this fiscal and Rs 20 crore in the next fiscal. What is different about impact investing is the expectation of return on investment. While commercial risk capital typically aims for returns of more than 25%, impact investors settle for payback of between 15% and 20%. Furthermore, impact investors back businesses whose customers are low-income groups. Network Effect Entrepreneurs said raising money from impact investment firms helps tap into a vast pool of resources and networks.
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12/21/13
Social enterprises: Doing good while making money is an alluring prospect - Economic Times Recommended by
Readers' opinions (6) Sort by: Newest | Oldest Anjum Mailaram (mumbai) 10 Sep, 2013 03:17 PM I hope the money really put to good use.. rama anne (sydney) 09 Sep, 2013 07:31 AM resected fellow indians ====== some fanatics equate the term 'Social' to Communism,and not making PROFITS Both are false myths propagated by vested interests ,india needs all sorts of enterprises i)larger tatas,mahindras in bulk industries ii)supply chain logistics ,retail ,some servive sectors we need social startup to first start as social startup is more conducive in rural markets at some point ,ultimately ,profits,quality of service will need to be made ,that is dependent on market forces and the overall strategy of such startups for a country like INDIA ,especially rural india we need these to arrest urban migration ,to absorb volatile shocks etc M.Janardhan Rao (Hyderabad) 08 Sep, 2013 07:42 PM Lessons to be learned from micro-finance businesses. manojim1974 (Mel) replies to rama anne 11 Sep, 2013 05:40 AM Very true. On one hand Indians feel outraged if some hard working entrepreneur puts in his thoughts, effort and money to make some change to the society as well as for self. And on the other hand feel smug when incompetent leaders loot the country. i just hope that these ventures does not grow big to attract govt attention. Small and micro level help centers all across rural India can be a good initiative that can bring long term prosperity to the society at large. But the bigger question is IS THE SOCIETY WILLING TO PROSPER???? I have my doubts... APROUDINDIAN (INDIA) 07 Sep, 2013 02:18 AM good COLRANBIRLAMBA (PTA) 06 Sep, 2013 09:27 AM adds to goodwill that is also a sort of profit Âť READ ALL COMMENTS
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articles.economictimes.indiatimes.com/2013-09-06/news/41835095_1_social-enterprises-venture-fund-lok-capital
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