NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, June 18, 2015

Aavishkaar, India’s biggest social entrepreneurship focused venture capital fund, would be investing about Rs 500 crore ($75 million) in start-ups from Pakistan, Bangladesh, Sri Lanka and Indonesia.

This would be for the first time that an India based fund has raised funds and would invest in South Asian countries. Aavishkaar would invest through Aavishkaar Frontier Fund (AFF), which is registered in Mauritius. Replying to an email questionnaire Aavishkaar said the investments in these countries would be in healthcare, education, sanitation, agricultural services, energy and technology amongst others. All the investments would be made in social sector where the returns or internal rate of returns (IRRs) are on a rather lower side when compared to other venture capital funds and private equity funds.

In last ten years Aavishkaar has been operational in India and has invested mostly in start-ups in the rural or semi-urban areas. In some of the cases the fund also invested at a seed stage. Aavishkaar currently has about $150 million under management, made some 48 investments through its four funds and has managed to get about 13 exits and 6 partial exits in two of its funds.

During an earlier interaction with ET in December Vineet Rai, CEO and MD of Aavishkaar had said that impact investment funds may have lesser returns but that is not akin donation. “Investing in these social enterprises is not like giving donations or government subsidies,” said Rai. So while the returns could be stressed the entrepreneurs the fund tends to make some money and the entrepreneur gets access to funds when other financial institutions are unable to service his needs.

In Pakistan, Bangladesh, Sri Lanka and Indonesia too Aavishkaar could look at investing in companies who need seed funding. The fund plans to invest in social impact sector which could create jobs and opportunities on the middle and bottom of the pyramid.