One Man’s Crusade to Bring Riches to Rural Areas: Aavishkaar Social Venture Capital Fund
Monday, January 18, 2010
Aavishkaar CEO Vineet Rai has been raising the ’social entrepreneurship’ bar that will help create excellent, livelihood-generating rural enterprises, says Rajni Bakshi.
Vineet Rai enjoys putting a twist in the buzz about social entrepreneurship. Since his work is one of the reasons for the excitement about such businesses, Rai is now a frequent speaker at public events. “I can’t wait for the ’social’ to be dropped” is usually his opening line.
Rai’s tightrope walk with India’ first social venture capital fund, Aavishkaar, usually attracts cheer-leading from the proponents of ’inclusive growth’. But it simultaneously challenges the hollow claims about inclusion in business circles and the extreme skepticism of political activists that profit and social justice can ever be combined.
That’s partly because Rai likes both the ends of the spectrum for different reasons — but does not fully believe in either.
With a corpus of little over Rs 165 crore (Rs 1.65 billion), Aavishkaar’s portfolio is a tiny drop in India’s economy. So why is Rai’s restlessness with the label of ’social’ important? Because it helps to highlight challenges that urgently need to be addressed.
There is no shortage of, what one insider calls, ’faux-philosophers’ who tell policymakers and general public alike that social equity can be got by seeking profit in more innovative enterprises, particularly those which tap the ’bottom of the pyramid’. Such trickle down oriented wealth-generation, this view holds, will eventually — some day — make all Indians prosperous.
But when Rai says that ’shareholders can take that profit which is left after stakeholders needs have been met’ he is raising the bar much higher than most conventional business persons may be ready to jump.
Rai, now 38, entered working life just as the liberalisation process was getting underway. Born into a middle class family in Uttar Pradesh, Rai graduated from the Indian Institute of Forest Management and was recruited on campus by Ballarpur Paper Mills.
Being posted at a remote village of Orissa introduced Rai to the complex structure of poverty. Later, by what he calls a series of accidents, Rai became a research associate at IIM Ahmedabad and then CEO of GIAN (Gujarat Grassroots Innovations Augmentation Network), a company for promoting rural innovation, development and business.
He soon realized that the main barrier to decentralized, livelihood-generating rural enterprises is often not shortage of skills, imagination or initiative, but investors who are overly risk averse.
So with the support of a few business veterans and an initial investment of Rs 50 lakh (Rs 5 million) Rai cobbled together Aavishkaar.
Over the last ten years Aavishkaar has invested in companies such as — Servals Automation, which is producing energy solutions for the poor; Vaatsalya, creating rural hospitals for low income groups; Vortex Engineering, which designs and manufactures low-cost ATMs for use in remote regions; Rangsutra Crafts, a company of a thousand textile artisans from the remote regions of India; Saraplast, which provides mobile toilets and aims to solve sanitation issues; et cetera.