Private Equity Discovers Bottom of the Pyramid
Saturday, December 4, 2010
With a staggering increase in capital invested across social ventures-$404.58 million in 2010 as compared to $150.36 million in 2009-private equity/ venture capital players are finding a fortune beyond the tip of the pyramid. And, in a turn of focus, interstitially more and more mainstream PE/VC funds are also venturing in this hitherto reserved space of social venture capital funds, making the investment play in the segment dynamic like never before.
Fathom this: If social VC funds such as Acumen Fund, Gray Matters Capital and Omidyar Network, in tune with their goals, are investing in a lighting and power company D.light Design, which delivers affordable and quality solutions to serve families living without adequate electricity, it’s being matched up by investments made by mainstream players such as Draper Fisher Jurvetson India (DFJ), who are driven solely by commercial gains.
So what is fuelling this growing interest in the social investing space by mainstream players? Draper Fisher Jurvetson India has made recent investments in environmental & facilities services firm Attero Recycling Pvt Ltd and D.light Design Pvt Ltd. Mohanjit Jolly, managing director, Draper Fisher Jurvetson India, points out that there is no denying the sheer population and collective buying power in the rural/semi-urban India. “It is clear that for India to continue on the economic growth trajectory, the needs of rural and semi-urban India will have to be addressed, whether that has to do with infrastructure, power, clean water, healthcare, education, financial services and retail/ distribution. With giants like P&G, Airtel, Nokia, Hero Honda and others seeing massive opportunity in that segment, it’s no surprise that start-ups and VCs are eager as well. With increasing successes as data points (telcos and MFIs for example), investors and entrepreneurs will continue to become increasingly confident about targeting the segment and creating large profitable entities,” he adds