VCs Plan to Invest $53M in Social Biz Over Six Months

Friday, August 6, 2010

MUMBAI: In the 20-company portfolio of Nexus Venture East, a $320-million venture capital (VC) fund, three businesses stand out. There’s Suminter India Organics, which does contract farming for organic produce; D.light Design, which provides solar lighting solutions; and Sohan Lal Commodity Management, which provides grain warehousing facilities in small towns and villages in 12 states.

Nexus refers to them as ’impact investments’ – businesses where the pursuit of profits is accompanied by the premise of social good.

In the four years it has been in India, Nexus has invested $10 million in social businesses. However, in the next six months alone, it expects to match that amount. Says Sandeep Singhal, co-founder, Nexus: “Businesses are targeting the bottom of the pyramid because people have a genuine ability to pay. So, we are looking at a few good deals in this space.”

It’s not just Nexus that is looking at a sharp increase in exposure to social businesses.

Each of the seven VCs that invest in social businesses that ET spoke to say they expect to increase their investments in such ventures at a faster pace. These seven VCs, which started investing in social businesses at various points between 1997 and 2009, have invested $220 million in such ventures in India so far. In the next six months, they say, they expect to add a combined $53 million.

Source: Economic Times (link opens in a new window)