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

Monday, November 20, 2017

Aavishkaar-Intellecap Group, the country’s oldest homegrown impact investor, has just raised commitments worth $95 million for its sixth impact venture capital fund, dubbed Aavishkaar Bharat Fund.

The fund, says a Mint report, has a final target corpus of about $200 million (Rs1,300 crore), making it the largest ever impact venture capital fund to be raised for the Indian market. The fund’s target size underscores the long road that still lies ahead of impact venture capital funds to get to critical scale.

There isn’t any doubt that impact investors such as Aavishkaar have made tremendous progress over the past decade since venture capital as an asset class returned in earnest to this market. Over the last seven years, 2010-2016, impact investors have put $5.2 billion to work across 485 deals, according to a McKinsey & Co. report in September. It wasn’t until 2010 that impact investments in India started to gather momentum and the last two years have been quite exceptional. Investments touched the billion-dollar mark for the first time in 2015 and scaled to nearly $1.1 billion last year.

The McKinsey data, it is important to note, includes investments by an array of investors such as non-profits, foundations, private equity firms, mainstream venture capital firms and impact venture capital firms. Firms such as Aavishkaar, Lok Capital, Elevar Equity and Unitus Seed Fund would account for a portion of the overall capital invested over the last seven years in the impact sector. As an asset class, impact venture capital hasn’t grown with the same momentum as mainstream venture capital.

Photo courtesy of Dean Hochman.