Aavishkaar India Micro Venture Capital Fund (AIMVCF)
Aavishkaar Goodwell (AGIMDC)
BYST Growth Fund (BYST)
Aavishkaar India Micro Venture Capital Fund (AIMVCF) is a fund created to promote inclusive development in rural and semi-urban regions in India. The fund targets promising micro, small to medium -sized enterprises (MSMEs). Aavishkaar was incorporated in the form of a Trust in October 2001 and was registered with SEBI as a Venture Capital Fund in May 2002. The fund achieved its First closing in August 2007 at US$6 million followed by a Final closing in January 2009 at US$14 million.
Aavishkaar helps establishment of entrepreneurial ventures by providing equity financing in the range US$50,000 and US$500,000. Aavishkaar has received subscriptions from both domestic and global financial and development institutions like CARE Enterprise Partners, CORDAID, NABARD etc. The key investment criteria for the fund are – scalability and the potential to make strong positive social impact on rural or semi-urban India. The fund management team further provides active operational & strategic support in growing the businesses.
Aavishkaar’s investments create sustainable changes by increasing economic activity at the bottom of the pyramid, boosting entrepreneurial spirit and establishing socially motivated VC- funding as a new financing mechanism in India. These efforts were recently acknowledged when Aavishkaar received the World Business Award 2006 sponsored by the International Chambers of Commerce, United Nations Development Program (UNDP) and Prince of Wales Foundation in recognition of service towards fulfillment of the Millennium Development Goals, L-Ramp Awards of Excellence 2007 presented by Dr. A.P.J. Abdul Kalam, Former President of India.
Aavishkaar along with social benefit to the society aims to provide returns to its investors in the range of 12-15% IRR over 10 year investment horizon. Aavishkaar generally adopts innovative modes of financing – that facilitate reducing the risk of dilution in promoters’ equity, while protecting Aavishkaar’s interests in the ventures. The various instruments made use of normally are: Common equity, CCPS (Compulsorily Convertible Preference Shares), Mezzanine funding, bridge loans, working capital loans etc.
Portfolio Till date, Aavishkaar has made 16 investments across industries, which include renewable energy, waste management, information and communications technology, agro-based technology, handicrafts, healthcare and rural innovations. The fund’s first investment was in 2002 – in a Chennai-based firm called Servals Automation that has developed innovative new products to serve the rural markets. Servals’ blockbuster’ product is a stove burner that uses 30% less kerosene than traditionally used stove burners. One of the fund’s recent investments is in ‘Vortex Engineering’ that has developed a pioneering cost-effective ATM suited to rural markets. Vortex, with its’ tie-up with various banks will serve rural markets across India by rolling out these cash machines.
Aavishkaar’s portfolio companies today have the potential to generate direct employment for thousands of people in addition to providing value for the end-beneficiaries.
Value Creation:
Armed with a successful business model, Aavishkaar has scaled up in order to accomplish its twin objectives of maximizing benefits for rural populace and generating commercial returns for its investors. Aavishkaar would invest its corpus in a portfolio of around 35 more scalable, socially relevant micro-enterprises across India. Aavishkaar, with the help of its network in social space as well as in the mainstream markets network brings valuable inputs to the portfolio companies to scale up the impact across a larger section of society. It intends to act as a facilitator towards linking the rural entrepreneurs with the mainstream markets.Further as an illustration of value creation, two of
Aavishkaar’s portfolio companies are looking towards raising funds in subsequent round to fuel their further growth and to scale up impact across rural healthcare and rural technology sectors.
Aavishkaar Goodwell India Microfinance Development Company (AGIMDC)
“Aavishkaar Goodwell India Microfinance Development Company” (“AGIMDC”) is a microfinance development company that invests in entrepreneurial microfinance organizations in India. AGIMDC was incorporated as a Global Business License 1 Company with Financial services Commission, Mauritius in December 2006. The fund achieved its final closing in the month of May 2008 at USD 18.3 mn. The tenure of the fund is 10 years. AGIMDC partners in the growth of Microfinance institutions by equity infusion. The fund has received subscriptions from international institutions such as IFC, Goodwell MDC, Blue Orchard etc. Aavishkaar Goodwell provides equity capital and active support to microfinance start-ups and microfinance institutions that are in the transformation or growth stage. The objective of Aavishkaar Goodwell is to maximize value through superior risk-adjusted social and financial returns, by focussing on scalability, efficiency and leverage, and by applying a rigorous private equity approach within a mission-driven setting.
Portfolio Strategy:
Aavishkaar Goodwll invests in small scale MFI start-ups, and in medium to large scale MFIs (transformation or growth phase) that operate either as non-banking finance companies (NBFCs) or as organizations having specific relevant financial services licenses. Till date AGIMDC has made 5 investments in large scale and growth phase start up MFIs. The strategy for small scale MFI start-ups is to combine a tried and tested service company- model, that operates with the help of loans from larger banking institutions (these loans are serviced by MFIs from the interest generated by lending money to people at the ‘Bottom of Pyramid’) with an innovative franchising approach. The franchising approach enables Aavishkaar Goodwell’s investment team to simultaneously manage and groom a significant number of startup MFIs within a short span of time, resulting in faster returns from investments with comparatively lower costs.
Aavishkaar Goodwell capitalizes on this business opportunity, first by using the model to create an innovative and cost-effective start-up vehicle for pro-poor banks, and secondly, using its partnership in defining exits. The strategy for medium to large scale MFIs (the NBFCs) is to provide risk capital to fund further growth while forming a strong basis for financial leveraging, and to build value as an active equity stakeholder in the underlying businesses. Aavishkaar Goodwell invests with the objective to hold the investments for the long term, averaging between 5 and 7 years. The fund will be an active shareholder, highly engaged and involved in matters of financial management, governance matters, planning and managing growth, technology and innovation. Till date, Aavishkaar Goodwell has made investments in three MFIs. Value-building through alliances and partnerships with key players in the industry Aavishkaar Goodwell’s value-building strategy is based on leveraging the expertise and resources in these networks, by forming alliances with leading microfinance capacity building organisations, MFIs, NGOs, banks and other funders. For instance, the franchising approach for startups has been developed and implemented by Intellecap in partnerships with ICICI, CGAP and local MFIs.
BYST Growth Fund (BYST)
BYST Growth Fund is the first fund launched in India to provide equity financing for businesses run by socially disadvantaged entrepreneurs. BYST Growth Fund was incorporated in the form of Trust in March 2008 and registered with SEBI as a venture Capital Fund in July 2008.
While some micro-finance institutions provide loans to this segment, there is none that provides equity, crucial in fostering economic growth. In this context, one of the successful Indian “early stage” investment managers, APIDC Venture Capital Limited has formed a joint venture with Aavishkaar Venture Management Services (a pioneering micro-equity manager focused on rural markets) to form ‘Ventureast Micro Equity Managers’. This entity has combined forces with India’s leading mentoring organization, BYST (Bharat Yuva Shakthi Trust), to launch this unique fund.
Portfolio Strategy
The Portfolio is managed by professionals who bring invaluable experience of managing micro equity and microfinance funds that invest in early stage enterprises. BYST is India’s leading network of mentors, with strong private sector partnerships (CII members), for fostering entrepreneurship at the grass root level. Corporate partners include Tata Sons, Godrej Industries, Diageo, AIG, Keep Walking Fund (UK), Escorts Group, Accenture, Bharti Group and Bajaj Group. Partners also extend their support through grants, professional assistance and sponsorship of events, on a purely voluntary basis. These mentors also contribute invaluably by advising the Fund’s management team on a continuous basis.
Value creation in small enterprises
The fund adds and creates value at three fronts by: 2-tier mentoring support; Creating competitive advantage through capacity sharing and Formalizing systems and processes BYST’s professionally dedicated, motivated mentors from Indian corporate industry form first tier of mentoring structure.
The Investment Manager then builds on technical and strategic direction provided by the mentors to the entrepreneurs. Investment Manager helps create competitive advantage by replicating the businesses it has invested in. Investment Manager will also provide hands-on support and guidance to investee companies in capital structuring and financial management, applying best practices for governance and transparency, operational efficiency and technology and innovation in products.The fund has a number of distinct advantages that give it a unique position to capture the opportunities in the micro and small scale sectors in India and to convert those opportunities successfully into sustainable businesses that generate social and financial returns. These advantages are:
Deal Flow: Proprietary access to top performing BYST entrepreneurs.
Equity like structure for financing: Only institution to offer this type of structure.
Constant hand-holding / mentoring / monitoring: Through the BYST mentors.
Competitiveness building: Unique 2 – tier mentoring strategy with the Fund manager building vertical expertise and then transferring it through a franchisee type model.
Fund Manager track record: Only fund management team with successful exit track.
