Social impact fund to raise $400m


MUMBAI: Aavishkar, the country’s biggest social entrepreneurship-focused venture capital fund, is set to raise $400 million (Rs 2,500 crore) in 2015. This would be the biggest amount raised by any fund focusing on the social sector or impact investing in the country.

Aavishkar would raise two separate funds, a $100 million and a $300 million one within the next 12 months. “We hope to close the first fund by the end of March as we are half way there. We are also raising a separate $300 million fund which would be closed by the end of 2015,” said Vineet Rai, CEO and managing director, Aavishkar.

The $100-million fund would be an Africa-focused fund while the $300-million fund would invest in India. In the past 12 years, Aavishkar had raised $112 million and invested in the early stage social sector enterprises. However, with its upcoming $300 million India-focused fund, it plans to invest in companies at a later stage. This would also be the first time an Indian VC is investing in Africa.

In the past decade, Aavishkar had made 48 investments across eight sectors with 90 per cent of the companies having rural and semi-urban markets as their focus. All the companies that Aavishkar invested in through its first four funds were in their seed stages. In the past year, the funds have also managed to exit 15 investments, 11 of them fully ,4 partially. “At a time when even mainstream funds have taken a hit on giving returns, many social impact funds have given decent returns to limited partners (investors). Due to this, more than 50 per cent of the investors in the impact investing funds are repeat investors,” said Amit Bhatia, CEO, Impact Investors Council (IIC), a newly-formed regulatory body for social investments in India.

There are around 9 funds in India which focus on social sector where the aim is to create an impact on the society along with returns on investments. Due to this, the returns are in the range of 1012 per cent, say industry trackers. However, this sector ran into trouble in the past few years due to the controversy surrounding micro finance institutions.

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