Social Impact Investing

Venture Capital
Aavishkaar
Impact First Investor
Investor
Multiple Investors
Profile: Rockefeller Foundation
Below market return
less fund fees
Equity
Impact investment
fund
Aavishkaar
Below market return
deal
Servals Automation
area of impact
Rural Poverty
geography
India
“At Aavishkaar we
wouldn’t want to think
of ourselves separating
the social impact from
the financial one or
seeing one as distinct
from the other. We see
social impact as being
implicit in the business
model of the enterprise.
The growth in the
business fortunes of
this company is directly
linked to the social
impact it makes; more
products sold means
higher energy efficiency
to poor households and
therefore improvement
in their quality of life.”
Pradeep Pathiyamveetil
COO
Aavishkaar
Multiple Investors
••
Aavishkaar’s investor base includes foundations, high net worth individuals and other impact-oriented investors
Rockefeller Foundation (http://www.rockfund.org)
••
Rockefeller Foundation has invested in numerous socially motivated investment vehicles through their programrelated
investing (PRI) work
Aavishkaar (http://www.aavishkaar.org)
••
Aavishkaar is a micro economic fund, targeting investments in India
••
Aavishkaar also runs a microfinance fund as a joint venture with Goodwell, a Netherlands-based microfinance
company
••
Looks to invest in SMEs and very small companies engaging in entrepreneurship
••
Screens companies from an impact perspective first, and after convincing themselves of strong impact, looks at
the financial metrics like growth and profitability
••
Typical investment size of INR 1MM (~$25K)
••
Primarily equity players, but permitted to provide debt in deals where equity is already present
••
Due to Indian regulations on venture capital firms, pure debt can only make up 20% of deals, so debt funding
tends to be bridge loans to take care of small requirements for limited time periods
Servals Automation Pvt Ltd (http://www.servalsgroup.blogspot.com/)
••
Servals Automation was founded by P Mukundan as a platform to launch rural innovations
••
Servals products include a kerosene saving stove burner targeting the rural poor and a rain gun which at half the
price of imported products which uses water more efficiently at half the price of imported products
••
The company, headquartered in Chennai, is aligned with the Rural Innovation Network (RIN)
••
Servals approached Aavishkaar for an equity investment to help strengthen its assembling, marketing and distribution
channels as well as to help promote its products
••
Aavishkaar has invested INR 1.119MM (~$25K) in the company through two rounds of equity investment.
It has also extended a bridge loan to Servals in order to cover working capital gaps
Impact
social/environmental impact
••
The products sold by Servals have impacted 450,000 low income
households
••
Average fuel savings have been around 72L of kerosene annually per
household
••
Financial savings have been INR 3000 (~$70) annually per household
••
Servals currently has 60 employees, of whom 60% are women
financial impact
••
Starting with no revenues in 2003, the company has grown to
a turnover of INR 11.4 MM (~$225K) in 2008
••
The working capital bridge loan offered by Aavishkaar was
repaid in full by the company
••
Aavishkaar has received strong dividend payback from the
investment after revenues have started to grow
••
Aavishkaar looks to exit the investment close to 5 years after
the initial equity round
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