Nurturing Micro Entrepreneurship : Micro Equity as a Solution to Macro Economic

Development Issues

Aavishkaar India Micro Venture Capital Fund

Micro Equity Provisions to Create Sustainable Intervention in Rural Economy Presented by

Vineet Rai

Co-founder & Chief Executive

Aavishkaar India Micro Venture Fund

• Essentially rural economy with 60% of the population dependent on agriculture.

• Widening disparity between the rural and urban India causing widespread migration towards urban centers.

• Government attempts have been focused on Agriculture and mostly related to productivity of land

Development Challenges for India

Opportunities Exist…. They need to be tapped

Rural Infrastructure with e-kiosks, rural ATM, local language software and e governance initiatives

Microfinance has reached a large number of people

Contract farming with small and marginal farmers

Innovative technologies for enhanced productivity

Market and access focus interventions in handicrafts and rural products marketing

Replication and scale require risk capital at start up stage !

Case in Point: Craftsbridge

Handicrafts is a major sector that impact rural poor but despite beauty and splendor the sector has been struggling due to Lack of understanding trends in colours, design and lack of marketing skills.

Enters Craftsbridge – A social focused For Profit Venture

Mission : Indian Handicrafts & Gifts designed and Marketed towards, generating sustainable income for talented but economically challenged artisans from India.

Operational Strategy to Create new markets for handicrafts goods domestically and internationally and combine Contemporary packaging and design inputs with crafts to create market pull

Outsource production to rural craftsperson and NGO supported rural outfits

Entrepreneurs have idea …

Need Equity to Create Sustainable Enterprises

Craftsbridge: Commercial & Social Result

Craqftsbridge performance- Financial

-200000-100000

0100000200000

300000400000

500000600000700000

800000900000

2001 2002 2003 2004 2005

Year

US $

Sales

Profits

Poly. (Sales)

Poly. (Profits)

Social Parameters : Works with 13 NGO & 100 Craftsmen. Very small individual businesses in handicrafts are also part of Craftsbridge supply Chain.

Serving the Bottom of the Pyramid Profitably

Achieved with Risk Capital of US $ 100,000 and rigorous hand holding support over two years by Aavishkaar Micro Equity Fund

Aavishkaar pioneered the concept of Social Venture Capital in India with its Micro Equity Fund.

We, at Aavishkaar, believe that one of the effective ways to address the challenges of development is to integrate the effort toward social development with the entrepreneurial spirit that characterizes Rural and Urban India.

Aavishkaar is a for profit fund addressing the systemic challenges to rural and social entrepreneurship at the start up stage.

Micro Venture Capital to Promote Social Enterprise

Founded in 2002 as a for profit private trust with a group of Indian and Non Resident Indians to make an Impact on Rural India accountably.

Registered with Securities and Exchange Board of India as a Venture Capital Fund in 2002.

Raised US $ 1.2 Million as investible corpus over three years

Invested and has committed investment of .5 Million US $

Pipeline of .5 Million US $

Operational Expense capped at 4.5% of Corpus

Expected return on Investment 6%

All Founders are Investors in Aavishkaar

History of Aavishkaar Micro Venture

Aavishkaar

Investment Strategy

Start up Growth Maturity

The equity Gap

Conventional Venture Capital

Private Equity /IPO/ Institutional

Investors

?

To meet regulatory capital needs and growth needs

Aavishkaar Focus

Exit Strategy

Stable Micro Enterprise with a sustainable model

Nervous Venture Capitalist

Social Investor with Local Focus

Long term loan/ Fresh EQUITY /

Promoter Buy Back

Venture Capitalist

Exit Design through

Take out financing

Aavishkaar Expectations

Aavishkaar believes that though still some questions are unanswered, a working proof of concept has been achieved.

It is important to scale up Aavishkaar Micro Equity investments into a larger corpus that can deliver to eco-system services to start up Social Venture Effectively

We are looking at Institutional Investors and HNI to invest experimental capital in Aavishkaar to allow us to take it to another level

Key Team Members

Arun Diaz: Trustee, Aavishkaar India & Member, Management Board and Investment Committee. Currently a Management Consultant, Arun served with Standard Chartered Bank for 28 years in senior positions in India and overseas. Thereafter, he had a brief stint with Reuters Consulting as Head of their South Asia Division.

Nilesh Mehta: Trustee, Aavishkaar India & Member, Management Board. Nilesh Mehta is one of the General Partners and the Principal of Infinity II, a cross border technology fund investing in India centric technology companies. Infinity II is a partnership with Advent International, Boston, one of the largest private equity funds in the US.

Anantha Nageswaran: Member, Management Board and Investment Committee. Anantha is Director and Head of Investment Consulting in Credit Suisse Private Banking,

Asia Pacific. An economist by profession Anantha also represents the investors’ interests as the Director of Aavishkaar International, Singapore

Arvind Singh: Advisor A banker by profession, Arvind served with Citibank and Standard Chartered Bank in India

and abroad before becoming a consultant and entrepreneur based in Singapore. Arvind serves as an Advisor to Aavishkaar.

Key Team Members

Jennifer Meehan, Member Management Board, Investment CommitteeJennifer worked with Chase Manhattan Bank before she became a full-fledged Micro Finance Specialist and

advises Micro Finance investors such as Calvert Foundation over their Micro Finance Investments worldwide.

Prof Krithi Ramamritham, Member Management BoardProf. Ramamritham received a Ph.D. in Computer Science from the University of Utah. He is currently at the

Indian Institute of Technology Bombay as the Vijay and Sita Vashee Chair Professor in the Department of Computer Science and Engineering and heads the Kanwal Rekhi School of Information Technology as well.

Pravin Gandhi, AdvisorMr. Pravin Gandhi has over 28 years of experience in the IT industry in India and is the co-founder of Infinity

Venture, an equity fund in the technology sector. He is an angel investor in several Indian software and Internet companies. In 1972, he co-founded the Hinditron group of companies (India's first IT Company), which subsequently merged with Digital Equipment Corporation in 1988.

Narayan Ramachandran, AdvisorNarayan Ramachandran is Managing Director and Global co-head of Morgan Stanley's Emerging Markets team. The team invests about $14 billion in the the secondary markets of emerging countries including India.Ramachandran received a B.S. with Distinction from the Indian Institute of Technology Bombay in Chemical Engineering and an M.B.A. from the University of Michigan at Ann Arbor.

Key Team Members

Sanjeev Sanyal: AdvisorSanjeev Sanyal is Deutsche Bank's Senior Economist for Asia. He is a Visiting Research Fellow at Oxford University and a Member of the India & ASEAN Research Group at the Institute of South East Asian Studies, Singapore. He holds a BA (Hons.) in Economics from Delhi University as well as two Master's degrees from Oxford University where he was a Rhodes Scholar.                                                                                                                         Vijay Mahajan: Advisor

Voted as the Social Entrepreneur of the Year by Schwab Foundation and presented the Distinguished Alumnus of Indian Institute of Technology Delhi, Vijay is an outstanding Entrepreneur, promoter and Managing Director of Basix and serves on the board of a large number of private and public companies.

Vineet Rai: Chief Executive OfficerVineet has a decade of experience in small business incubation, innovative technologies and SME sector. Prior to Co-founding Aavishkaar,he was the Chief Executive of GIAN, a business incubation fund in of IIMA & Government of Gujarat. Vineet has also co-founded, Intellecap – a development consulting company and Rural Innovation Network. Vineet has been awarded Ashoka Fellowship for his innovative work in the field of social entrepreneurship.

Mr. Vineet Rai, CEOAIMVCFUnit 201 & 221, Atlanta Estate,Dr. Ambedkar Chowk, Off Western Expressway,Goregaon (E), MumbaiINDIA – 400 063.

Phone : +91-22-5699 8955 Mobile: +91-98206 45736

Email: vineet_rai@aavishkaar.org

Website.: www.aavishkaar.org

Contacts