Social ventures in India get angel investors


Biswaroop Gooptu | The Economic Times


BANGALORE: As more wealthy Indians veer towards the business of social good, they are pooling money and minds together in a model that mimics the country’s leading angel investment networks.


Around a dozen wealthy individuals have come together to form the Impact Circle, India’s first specialised network of angel investors who will support fledgling social ventures.


Amongst the members are senior corporate executives such as Anurag Jain, who led delivery services at Dell, Joydeep Mukherji, a former American Express executive and Sadeesh Raghavan, former managing director at Accenture, who is also a member of the Indian Angel Network. “The Circle handpicks its members for their commitment to impact investing and their expertise, and not return expectations,” said Digbijoy Shukla, director, Impact Circle. Having sealed its debut investment in Sudiksha Knowledge Solutions, a Hyderabad-based education services provider, the network expects to close two more deals in the healthcare and agricultural information space at the start of the New Year.


Given the niche space in which it operates, Impact Circle, which currently has 15 investors, plans to cap its membership at about 50 by early-2014.


In contrast, the country’s two most prominent angel investors – Mumbai Angels and the Indian Angel Network – count more than 150 investors as members.


The network, which has the backing of institutional investors such as Ennovent, Switzerland’s Rianta Capital, and the Michael and Susan Dell Foundation, will provide seed capital ranging from $25,000 to $1 million (Rs 14 lakh to Rs 5.5 crore) to very young social ventures. Investments will be directed mostly towards ventures in the food, energy, healthcare, water and education sectors.



“We will also look at allied sectors such as rural transportation , financial services and mobile payments,” said Shukla.


The social enterprise sector in India is on the path of recovery as investors shed their cautious outlook on mission-driven businesses after a lean period following the microfinance crisis of 2010. This year, social ventures have received investments of $55.1 million spread across 24 transactions.



“There is a huge gap between supply and demand, that is where Impact Circle can make a difference, largely because it is focusing on the very early-stage space,” said Raghavan.



The investments will be either direct equity or compulsory convertible debt investments , and will be for 5-7 years. Impact investing is increasingly being seen as an attractive asset class by risk capital in India, given the travails of commercial private equity in recent years.



“If it wasn’t sustainable, and if the market opportunities weren’t there, we wouldn’t be in the space,” said Shukla, who expects that his network of socially conscious angels will garner returns ranging from 10 per cent to 12 per cent.



The original article appeared in The Economic Times



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