aavishkaar presentation (ppt)

Investing at the Bottom of the Pyramid

Micro venture capital for Sustainable businesses

Aavishkaar India Micro Venture Fund

Entrepreneurial Opportunities..

Entrepreneurial interventions do have the potential to impact the bottom of the pyramid but the intervention strategies vary based on approach, choice and the scale of intervention.

Business Expansion in Rural Markets

Business Intervention for Social Change

Social Sustainable Enterprise

Large Corporate

Micro Equity Provisions

Donor Funded

BOP Opportunities

Rural Products enterprises in the area of handicrafts, agri products, dairy, renewable energy for rural electrification, medicinal herbs based products and many more.

Social Technology initiative such as N-Logue (WLL), Drishtee (e-governance), Vortex (rural ATM), CK Shakti (Local Language Software)

Financial Innovation based interventions such as Microfinance

Replication and scale require risk capital with equity feature!!

Why Venture Capital?

Initial Idea, Business Formation

Business Growth

Maturing Business

Larger Sustainable Enterprise

•Entrepreneur conceives idea•Often a small proprietorship•Generally micro or sub-micro in size

•Entrepreneur works with team

•Business plan to grow business past micro stage•Requires more infrastructure, addition of new products and services•Increase in headcount

•Aavishkaar provides financial support•Aavishkaar provides business building support

•Business growth slows•Focus on profit and efficiency

•Aavishkaar provides strategic and operational support

•Business enters small stage•Pursues growth opportunities to get to medium and large size

•Other investors join

Why Venture Capital?

Start up Growth Maturity

The equity Gap

Conventional Venture Capital

(Not interested in BOP)

Private Equity /IPO/ Institutional

Investors

(Not Interested in BOP)

?

To meet regulatory capital needs and growth needs

Aavishkaar Focus

Aavishkaar Micro venture Capital

Investment Thesis

AIMVCF seeks to achieve sustainable development in India by:

Investing in innovation and appropriate technology driven Small & Micro

enterprises that are

socially relevant

environmentally friendly

commercially viable

and have little or no access to established financial institutions for

risk or collateral free loans/Equity

Achieve Socio-commercial returns for its global investors

Four Tier Evaluation Process

Evaluation concentrates on Rural Applicability, social relevance and presence of a organized business model.

Focus to understand the motivations of the Entrepreneur, his ability to lead, integrity, honesty commitment to the project along with social benefits.

Business evaluated on commercial parameters such as markets, scalability, uniqueness of business model, growth, return on investment.

Term Sheet, Audit and Legal Due Diligence

Decision made by Chief Executive based on the recommendation of the Project Manager

Decision taken by the management board to accept or reject the proposal

Decision by the Management board on investment, size and valuation based on the recommendation of the Executive team

Investment made based on the recommendation of the Auditor

Aavishkaar Portfolio

Servals Automation Private Ltd

Rain Gun Kerosene Burner

Kerosene stove burners – 70000+ sold– Sold burners will save customers in aggregate US $ 500,000 during their useful life (1 year); government fuel import burden

also reduced by same amount [assumes Rs. 100 kerosene expense per household per month, reduced by 20% conservatively) Rain gun – 170+ sold

– A micro-irrigation device, also called an overhead sprinkler. The rain gun produces an artificial rain by throwing out water to a distance of up to 90 feet with a 360 degree rotation facility

– The size of the drops, the quantity of water released and distance are such that it provides optimum irrigation to many crops while saving water otherwise wasted through flood irrigation

Servals is an appropriate technology provider for rural India. The company has two products: an energy efficient kerosene burner and a rain gun irrigation device. Both products were designed by rural innovators. Servals currently has 7 employees and is located in Chennai.

SERVALS:

BUSINESS MODEL

Impact of Micro equity Provisions

SERVALS AUTOMATION

Original Stove

Manufacturers

Manufacture

Direct Demo’s and Periodic visits

Orders

Supply

NGO’sBurner

Retailers

SHG’s

Layered Incentive Scheme

SERVALS: Commercial & Social Result

SERVALS performance- Financial

-20000

-10000

0

10000

20000

30000

40000

50000

2004 2005

Year

Sales

Profits

Poly. (Sales)

Linear (Profits)

Social Parameters :Relationship with 10 large NGO’s, also supplied burners to service distressed victims in Tsunami.

Won the International award of maximum fuel efficiency by Paraffin Safety Association of South Africa

Serving the Bottom of the Pyramid Profitably

Equity investment of US $ 26,444.

Rigorous hand holding support over three years by Aavishkaar Micro Equity Fund

Aavishkaar Investment

Shri Kamdhenu Electronics Private Limited (SKEPL)

Company OverviewSKEPL pioneered the automation of the milk collection process at dairy cooperatives. The system introduces transparency and efficiency and helps improve cooperative management. SKEPL has 32 employees and is located in Anand, Gujarat.

Social valueSKEPL products improve the operations of milk cooperatives, an effective business structure utilized throughout India’s dairy industry. Cooperatives using SKEPL’s technology are more profitable, improving the livelihoods of their members.

Aavishkaar Portfolio Cont..

SKEPL:

BUSINESS MODEL


SKEPL

Milk Unions Milk Cooperative

Foreign Imports

Marketing effort with Dealers and Sales Team

Orders

Outsource Parts

Assembling & Supply

SKEPL: Commercial & Social Result

SKEPL performance- Financial

-100000

0

100000

200000

300000

400000

1999 2000 2001 2002 2003 2004 2005

Year

US

$

Sales

Profits

Poly. (Sales)

Linear (Profits)

Social Parameters : Outreach with 600 Unions and co-operatives in Gujarat. Expanding to Maharashtra, MP & Rajasthan.Recently won Manthan Award for best e-content practices in e-business category


Equity investment of US $ 44,000.

Rigorous hand holding support over two years by Aavishkaar Micro Equity Fund


Craftsbridge (I) Private Limited

Company OverviewCraftsbridge is a design and marketing outfit with an outsourced production model in the area of Indian handicrafts. The company’s mission is to design and market handicraft idea worldwide and generate sustainable income for talented but economically challenged artisans from India.

Aavishkaar portfolio contd…

http://www.craftsbridge.com/craftsbridge/scripts/itemdetails?item=1116

Craftsbridge:Impact of Micro equity Provisions

Craftsbridge

International markets

Corporate

Buyers

Rural Handicrafts Producer

NGO Facilitator

Marketing effort with Designer samples

Orders

Outsource

Production

Production & Supply

BUSINESS MODEL

Craftsbridge: Commercial & Social Result

Craftsbridge performance- Financial

-200000-100000

0100000

200000300000

400000500000

600000700000

800000900000

2001 2002 2003 2004 2005

Year

US

$

Sales

Profits

Poly. (Sales)

Poly. (Profits)

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


400% commercial growth achieved by investing equity of US $ 100,000.

Rigorous hand holding support over two years by Aavishkaar Micro Equity Fund


Tide Technocrats Private Limited

Company OverviewTide Technocrats operates in the space of Rural Energy Solutions. TTPL provides end to end solutions for micro hydel installations and the alternative fuel needs for the power plants. It aims to provide electrification in rural and far flung remote areas where bio mass creates avenues of employment.

Tide Technocrats:


TTPL

ELC VendorsTurbine Vendors

Direct Selling Agents

Coffee Plantations

Biomass Customers

Coordinators

Coconut Farmers

BUSINESS MODEL

Tide Technocrats:


Recent Updates…

Aavishkaar has partly divested its stake and has made a partial exit from TTPL.

Aavishkaar has also found a Long Term Strategic Investor (Velcan Energy, France) for TTPL.

Shareholder % Stake before partial exit % Stake after partial exit

Sampath and Rajeshwari stake

72.4% 34.42%

Aavishkaar India Micro Venture Capital Fund

27.6% 14.56%

Velcan Energy - 51.02%

Net Systems Informatics (I) Private Limited

Company OverviewNet Systems (I) Private Limited is a company based in Mumbai, aims to create disabled friendly IT infrastructure. It enables software and websites for the use of disabled, particularly those with vision and auditory impairment. The company also provides Technical Writing outsourcing services.

Social valueN-Syst is trying to open up a world of opportunities for the disabled by making IT infrastructure compatible to their usage.

Aavishkaar portfolio contd…

N-Syst: Impact of Micro equity Provisions

Net Systems

ITCOMPANIES (INTERNATIONAL)

IT Companies (Domestic)

Technical Writing

Marketing efforts with Direct approach, Seminars & Workshops

Order Assignments

Accessibility

Testing

BUSINESS MODEL

N-Syst: Commercial & Social Result

Net Systems performance- Financial

-20000

0

20000

40000

60000

80000

Q1 2005 Q2 2005

Year

US

$

Sales

Profits

Poly. (Sales)

Linear (Profits)

Social Parameters : Concentrated efforts towards increasing Accessibility awareness…


45% commercial growth achieved by investing equity of US $ 40,000 in six months.

Rigorous hand holding support over six months by Aavishkaar Micro Equity Fund


Naveen Gram Agrotechnologies Private Limited

Company OverviewNaveen Gram Agrotechnologies Private Limited is a start up company, based in Rajasthan which addresses and provides solutions for the challenges of awareness, availability and acceptability faced by small enterprises. It aims to make an impact in the rural sector through development of a distribution and marketing channel for rural products by tying up with innovative manufacturers.

Social valueNaveen Gram concentrates its efforts towards up gradation of rural processes through introduction of technology.

Aavishkaar’s New Investment

Aavishkaar’s New Investment

Naveen Gram

Agricultural and Rural demand for Technology

Small Enterprises with Innovative Products and

Technology for Rural

Marketing efforts with Demonstrations and Direct Efforts

Demand

Outsource Technology

Brand Introduction

Dealers

BUSINESS MODEL

Naveen Gram Agrotechnologies Private Limited

Aavishkaar support goes well beyond funding

Portfolio Company

Servals

SKEPL

Craftsbridge

Aavishkaar Efforts

• Introductions to customers within Aavishkaar’s network of NGOs• Continued strategic assistance

• Continued efforts to improve financial discipline• Assisting in MIS system development• Using Aavishkaar network for business development

• Restructured financial management, MIS• Advised on new sales force compensation plan• Providing export expansion advice• Using Aavishkaar network for business development

TIDE • New promoter found• Company restructured• Aavishkaar sourced customer contracts• Using Aavishkaar network for business development

The funded companies now use TALLY, the accounting software, to manage their accounts and produce timely financial statements.

Projects In Pipeline

Pipeline Projects

C K Technologies Private Limited

Vaatsalya Healthcare Solutions Private Limited

Dorgen Agro Bio Technology Private Limited

Reason for Existence

• Based in Chennai• Prepares Multilingual Software

• Based in Bangalore • Provides Rural Healthcare Solutions

• Based in Chennai• Operates in space of Food Processing (Banana Based Products)

Vortex Engineering Private Limited

• Based In Chennai • Manufactures Rural ATM’s

Farmers Trading Company • Based In Hyderabad• Operates in sector of Organic Cotton

Potential Exit Strategy

Stable Micro Enterprise with a sustainable model

Micro Venture Capitalist

Social Investor with Local Focus

Long term loan/ Fresh EQUITY /

Promoter Buy Back

Venture Capitalist

Exit Design through

Take out financing

Aavishkaar has made six investments in last three years and is in the final stages of disbursing the seventh investment.

Aavishkaar has raised a corpus of Us $ 1.3 Million and is working on raising it to US $ 5 Million.

The Fund is expected to make return in the range of 4-6% on an IRR basis by 2010.

The fund has already invested over INR 164 lakhs (USD172,000) with another disbursal of Rupees 50 lakhs (USD 110,000) approved and a near term pipeline of another Rs 93 lakhs (USD215,000) and a long term pipeline of USD 500,000of probable investment. The fund current corpus would be fully invested by march 2006.

Some Facts..

Investment Sectors Focus

• Agri Processing, Contract farming• Technology intervention for improved

outreach and access• Innovative Microfinance Start up• Renewable Energy• Handicrafts

With increased momentum in Microfinance in recent years, Aavishkaar has attracted new & large investors towards making equity investments in small enterprises and MFI’s.

The venture capital fund is in the process of entering into agreements with some major players of the industry.

Aavishkaar is known for it’s rigid investment criteria and due diligence process in its space.

With its strategies and management support, it has been successful in turning around its investee companies…

Attracting Large Investors…

Management & Oversight

Board of Trustees

Management Board

CEO

ProjectOriginators

ProjectOfficers

Finance & Admin

Mentor OrgsNGOsOther 3rd Parties

MOU

Board of Trustees(*)Mr. Arun Diaz: MBA, 28 Years Banking ExperienceMr. Nilesh Mehta: MBA, Partner – Infinity Venture

Management Board(*)Dr. Anantha Nageswaran: Ph.D, MBA, Director, Global Economics and Asset Allocation, Credit Suisse, Asia-PacificMr. Arun Diaz: MBAMs. Jennifer Meehan: Microfinance & Social Investing professional, formerly with The Chase Manhattan BankProf. Krithivasan Ramamritham: PhD, Prof. & Head Kanwal Rekhi School of IT (IIT Mumbai)Mr. Nilesh Mehta: MBAMr. Pravin Gandhi: Partner, Infinity VenturesSushant Gupta: MBA, EntrepreneurSameer Wagle: Orion Capital

ManagementMr. Vineet Rai, CEO: MBA, Ashoka FellowMr. P. Pradeep, Project Officer: MBA, former Deputy Finance Manager Agricultural CompanyMr. Priyank Jain, Junior Associate: MBA, B.E.

Advisory Board

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: [email protected]

Website.: www.aavishkaar.org

Contact

mailto:[email protected]

http://www.aavishkaar.org/

aavishkaar presentation (ppt)

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