The National Innovation Council (NInC) and the Ministry of Micro, Small and Medium Enterprises (MSME) jointly announced the creation of the India Inclusive Innovation Fund (IIIF).
The Fund will be registered under Sebi’s Alternative Investment Fund Category I guidelines with an initial corpus of Rs 500 crore, with the Ministry of MSME committing to 20% (Rs 100 crore) and the balance being given by banks, insurance companies, overseas financial and development institutions.
The Fund will aim to provide modest financial returns, while ensuring significant social impact to the community. The Fund’s eventual aim is to expand the corpus to Rs 5,000 crore over the next 24 months.
IIIF, which has been approved by the Union Cabinet, was conceived and architected by the NInC as a concept which seeks to combine innovation and the dynamism of enterprise to solve the problems of citizens at the base of the economic pyramid in India.
Sam Pitroda, Chairman of NinC and Advisor to the Prime Minister on Public Information, Infrastructure and Innovation said: “The needs of the people at the base of the economic pyramid are today served by philanthropy and government grants / subsidies which can never be either adequate or scalable.. IIIF seeks to leverage the model of Venture Capital to transform the lives of the less privileged”.
The Fund will invest in innovative ventures that are scalable, sustainable and therefore profitable but address social needs of our less privileged citizens in areas such as healthcare, food, nutrition, agriculture, education / skill development, energy, financial inclusion, water, sanitation, employment generation, etc.
Lack of Capital is one of the major reasons why ventures and entrepreneurs seeking to address the needs at the base of the economic pyramid have failed to take off. IIIF seeks to address exactly this gap and therefore at least 50 per cent of its investments initially will be to enterprises that fall in the MSME stage. It has been observed globally that new enterprises have the highest potential for job creation and hence IIIF will seek to address this aspect as well.
The IIIF will also partner the entire ecosystem in this space, including incubators, angel groups, and also public R&D programmes and laboratories to support the commercialisation and deployment of socially relevant innovative technologies and solutions.
The Government will not be involved in the day to day operations of the Fund, which will be entrusted to an Asset Management Company (AMC), set up as a Section 25 not for profit company. The AMC will appoint a professional management team for this purpose as also an Investment Committee comprising professionals of repute, which will take all investment / divestment decisions.