A number of angel investors, and venture funds, invest in technology start-ups and commercial businesses, hoping to get good returns in a short span of time. However, Ankur Capital, an impact angel fund co-founded by Rema Subramanian, has decided to focus on an uncharted territory, where there are not many successful examples to boost the spirit. She explains to Bibhu Ranjan Mishra why the fund is investing in social ventures. Edited excerpts:
What has been Ankur Capital's approach while selecting investments?
Both my partner, Ritu Verma, and I were mentoring organisations in the social space, after successful stints in corporates and large organisations. We realised these businesses not only require capital, but a lot of hands-on support. We decided to take up this work full-time and, thus, came up with Ankur Capital, the first impact Angel fund registered with the Securities and Exchange Board of India and also the first fund run by all-women promoters.
Our focus is to create a model, where start-ups can get access to hands-on support in building efficiencies, so they can become scalable businesses.
Of late, there are a lot of incubation and mentorship initiatives in India with the growth of the start-up system...
True, but most of these are confined to the technology space, far more developed as compared to traditional brick-and-mortar businesses which try to solve social problems. And, you have many angel investors who want to enter this space but then realise a lot of hard work is required to make these companies succeed.
To give an example, there is a company, where we co-invested with other angel investors, that supplies green fuel made out of farm waste to cement factories. The other investors wanted to put their money only if Ankur Capital came in. It's because they realised that if you don't have oversight over these companies, they will fail. There are a lot of angel investors who come in and expect the same as is in the technology space. We bring in the principles of regular commercial businesses to social enterprises.
Why have you chosen social enterprises as a key focus area?
There is a need to deliver services in such areas, whether it's in health care or education for millions of under-served people. That is where social entrepreneurs come into the picture, with business models and ideas to enable doing that. This is an area where one needs to be really innovative, to deliver a service at an affordable price-point and a large scale.
While many are innovating new business models, there are entrepreneurs who are tweaking existing successful models for a different segment or region. For example, we have invested in ERC Eye Care, an Assam-based provider of affordable eye care for economically-challenged people. Its model is similar to that of Aravind Eye Care but has been tweaked for the northeast region.
Does it mean you will not invest in technology start-ups?
We've invested in companies that try to solve complex social problems - whether it is in agriculture or health care - by using technologies. For example, we have invested in a company called Crop-In Technology, which connects small farmers with a global supply chain using a GPS (global positioning system) mobile-based ERP (enterprise resource planning) system. Large vendors are always a part of the suppliers, SAP (systems, applications and products) through which they connect with the latter but for farmers who don't know the use of technology, it is next to impossible. This platform enables farmers to connect with companies to sell their produce directly. Similarly, we have invested in a company that provides remote health care to rural people using technology.
Do you come in only in the angel stage?
Yes, in the very early-stage, where they not only need money but support in laying the foundation. We are a $7-million (Rs 40 crore) fund and we typically invest Rs 50-70 lakh in the first round and set aside Rs 2-4 crore for subsequent rounds, depending on how these companies perform.