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. Large Corporate

Business Expansion in Rural Markets

Micro Equity Business Intervention for Social Change Provisions

Social Sustainable Enterprise

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

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

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

Maturing Business
Business growth slows Focus on profit and efficiency

Larger Sustainable Enterprise

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

Entrepreneur works with team

Aavishkaar provides financial support Aavishkaar provides business building support

Aavishkaar provides strategic and operational support

Other investors join

Why Venture Capital?

To meet regulatory capital needs and growth needs

Start up The equity Gap

Growth

Maturity

Conventional Venture Capital

(Not interested in BOP)

Private Equity /IPO/ Institutional Investors (Not Interested in BOP)

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

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. 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 irrigationKerosene Burner while saving to many crops Rain Gun water otherwise wasted through flood irrigation

SERVALS: Impact of Micro equity Provisions

BUSINESS MODEL

Orders

Original Stove Manufacturers

Burner Retailers

NGOs

SERVALS AUTOMATION

Direct Demos and Periodic visits Supply

SHGs
Layered Incentive Scheme

Manufacture

SERVALS: Commercial & Social Result

Aavishkaar Investment
50000 40000 30000 20000 1 0000 0 -1 0000 -20000 Year 2004 2005 Sales P rofits P oly. (Sales) Linear (P rofits)

SERVALS performance- Financial

Equity investment of US $ 26,444. Rigorous hand holding support over three years by Aavishkaar Micro Equity Fund

Social Parameters :Relationship with 10 large NGOs, 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

Aavishkaar Portfolio Cont..

Shri Kamdhenu Electronics Private Limited (SKEPL)

Company Overview SKEPL 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 value SKEPL products improve the operations of milk cooperatives, an effective business structure utilized throughout Indias dairy industry. Cooperatives using SKEPLs technology are more profitable, improving the livelihoods of their members.

SKEPL: Impact of Micro equity Provisions

BUSINESS MODEL

Orders

Milk Cooperative

Milk Unions

SKEPL

Marketing effort with Dealers and Sales Team Assembling & Supply

Outsource Parts

Foreign Imports

SKEPL: Commercial & Social Result

400000 300000 US $ 200000 100000 0 -100000 1999 2000 2001 2002 Year 2003 2004 2005

SKEPL performance- Financial Aavishkaar Investment

Sales Profits Poly. (Sales) Linear (Profits)

Equity investment of US $ 44,000. Rigorous hand holding support over two years by Aavishkaar Micro Equity Fund

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 ebusiness category

Serving the Bottom of the Pyramid Profitably

Aavishkaar portfolio contd

Craftsbridge (I) Private Limited

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

Craftsbridge: Impact of Micro equity Provisions

BUSINESS MODEL

Orders

Corporate Buyers

International markets

Craftsbridge

Marketing effort with Designer samples Production & Supply

NGO Facilitator

Outsource Production

Rural Handicrafts Producer

Craftsbridge: Commercial & Social Result

Craftsbridge performance- Financial
900000 800000 700000 600000 500000 400000 300000 200000 100000 0 -100000 -200000

US $

Aavishkaar Investment

Sales Profits Poly. (Sales) Poly. (Profits)

2001

2002

2003 Year

2004

2005

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

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

Rigorous hand holding support over two years by Aavishkaar Micro Equity Fund Serving the Bottom of the Pyramid Profitably

Tide Technocrats Private Limited

Company Overview Tide 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 Impact of Micro equity Provisions Technocrats:

BUSINESS MODEL

Turbine Vendors

ELC Vendors

Biomass Customers

TTPL

Direct Selling Agents

Coordinators

Coffee Plantations

Coconut Farmers

Tide Impact of Micro equity Provisions 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 Sampath and Rajeshwari stake Aavishkaar India Micro Venture Capital Fund Velcan Energy % Stake before partial exit 72.4% 27.6% % Stake after partial exit 34.42% 14.56% 51.02%

Aavishkaar portfolio contd

Net Systems Informatics (I) Private Limited

Company Overview Net 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 value N-Syst is trying to open up a world of opportunities for the disabled by making IT infrastructure compatible to their usage.

N-Syst: Impact of Micro equity Provisions

BUSINESS MODEL

Order Assignments

IT Companies (Domestic)

ITCOMPANIES
(INTERNATIONAL)

Marketing efforts with Direct approach, Seminars & Workshops

Net Systems Testing

Technical Writing Accessibility

N-Syst: Commercial & Social Result

80000 60000 US $ 40000 20000 0 -20000 Q1 2005 Q2 2005 Year

Aavishkaar Investment

Net Systems performance- Financial

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 Serving the Bottom of the Pyramid ProfitablyEquity Fund Micro

Aavishkaars New Investment

Naveen Gram Agrotechnologies Private Limited

Company Overview Naveen 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 value Naveen Gram concentrates its efforts towards up gradation of rural processes through introduction of technology.

Aavishkaars New Investment Naveen Gram Agrotechnologies Private Limited BUSINESS MODEL

Demand

Agricultural and Rural demand for Technology

Brand Introduction

Marketing efforts with Demonstrations and Direct Efforts

Naveen Gram

Dealers

Outsource Technology

Small Enterprises with Innovative Products and Technology for Rural

Aavishkaar support goes well beyond funding

Portfolio Company
Servals

Aavishkaar Efforts
Introductions to customers within Aavishkaars network of NGOs Continued strategic assistance

SKEPL

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

Craftsbridge

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

Reason for Existence

Based in Chennai Prepares Multilingual Software

Vaatsalya Healthcare Solutions Private Limited

Based in Bangalore Provides Rural Healthcare Solutions

Dorgen Agro Bio Technology Private Limited

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

Vortex Engineering Private Limited

Based In Chennai Manufactures Rural ATMs

Farmers Trading Company

Based In Hyderabad Operates in sector of Organic Cotton

Potential Exit Strategy

Social Investor with Local Focus Long term loan/ Fresh EQUITY / Promoter Buy Back

Stable Micro Enterprise with a sustainable model

Micro Venture Capitalist

Exit Design through Take out financing

Venture Capitalist

Some Facts..

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.

Investment Sectors Focus

Agri Processing, Contract farming Technology intervention for improved outreach and access Innovative Microfinance Start up Renewable Energy Handicrafts

Attracting Large Investors

With increased momentum in Microfinance in recent years, Aavishkaar has attracted new & large investors towards making equity investments in small enterprises and MFIs. The venture capital fund is in the process of entering into agreements with some major players of the industry. Aavishkaar is known for its 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

Management & Oversight

Board of Trustees Management Board
Board of Trustees(*) Mr. Arun Diaz: MBA, 28 Years Banking Experience Mr. Nilesh Mehta: MBA, Partner Infinity Venture Management Board(*) Dr. Anantha Nageswaran: Ph.D, MBA, Director, Global Economics and Asset Allocation, Credit Suisse, Asia-Pacific Mr. Arun Diaz: MBA Ms. Jennifer Meehan: Microfinance & Social Investing professional, formerly with The Chase Manhattan Bank Prof. Krithivasan Ramamritham: PhD, Prof. & Head Kanwal Rekhi School of IT (IIT Mumbai) Mr. Nilesh Mehta: MBA Mr. Pravin Gandhi: Partner, Infinity Ventures Sushant Gupta: MBA, Entrepreneur Sameer Wagle: Orion Capital Management Mr. Vineet Rai, CEO: MBA, Ashoka Fellow Mr. P. Pradeep, Project Officer: MBA, former Deputy Finance Manager Agricultural Company Mr. Priyank Jain, Junior Associate: MBA, B.E.

Advisory Board

CEO

Finance & Admin

Project Officers

Project Originators
MOU

Mentor Orgs NGOs Other 3rd Parties

Contact

Mr. Vineet Rai, CEO AIMVCF Unit 201 & 221, Atlanta Estate, Dr. Ambedkar Chowk, Off Western Expressway, Goregaon (E), Mumbai INDIA 400 063. Phone : +91-22-5699 8955 Mobile: +91-98206 45736 Email: Website.:

vineet_rai@aavishkaar.org
www.aavishkaar.org