Aavishkaar (a Hindi word that means innovation) India Micro Venture Capital Fund (www.aavishkaar.org) came into existence to finance socially relevant, commercially viable and environmentally friendly enterprises that do not have access to project financing – loan or equity – from traditional financial institutions. Aavishkaar India fills an important niche as it is positioned between microfinance and traditional venture capital funds with its promise of equity support to small businesses. The projects that Aavishkaar support are in the range between Rs.500,000 (USD 10,000) and Rs.5,000,000 (USD 100,000).

Aavishkaar India Micro Venture Capital Fund (‘Aavishkaar’) concentrates on supporting micro enterprises based on grassroots innovations and seeks to:

• provide venture capital to sustainable - socially relevant, environmentally friendly - commercial ventures that otherwise would not have access to capital from traditional sources of finance,
• achieve commercial returns for its global investors such that the chain of innovation – financing – commercialization and growth continues to be strengthened,
• maximize impact, in terms of growth, employment, productivity and return on its investments.

Aavishkaar consists of two parts. One is the venture fund – Aavishkaar India Micro Venture Capital Fund - operating on-shore in India, which is organized as a ‘for-profit’ Trust, registered with and regulated by the Securities and Exchange Board of India (SEBI. The second part of the Aavishkaar Organisation is Aavishkaar International Private Limited (AIPL). AIPL has been set up as a private limited company in Singapore to aggregate individual investments and remit the funds to Aavishkaar India under a single approval from the Foreign Investment Promotion Board of the Government of India.

Aavishkaar made its first investment in Servals Automation, Chennai, India, which helps grass root innovators in licensing and patenting as well as marketing their innovations. It has also invested in Tide Technocrats Private Limited (TTPL), Bangalore, a company that works on Micro and Pico Hydel projects to provide electricity in remote areas as well as Shri Kamadhenu Electronics Private Ltd (SKEPL), Vallabh Vidyanagar, Gujarat, which markets a computerized milk analyzing and billing system.

Why micro venture capital?

Rural and semi-urban India – consisting of over 800 million people – still experiences a low standard of life, despite a decade of strong national growth.

Small to medium sized private enterprise can drive development in these underserved regions. Historically, this enterprise has been thwarted by misguided economic policies, infrastructure challenges, and limited access to capital. Recently, improved economic policies and infrastructure investment have removed many obstacles. A lack of access to capital, however, continues to inhibit widespread growth. Micro-credit is too small and too restrictive to be used for true business creation. Conventional venture capital focuses on businesses requiring USD $1 million+ that target urban regions or service export. Businesses smaller in scale addressing rural and semi-urban India cannot find the risk capital they need. Aavishkaar strives to fill this gap.