We’ve already profiled Aavishkaar, the Indian micro venture capital fund that works with entrepreneurs whose capital needs are between $50,000 and $500,000 – too much for traditional microfinance but too small for commercial VCs. Now Aavishkaar has a counterpart in Nicaragua – Agora Partnerships, an initiative of Columbia University MBA students. BusinessWeek mentioned the group in a good article on the group last year; the MicroCapital blog reminded me of them again last month.

At the risk of repeating myself, I want to emphasize why I think Aavishkaar and Agora are great projects. First, they address a key bottleneck – entrepreneurs need more than the few thousand dollars that microfinance offers in order to effectively scale up, but often don’t have the collateral to secure a commercial loan (mesofinance). Second, both models are firmly rooted in profitable business practices – Aavishkaar is run by experienced VCs, while Agora’s consultants are graduates of a top-25 MBA program. Finally, these models aren’t charity – they generate profits for investors.

These funds support a range of entrepreneurs: in India, Aavishkaar has funded the inventor of an irrigation rain gun and a dairy cooperative; Nicaragua’s Agora is working with everyone from a plastics recycler to a cigar manufacturer. Not all of the entrepreneurs these funds support are explicitly environmentally-friendly or socially responsible. Should this give investors pause? Should it give me pause?

I’m not sure. To run a profitable venture capital fund, you have to work with the best entrepreneurs. Sometimes that means working with a metal casting business – but isn’t a locally-owned business that puts its profits back into the community better for the economy as a whole? There aren’t a lot of data to support this, but it’s my hunch – and the salve to my conscience. What do you think – should we be discussing BOP venture capital if the enterprises funded aren’t socially responsible or environmentally friendly?