Aavishkaar Fund: Dedicated to supporting rural Indian entrepreneurship

June, 2002
Most of us passionately hope to see India scale the heights of economic development rapidly and enter the ranks of advanced nations. Towards this end, we contribute in several ways. More often, the predominant mode is material contribution to our favourite charities or local causes in the neighbourhoods where we grew up.

Charitable contributions leave us with a sense of incompleteness and a gnawing thought that we might be encouraging a culture of dependence. Further, donations or grants are suitable for supporting public and social causes but economic activities need only capital support.

Particularly, in the case of encouraging new business activity, there is much to be said for supporting individuals through investments rather than grants for it would inculcate a discipline that values capital and the need to grow it, through prudent business decisions.

Aavishkaar India Micro Venture Capital Fund (AIMVCF) aims to do that precisely. It seeks to boost entrepreneurial activity in rural India through investment support.

The Rural Innovation Phenomena

It is often said that "need is the mother of all inventions." Nowhere is this truer than in rural India where every day men and woman devise new methods and means to ease the burdens of their daily lives. These "rural innovations" not only improve the productivity and efficiency of local farmers or artisans, but also have significant...  environmental and social impact by developing eco-friendly "appropriate" solutionsto local problems.

The creativity of these innovators and their innovations, however, remains confined to their immediate communities. Another village 100 miles away struggles with a similar problem and may only have a sub-optimal solution, or worse still, no solution at all. The potential of the innovations, therefore, remains untapped and the work of the innovators unknown.

An Appropriate Technology Void

In addition to this, transfer of appropriate technologies from urban research centres and universities to rural areas barely exists. Thus, quality of life in rural India improves at an unsatisfactory rate, if at all.

Untapped Opportunities

Despite this lack of trickle up - from rural innovators to the broader rural population - and trickle down - from the urban areas to the rural areas - there are viable business opportunities to reduce waste and enhance productivity.

We firmly believe we can leverage rural innovations and appropriate technologies to create viable and sustainable micro ventures. This will spur economic activity, create productive jobs and improve quality of life in rural India. The consequent purchasing power in rural India will lead to greater rural demand for goods and services provided by corporate India. Potentially, such a model can create a "virtuous cycle" of sustained growth and development.

Financing: The Big Bottleneck

The key constraint is that resources dedicated to nurturing and creating micro ventures based upon these commercially viable technologies are scarce. Along with professional expertise and mentoring, timely availability of capital is a crucial missing ingredient.

Venture funding in India is nascent and has thus far focused mainly on high technology and internet-based ventures; equity investment vehicles do not consider small innovators and entrepreneurs. Micro finance institutions may initially support some innovations at early stages, but the limited amount of financing available and high cost of funds results in such support not being sustained long enough for innovations to mature into enterprises.

Professor Anil Gupta of the Indian Institute of Management, who established the HoneyBee Network to identify and share innovations between rural communities, has been a champion for creating a micro venture capital fund to nurture enterprises based upon rural innovations. His vision has inspired the creation of Aavishkaar.


Avishkaar International Private Limited has been set up in Singapore, a leading financial centre known for high standards of corporate governance. The role of AAvishkaar International is to aggregate individual contributions and remit the funds to AIMVCF under approval from Foreign Investment Promotion Board (FIPB).

AIMVCF will provide timely appropriate financing, management support and professional expertise to promising micro ventures. Consistent with social development objectives, the fund would accord priority to projects with limited or no access to established institutions.

AIMVCF has been established as a venture fund in conformity with Securities and Exchange Board of India (SEBI) regulations and has been registered as a Trust under the Indian Trust Act.

A Competent team is in place

Initially, AIMVCF has two trustees; both the initial trustees represent AAvishkaar International and have exceptional professional credentials and track record. Mr. Nilesh Mehta (39, an alumnus of IIM Ahmedabad & Managing Director of eIndiaVenture Fund) and Mr. Arun Diaz (50, an alumnus of XLRI and a career international banker) are based in Mumbai, India.

Building a Network to Solicit Projects

AIMVCF will work with private, government and corporate entities, NGOs, and the financial sector, to solicit investment proposals for projects consistent with the fund's objectives. Potential partners identified to date include the Rural Innovation Network (RIN) and Government of India agencies like Technology Information, Forecasting & Assessment Centre (TIFAC) and Technopreneur Promotion Programme (TePP). Where possible, these agencies may be able to assist in monitoring the projects that have been funded by AAvishkaar.

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