We at YourStory caught up with Vineet Rai, founder of Aavishkaar and Intellecap, known to be one of the pioneers in Social investments space in India. Vineet shared with us the story that led to the creation of Aavishkaar and Intellecap, and later Sankalp forum that emerged as the most compelling story telling platform in this space. If you are in Mumbai this May 5th and 6th, Sankalp is an event you should not miss!
You started Aavishkaar way back in 2002 when there was not much hype in this space. How have you seen the social entrepreneurship ecosystem evolve over the last decade in India?
Aavishkaar was started in 2001 September actually. Between 2001 to 2005, we were the only ones in this space in India. Though Acumen was started in 2002, they started investing in businesses around 2005 - 2006. Investing in microfinance has become very attractive around 2006. Around 2009, monitor started doing a study in microfinance space. Later institutions like Grassroots Business Fund, Elevar Equity started playing a role in this sector. Then slowly, a lot of players entered this space. Later, Sankalp became a critical story teller in this space!
But, back in 2001, What motivated you to enter this space? Please share with us the story behind Aavishkaar and Intellecap.
It is a simple story. I earlier used to run a business incubation fund called Gian. I used to live in the forest while working at Gian. The forest introduced me to poverty and it made me think about helping people start their own businesses, as an option to deal with poverty. Of course, I was too naive at that time. I was too young to create any value. I went to IIFM in 1997 and worked at Gian till 2001. My job was to create ideas into businesses. I used to work closely with the farmers. I learnt about the challenges that farmers face while converting ideas and products into businesses. During this phase, I learnt that there is a need to provide capital to make a difference, but that capital has to be very different. At that point of time, India was growing at 6% on GDP basis and there was a plan that we should reach a growth of 10% to 12%. I realized that, 70-80% of our population lives in non metros, and yet most of our investments would go into cities and metros. So to create opportunities in rural India, you have to take capital to rural India.
From a very naive perspective, I asked myself, “How does one take capital to rural India?” then I realized the kind of capital that rural India would prefer right now is patient, long term and has high risk bearing capacity. I realized that there is something called Venture Capital, just that it is not patient. That is when I thought that I should start a venture capital fund that is all designed for rural India which is patient and long term, that is what lead to the creation of Aavishkaar.
But, my association with rural India has taught me that, providing money is just not enough, you need to actually have a high quality mapper continuously working with rural India to create value. I thought venture capital is important, but intellectual capital is imperative. Thus Intellecap was created. Again you have to take it with a pinch of salt, I was actually a small guy with very little money, I thought let me make a statement by setting up an Intellectual Capital for rural India. But, Intellecap has been dormant for 2-3 years because we neither had money nor the network of people. Around 2004, we started hiring and building a team, the idea was to attract really high quality talent that is driven by the idea of making a difference. We wanted people who can bring new ideas to the space of social/rural/bop businesses and act as a bridge between entrepreneurs and people who wanted to invest capital in this segment.
The last few years have seen Social entrepreneurship get its recognition in some way albeit small, infact in the last one year has seen "Social entrepreneur" emerge as one of the buzzwords. Please share your views on this and what are the underlying challenges in this space? What can we do better?
The belief that a lot of things have been done is a false belief. There is a lot of hype in this space. The reality and the hype do not match up. What people are thinking is that, having more funds will solve all the problems, but funds are meaningless if there are not enough invest-able companies. A far more higher level of effort has to be put in to make a difference, what we need is more companies coming up in this space and that is something that nobody wants to do, people think that setting up a fund is a great idea, but funds will not solve the problems if there are not enough people setting up companies. Today, there is not enough understanding of Private Limited Company and Limited Liability Partners and the difference between the two, forget about people talking about strong investments and ecosystem in place. The basic principles of how to build a business are not taught, forget about the next layer.
Can you please share with us the story behind Sankalp forum?
Sankalp was started as a platform to connect entrepreneurs with investors. We realised that investors(and especially main stream investors) do not really understand what’s going on in the social sector space. At the same time, entrepreneurs feel that they work in very difficult and unique circumstances, they are of the belief that investors should give them money without asking any questions. So we wanted to educate the entrepreneurs about the challenges of dealing with the investors and at the same time educate the investors of the challenges faced by the entrepreneurs. This realization lead us to the creation of Sankalp, as a forum for discussing the broader issues around social entrepreneurship. The idea is to create an interconnection between social entrepreneurs, government and the investors.
What can we expect from Sankalp forum this year?
That is actually a million dollar question :) The idea is to create value to the entrepreneurs and investors. We have a fairly long list of people who are speaking from regulatory community, entrepreneurship community, government and political community and investor community, all talking about their challenges. We are hoping that 600 - 700 people would be aggregating at the event. The idea is to bring in all the national and international players in this space on one platform. Another aspect that we want to uncover this year is, why a lot of Indians who created immense value in this space are not investing in this space.
Candid and Inspiring, we at YourStory came out charged up after this conversation with Vineet, tell us your views.
Sankalp Forum is round the corner. While our correspondents will keep you posted from the event, do check out http://www.sankalpforum.com Feel free to write to us at firstname.lastname@example.org YourStory is the online media partner of Sankalp Forum 2011.