The Ennovent Circle is a global group of individuals and organizations that works to accelerate innovations for sustainability in low-income markets. Ennovent Circle members collaborate to discover, start up, finance and scale promising innovations. They finance enterprises looking to raise funds in the range of $50,000 to $ 300,000 in equity, debt or “quasi equity” for 5-7 years.
SocialStory spoke with Digbijoy Shukla, director – Ennovent Circle about the objective of the circle, importance of angel investing, investment philosophy, member profiles and the types of exits they envisage.
SS: When was EC formed? What was the objective?
DS: The Ennovent Circle was formally launched in October 2012 with the objective of supporting high potential social enterprises both financially and non-financially especially in the early stages of their evolution. The Circle offers unique investment & mentorship opportunities for impact investors and mentors to make a sustainable impact within low-income markets in India while generating financial returns for investors.
The Circle was formed as a direct result of the need and the challenges of the ecosystem in helping early stage enterprises access early stage capital from a variety of investors such as Angels, Institutional Funds and Foundations. The other need was to build an investible pipeline for institutional investors who might want to come in at a later stage. We also felt there was a huge gap in the needs of enterprises and they being investor ready on one side and the investors who also lacked the sensitivity towards investing in social enterprises on the other.
The circle by attracting new domestic/international investors does a lot of education both on the enterprise side and investor side to bridge these gaps.
SS: How important is angel investing in the Indian social enterprise scenario?
DS: The angel investment scenario for investing in social enterprises is now evolving and increasingly we are seeing angel investors looking to support and invest in high potential social enterprises. This movement is very good for enterprises as they can now access early stage financing from domestic investors and also more importantly get access to capacity building from Investors since these are folks with substantial entrepreneurial and professional experience. For the investors it helps to diversify their portfolio to generate fair returns and yet create a sustainable impact on low-income people in India
SS: Who are the individuals/organization that constitute EC?
DS: We have now 20 members comprising of individuals and institutional investors, some of the members are:
Sadeesh Raghavan: Sadeesh Raghavan was the Managing Director at Accenture. He is very active in venture philanthropy and angel investing; he sits on numerous boards including the Global Advisory Board and Investment Committee of Acumen Fund and India Advisory Board of the Asia Venture Philanthropy Network. He is also a member of the Ashoka Support Network. He obtained his undergraduate degree at IIT-Madras and his MBA at UCLA, USA.
Vipul Prakash: A serial Entrepreneur, an Innovator and a Business creator, Vipul Prakash until recently was the Managing Director- India of Gi Group (global leaders in temporary staffing). In addition to his role at Gi Group, he is also championing the objectives of Indian Staffing Federation (ISF) as a Trustee and Member, Executive Board.
Rohit Luthra: Rohit Luthra has worked across technology, investments and consumer products domains for over 20 years. He has co-founded organizations in Technology & Cloud Computing space (www.progression.com) and early stage & impact investments (www.pvcpartners.in).
Prabhat Agarwal: Prabhat Agarwal is founder and coach at Aravali Scholars. Prabhat also is a mentor and/or investor in several start-ups, most of which are in the social enterprise space. Prabhat has been a serial entrepreneur and has co-founded Parsec Technologies, Parsec Loans and Whowhere, Inc. He has worked with HCL, Feedback Ventures and RP Punj group in his early career days.
Artha: Rianta Philanthropy AG is the initiative of a single-family office and is linked to the Artha Platform, which aims to accelerate the flow of capital to sustainable enterprises operating at the base of the pyramid (BOP). This program as a whole strives to support investment in high impact sustainable enterprises that are validating the market niche for providing goods and services to the ‘bottom of the pyramid’ in India, with an emphasis on agriculture, energy and livelihoods.
Insitor Fund: Insitor Management is a social venture capital fund, investing across sectors in early stage companies, which directly impact the underserved communities across Developing Asia. Insitor Management was founded in 2009 in Phnom Penh, Cambodia and now has over 10 investments across Cambodia, Vietnam, Laos and India, with country offices in Delhi, India and Yangon, Myanmar. The sectors invested in include Affordable Healthcare, Energy, Affordable Housing, Micro-finance and Water to name a few.
Beyond Capital Fund: (“BCF”) is an impact investment fund that promotes economic development in impoverished communities through investments in water, waste and sanitation, healthcare and energy sectors in India and East Africa.
SS: How many investments have been made so far?
DS: The circle has facilitated 5 investments so far and currently will be closing its 6th investment in a month. These include the investment made into ERC Eye Care by Ennnovent Impact Investment Holding and Ankur Capital along with Circle members Beyond Capital Fund and Sadeesh Raghavan as well as facilitation for a seed investment made by Prabhat Agarwal into Janta Meals.
SS: Does Ennovent Circle co-invest?
DS: Co-investing is our core mandate and the genesis of the Circle. We realized in running our own early stage fund – Ennovent Impact Investment Holding – that if we need to do early stage investing which is in the range of USD 50,000 to USD 300,000 then we need to collaborate with other like minded early stage investors to not only diversify investment risk but also leverage the expertise of other investors who bring on board large operational and strategic experience for diligence and value add post investment.
SS: What is the investment philosophy?
DS: Low-income markets consist of approximately 4 billion people globally and offer a huge market opportunity that is often neglected. The Ennovent Circle focuses on Indian low-income markets – predominantly households in rural areas earning below $2,000 per year (approximately $5.5/day). It invests in sustainable for-profit enterprises that increasingly strive to serve these markets while making a fair profit and a sustainable impact.
The investment strategy is to transform early-stage enterprises into professional, efficient and scalable organizations by providing capital and by adding value. The enterprises should either be providing affordable quality goods and services in core sectors – food, energy, health, water and education or engaging the low-income people in the production/supply side leading to incremental income & livelihood. The Circle investments must be in line with the investment criteria and yield social, economic and environmental, in addition to financial, returns – sometimes called the triple-bottom line (People, Planet, Profit).
SS: How much is invested on an average?
DS: On an average Circle members invest anywhere between $ 25,000 to $ 1 million, the sweet spot for the Circle members is $ 300,000.
SS: Are there any specific areas of investment?
DS: The Circle members are sector agnostic as long as the enterprise creates a clear social impact on low-income people in India. Although the Circle members are not inclined to invest in MFI & affordable housing, they are open to other sectors like food, water, education, skill development, health-care or livelihoods.
SS: How long does EC plan on staying invested?
DS: Typically 5-7 years.
SS: Do you’ll help investees secure follow-on funding?
DS: Absolutely since most of the investments are early stage and need follow up round of investments. Also, since we have institutional investors in the circle they have direct visibility to the portfolio companies. We already have one example wherein for 1 of the 5 companies we are helping secure additional financing from two other circle members.
SS: How much has been invested so far and how much does EC plan on investing in 2014-15?
DS: We have facilitated 5 investments with a total of USD 1.2 million invested across the 5 companies. We plan to do an additional 6 investments in the year for 2014-2015. The unique part of the Circle investments is early stage investing wherein we have facilitated a deal below USD 25,000 as well, which would hopefully give impetus to early stage financing.
SS: Typically what’s the equity that you’ll seek for the angel investment?
DS: Completely depends upon the company plus sometimes angels don’t do direct equity and do convertible notes.
SS: What kinds of exits do you’ll envisage?
DS: The space is evolving rapidly and we don’t have too many examples of exits for the sector as a whole. Predominantly, we envisage secondary exits or mergers and acquisitions.