More angels to help social start-ups

Investments in social sectors are set to get a much broader base with the country's largest angel investor group, Indian Angel Network, taking a leap to catch fledgling social ventures early on. Small investments and early mentoring will make them better positioned to raise additional capital from venture firms.

A bunch of IAN investors have launched a sub-entity, 'IAN Impact' to invest exclusively in start-ups with business models which aim to solve problems at the bottom of the pyramid. The trigger - an increasing number of business plan applications focused on improving the quality of life of the underserved population in semi-urban and rural India.  

According to Sadeesh Raghavan, an IAN member, such "impact investments" have historically happened through oversees funds, grants from government schemes and some venture capital contribution. "With this initiative, a much larger group of investors will be picking up such businesses at a very early stage," says Raghavan, who is also part of the investor group. Other group members are Saurabh Srivastava (co-founder), Alok Mittal, Srikant Sastri, Ravi Krishnappa and Nagaraja Prakasam.

The ticket size of social investments from IAN will be lower than its investment in businesses across other sectors which range between Rs 2 crore and Rs 2.5 crore. This is owing to the fact that these ventures carry much more risk than other segments such as e-commerce or technology. "The businesses we will look at should be those with a validated idea and a proof of concept. They should be scalable and profitable in a certain time-frame," said Raghavan.

Gram Vaani, based at IIT-Delhi, is the first social venture to raise investment from the impact group. It provides a social media network to rural communities with what is called an Interactive Voice Response (IVR) system. Users can dial a number and convey any information they want to about what is happening in their community, while listening to others messages as well. Co- Founded by Aaditeshwar Seth in 2009, the start-up claims to have about two million users.