Vineet Rai is founder and CEO of Aavishkaar, a rapidly successful non government organisation working effective social entrepreneurship programmes. Rai has also co-authored several papers on issues concerning rural and micro innovations.
He spoke with THT Perspectives on the importance of promoting Socail entreprenuership.
What is Avishkar about?
Avishkar means invention. The idea was to set up a venture capital fund that we started in 200/2001. That time urban India was growing at a very fast rate while rural India lagged far behind. Rural Indians comprising 70 per cent contributed less than 25 per cent to the GDP. The thought was to provide risk capital to young people who wanted to create a business in rural India such that they might be able to create participatory growth,
employment, be involved in buying and selling goods or provide production solution. Avishkar is about venture capital funding. It provides aspiring social entrepreneurs with equity. The problem with loans is that the lender, either an individual or an institution does not trust a person without means. And one can acquire loans only with collateral. That means if the business fails it renders a poor person to a destitute.
How does it work?
Avishkar was conceived as a binary venture. We have grown a sustainable venture capital fund for investment to businesses. Avishkar has set up a fund collecting money from rich people and global financial institutions. We actually get a small pea of the money for grant management. When we raise money we tell people that we may not be able to return it. Avishkar gives the money to deserving people to run a business. Of course, figuring out smart people capable of running a business is crucial. Once our beneficiaries return the money following success in their business we too
return it to the concerned source.
In venture capital you take a lot of risk and help somebody start a business. When the business is stable you find the way to sell your stake and take back the money unlike a loan. Therefore, we spend a lot of time in understanding our beneficiary, helping him/her with the business till its maturity.
How do you convince rich people and financial institution to give you money?
It takes time. It took me five years to raise IRs 5 million. Now we manage IRs 8 billion (CHECK!).
What is the importance of social entrepreneurship?
It is an emerging concept. Basically the traditional form of bringing about development is by providing grants and charity. Social
entrepreneurship is when somebody starts a business with the idea of not only making money but doing it differently. People who are involved in business actually benefit from it. For example, you help women in rural Nepal to make handicrafts and sell it in an organised manner and create ownership for those women as well. Thus, you are creating employment for them and also creating value. Social entrepreneurship is about trying to do business by doing good for yourself as well as concerned people.
How is Avishkar helping the development of social entrepreneurship?
We are trying to make investment where nobody would. Therefore, Avishkar is making investment in very young people and those in business for the first time or those who have failed in the past. We invest in businesses that did not exist before. We find people and help them build their business plan and stand by them.
We have to find people capable of taking risks in creating more employment. And in some sense people who are not just creating power and riches for themselves. Yet, there have been many successful social entrepreneurs in the world and lately in India. In India some middle class people have become extremely successful social entrepreneurs in inspiring a generation of very young Indians.
The other important factor in South Asian countries like India and Nepal is that we as a society are extremely unforgiving to people who fail. But failure is part and
parcel of being an entrepreneur. We can now actually take away that stigma in India. In Nepal also if we can celebrate the spirit of taking risk rather than penalising people for taking risk you might actually see serious emergence of entrepreneurship.
What can Nepal learn from India’s experience?
India can actually learn from Nepal. We share a similar culture and values. In India the spirit of entrepreneurship is now accepted and in Nepal you can bring the same type of change and start celebrating the spirit of entrepreneurship. The Indian government over period of time has started to acknowledge that entrepreneurship has brought about astounding changes in development. They are making policy incentives and creating infrastructure that will allow social entrepreneurship. I think Nepal can also build similar type of policy incentives and infrastructure that nurture social entrepreneurship. India converted its adversity into strength like — its population and youthfulness. I think Nepal can do the same with its adversities like — a small country, landlocked nation and its people. It can also use its natural surroundings to its advantage.