Lok Capital, a venture capital firm focused on the bottom-of-the-pyramid (BoP) market, has made a final close of $65 million for its second fund. Lok Capital II LLC made its first close at $52 million in October 2010 and was targeting $80 million. Lok Capital’s second fund is, however, three times the size of its first fund, which raised $22 million. With the close of the second fund, Lok Capital’s funds under management will go over $85 million.
“Existing investors IFC, CDC, KfW, FMO and responsAbility have subscribed to Lok Capital II. The new investors are Proparco and ASN Novib. Lok Capital plans to deploy the capital in the next four years in social enterprises across India, with typical investment horizon of 4-6 years,” Lok Capital said in a statement.
Lok Capital’s first fund was deployed fully by 2010. Its initial investments focused on the microfinance industry, and in companies like Asirvad Microfinance Pvt Ltd, Spandana Sphoorty Financial Ltd, Basix and Ujjivan. But the fund is now looking to diversify its investments with “enterprises focusing on broader financial inclusion.” This means investments in full-service financial institutions, micro-credit, mobile payments, remittances and small business lending.
Besides financial inclusion, Lok Fund II will also target businesses offering low-cost healthcare (at primary and tertiary levels), education (remedial education and content, to name a few) and vocational training. The fund will have a sweet spot of $2-4 million. Its most recent investment took place in September 2011, when it put in $3 million in Bangalore-based BPO Rural Shores.
Lok Capital II is sponsored by the Lok Foundation, a New York-based not-for-profit organisation whose directors include IDFC MD & CEO Rajiv Lall and former Actis South Asia head Donald Peck.
“The need for building sustainable enterprises which provide access to quality health and education and create employment opportunities to the BoP is more critical now than ever. Lok Capital is committed to partnering with entrepreneurs who are setting up and running profitable businesses while empowering the BoP,” said Venky Natarajan, Managing Partner of Lok Advisory Services.