Tata Trusts, the philanthropic wing of the Tata Group, is looking to raise nearly $30 million (Rs 192 crore) to invest in social enterprises.
The firm has received approval from the Securities and Exchange Board of India (SEBI) for a Category I alternative investment fund, with a $15-million green shoe option. The investment ticket size will be between $500,000 and $2 million, a company statement said.
The fund claims to be the country's first-ever technology-focused fund investing in high-impact social enterprises. Called Social Alpha Fund-1, it is the third tier of the Social Alpha stack being built with Tata Trusts and the Foundation for Innovation and Social Entrepreneurship (FISE), said Manoj Kumar, co-founder and chief executive of FISE.
The Social Alpha stack is focused on catalysing innovation, enterprise incubation, and growth hacking to address the challenges of scale and sustainability in social entrepreneurship. Tier 1 is sponsored by Tata Trusts and focuses on innovation. Tier 2 is managed by FISE and is focused on incubation and growth hacking while Tier 3 is a fund with external partners.
“We expect the first closure before the end of this year and to deploy funds over the next 12-24 months. Our model is based on creating deal flow/pipeline through our multi-million dollar investments in institutions and innovation, mentoring and curating this pipeline and qualifying throughout the product lifecycle stages,” said Kumar.
FISE runs the India Innovation Growth Programme 2.0 (IIGP 2.0), a public-private partnership that invests in over 50 social and industrial innovations, trains innovators in commercialisation strategies, offers opportunities for incubation, and assists in business development, information on the company’s website shows.
Investments in social enterprises in India trail those in commercial ventures by a margin.
In May 2016, global philanthropic organisation Michael and Susan Dell Foundation (MSDF) announced that it had earmarked an additional $50 million (about Rs 333 crore) for investments in India. The amount was in addition to its existing impact investment fund India Educational Investment Fund (IEIF), which supports early-stage investment in education startups.
One of the most active impact investors is Aavishkaar-Intellecap Group, which in January raised $25 million (about Rs 170 crore) in an equity funding round led by Triodos Investment Management and Shell Foundation.
Another such fund is Menterra Social Impact Fund, which invests between Rs 1 crore and Rs 4 crore in early-stage social enterprises in education, health, agriculture and energy sectors. In June, the investor marked the final close of its debut fund at Rs 50 crore ($7.74 million).