India Inclusive Innovation Fund - Launches on 27th January 2014

13
MSME and National Innovation Council Launch The India Inclusive Innovation Fund 27 th January 2014

description

The National Innovation Council (NInC) and the Ministry of Micro, Small and Medium Enterprises (MSME) jointly announced the creation of the India Inclusive Innovation Fund (IIIF). IIIF, which has been approved by the Union Cabinet, was conceived and architected by the NInC as a unique concept which seeks to combine innovation and the dynamism of enterprise to solve the problems of citizens at the base of the economic pyramid in India.

Transcript of India Inclusive Innovation Fund - Launches on 27th January 2014

Page 1: India Inclusive Innovation Fund - Launches on 27th January 2014

MSME and National Innovation Council

LaunchThe India Inclusive Innovation

Fund27th January 2014

Page 2: India Inclusive Innovation Fund - Launches on 27th January 2014

India has key Developmental Challenges

• Healthcare, food, nutrition, agriculture, education, energy, water, financial inclusion, livelihoods.

• Globally and in India such challenges are addressed in 2 ways – Philanthropy and government grants / subsidies.

• These can never be adequate & when the fund flow stops, the good work stops !ˉ Corporates following global best practices commit 1% of PBT

to CSR – this means a company with $1 bn. revenues commits $1mn !

ˉ Routed through NGOs, managed by committed and passionate people but not efficient users of capital, with little experience of building scalable / sustainable enterprises

ˉ Government handouts have similar challenges & systemic inefficiencies

Page 3: India Inclusive Innovation Fund - Launches on 27th January 2014

Leveraging the power of Innovation

• Innovation has transformed our lives through:– a business model that combines innovation with the dynamism of

enterprise – a financial construct that encourages investors to take risks inherent

in innovation• This model - “Venture Capital” - has attracted the best brains in the

world to solve the problems of the affluent, vastly improving our lives• Intend to use the same model to drive innovation and attract the best

brains in the world to solve the problems of the poor. • Creating a new class of capital willing to accept modest financial

returns coupled with measurable social returns• Investing in ventures that improve the lives of our citizens at Base

of the Economic Pyramid, and create wealth & employment • But which are profitable & therefore scalable & sustainable, thus

creating significant impact , disproportionate to the initial investment

India Inclusive Innovation Fund

Page 4: India Inclusive Innovation Fund - Launches on 27th January 2014

Inclusive Innovation: Does It Work?

NARAYANA HRUDUYALAYA CARDIAC HOSPITALDR DEVI SHETTY; BANGALORE, INDIA

Healthcare for the Poor

• WORLD-CLASS. Full-spectrum cardiac care for poorer citizens. Mortality rate at 2%; hospital-acquired infection rate of 2.8 per 1000; in line with global best-in-class

• EFFICIENT. Supply side process innovation reduces cardiac surgery costs to just USD 3,000/ operation (compared to USD 7,000 in India, USD 50,000 in the US)

• ACCESSIBLE. Revenue model innovation (micro-insurance schemes) makes surgery accessible at a few cents per month.

• SCALABLE. Within 3 years of founding, treating 60,000 outpatients, 7,500 cardiac surgeries; many therapies done over telemedicine. Profitable.

Nar

ayan

a H

rudy

alay

a

Page 5: India Inclusive Innovation Fund - Launches on 27th January 2014

Inclusive Innovation: Does It Work?

SELCO INDIAHARISH HANDE; KARNATAKA, INDIA

Renewable Energy for the Poor

• INNOVATIVE. Solar-powered electricity sold as an affordable service (not as expensive product) to poorer, off-grid urban and rural customers.

• ACCESSIBLE. Revenue model innovation (pay-as-you-go billing; distribution through local entrepreneurs; micro-finance facilitation through grameen banks) makes electricity accessible – and custom-provided – at a few cents per day.

• SCALABLE. Sold and financed over 115,000 systems. Profitable: INR 12 mn profit from INR 170 mn revenue base, FY2011-12.

Nar

ayan

a H

rudy

alay

a

Page 6: India Inclusive Innovation Fund - Launches on 27th January 2014

Inclusive Innovation: Does It Work?

JAYASHREE SANITARY NAPKINSA MURUGANANTHAM; TAMIL NADU, INDIA

Hygiene & Livelihood

• INNOVATIVE. Sanitary napkins are inaccessible to 88% of Indian women: high capital costs of production (USD 500,000 per machine) are unaffordably passed on to customers. Jayaashree’s simplified, UV-based technology (USD 2500 per machine) allows them to be made and sold at a few cents a pack

• ACCESSIBLE. Manufacturing and distribution innovation (simplified cellulose processing and sanitising technologies) makes hygienic feminine care available to poorer households.

• LIVELIHOOD GENERATING. Napkins and sold locally by rural housewives, in small-scale units: driving scalability and local up-take.

The

HIn

du

Page 7: India Inclusive Innovation Fund - Launches on 27th January 2014

Inclusive Innovation: Does It Work?

JAIPUR FOOTMR. DR MEHTA, LATE MR. RAM CHANDER SHARMA & DR. P.K.SETHI; JAIPUR, INDIA

World-class artificial limbs

• INNOVATIVE. The Jaipur Foot is $45 is an ultra modern prosthetic device made of self-lubricating, oil-filled nylon. It has higher functionality compare to a similar $12,000 limb produced in the US –

– is both flexible and stable, even on irregular terrain – Special feature is lightness and mobility,– those who wear it can run, climb trees and pedal

bicycles. • WORLD CLASS Knee Replacement developed

in cooperation with Stanford University costs a mere $20

• ACCESSIBLE. An open door policy for anyone with disability without any discrimination –social, religious or gender.

• SCALABLE. 20 centers across India, serving 65,000 patients each year, an annual budget of US$3.5M.,>1.2 million limbs till date.

Page 8: India Inclusive Innovation Fund - Launches on 27th January 2014

IIIF Objectives• Drive inclusive growth by igniting innovative

entrepreneurship that addresses Bottom of the Pyramid needs• Mobilise capacity to identify and scale innovative solutions

that will address problems of the disadvantaged• Create an ecosystem of innovative solutions, business

models and approaches that reach beyond IPs/Patents• Balance social and financial returns, simultaneously

achieving social good and economic sustainability• Employment / livelihoods creation at the bottom of the

pyramid will be a key bias for the fund’s investments• Mentor, develop skills, build capacity : create dedicated

support networks and education programmes for socially focused entrepreneurs

• Pool innovators and entrepreneurs focused on the bottom of the pyramid: partner with incubators, entrepreneurship cells, angel networks, VC Funds, etc.

Page 9: India Inclusive Innovation Fund - Launches on 27th January 2014

Fund Characteristics• Structured as an autonomous, Rs. 5,000 fund, first close Rs. 500

crores– Indian Government contributing 20% ( Rs. 100 crores ) to first close

through Ministry of MSME• Balance contribution from public sector banks, financial institutions,

insurance companies, multilateral / bilateral development agencies, Indian & global corporates,

• Fund Life: 9 years, extendable by up to 2 years (subject to approval of contributors)

• IRR: Fund will target Internal Rate of Return of 12% per annum• Hurdle Rate: 8% per annum• Management Fee: 2.5% declining to 1.5% based on the size of

corpus• Focus Sectors: Include (i) healthcare; (ii) food and nutrition; (iii)

agriculture; (iv) education; (v) energy; (vi) financial inclusion; (vii) environment; (viii) technology as an enabler, etc.

Page 10: India Inclusive Innovation Fund - Launches on 27th January 2014

Fund Characteristics (cont’d)• Will Invest directly in BOP enterprises, across the

venture development cycle: majority in seed/early tage

• Will also invest indirectly through other BOP-focused funds

• Professionally managed by world class professionals• Will operate as a for profit entity, providing investors

modest financial returns, coupled with measurable social returns

• Will Source pipeline via a multitude of on line and off line channels

• Will Partner with all stakeholders locally and globally, learn and share experiences

Create a Model for the World to Emulate

Page 11: India Inclusive Innovation Fund - Launches on 27th January 2014

Fund Management• Governing Council

– Comprises eminent people from industry & govt. to oversee the thesis of the Fund

• Investment Committee– Mix of successful business people - entrepreneurs,

management / domain / industry experts, and representatives of investors & management team

• Management Team– Comprises successful serial entrepreneurs and

experienced fund managers– Will get a salary and “carry” – incentivized equally

on social and financial returns

Page 12: India Inclusive Innovation Fund - Launches on 27th January 2014

Why the Fund Should Succeed• India has the right resources and competencies

– World-class entrepreneurs; world-class technological capabilities; world’s largest young talent pool; strong government focus

– Entrepreneurial bug has bitten India: a rising culture of inspired engineering and business school graduates choosing entrepreneurship over job security

• India has the right talent– Capable of doing more with less for more– Innovative approach to problem solving: beyond jugaad, focusing beyond IP:

developing new business models, go-to-market approaches– Aware of bottom 500 million needs – that often define their own context

• India has the right market– World’s largest market for products / solutions for the poor– Market explodes for the right offering at the right “Indian” price point– Mobile subscribers went from 1 mill to 800 m in ten years as call rates & handset

prices dropped exponentially and became affordable by the poor, creating major empowerment

• India right place to prove model on scale & offer to the World

Page 13: India Inclusive Innovation Fund - Launches on 27th January 2014

Thank You

For more information on India Inclusive Innovation Fund visit

www.innovationcouncil.gov.in