Wednesday, December 21, 2011

[ZESTCaste] Venture fund for India’s forgotten

Venture fund for India's forgotten

By James Crabtree in Mumbai

Published: December 19 2011 17:43 | Last updated: December 19 2011 18:52

Those at the very bottom of India's caste system face not just the
legacy of centuries of prejudice and injustice, but also real
contemporary problems starting and funding their own businesses. Now
help may be at hand, with the launch of the country's first venture
capital fund investing solely in "Dalit-owned" enterprises.

The planned $95m venture, due to begin operation in August 2012, is
backed by the Dalit Indian Chamber of Commerce and Industries, a trade
body representing Dalit business leaders. Those behind the fund are
seeking a first round of investors, with the aim of supporting both
start-ups and more established ventures.
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Prasad Dahapute, a Mumbai-based banker leading the team setting up the
fund, said: "We are going to operate on a strictly commercial basis.
Our plan is to make strategic investments that have the potential to
quickly accelerate the pace of Dalit capitalism."

India's Dalits number at least 167m, or 16 per cent of the population,
according to the last census in 2001. The group has benefited unevenly
from their nation's speedy growth over the last two decades.

India's media enjoy highlighting the occasional success story, with
one prominent commentator earlier this year hailing the existence of a
handful of Dalit millionaires as "an astonishing new phenomenon". But
despite a plethora of affirmative action programmes the group as a
whole remains relatively badly off – and are especially
under-represented as owners of private businesses.

Ashutosh Varshney, an academic at Brown University who recently
co-authored a Harvard Business School paper on the problems faced by
Dalit entrepreneurs, said: "The evidence shows that as India's economy
has grown the middle castes have benefited considerably, but so far
most Dalits have not." Mr Varshney notes that Dalits face obstacles in
both founding and expanding businesses.

The new fund plans to raise capital from a mixture of high net worth
individuals and financial institutions in both the private and public
sector. Mr Dahapute says that, if this fundraising is successful, he
aims to make minority investments of around $2m in up to ten
businesses during their first year of operation.

Commenting on the launch, Madhu Kannan, chief executive of the Bombay
Stock Exchange, said: "India's Dalit entrepreneurs and business
leaders still face significant challenges when raising capital. This
new fund will be an important first step to addressing some of these."

Such moves to support a new generation of Dalit entrepreneurs have
attracted support in the upper reaches of India's business elites. An
annual Dalit trade fair, held this weekend in Mumbai, featured
appearances from two of the country's most celebrated corporate
titans: Ratan Tata and Adi Godrej, billionaire chairman of the Godrej

Speaking at the event, Mr Tata asked the government to do more to
"create enterprises that would be run by the underprivileged", and
called for the introduction of a new law mandating all India's
businesses be forced to source up to 10 per cent of their raw
materials and components from Dalit-operated businesses.


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