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Rotary Club of Bombay / Speaker / Gateway  / Vineet Rai introduced Rotarians to impact investing

Vineet Rai introduced Rotarians to impact investing

Vineet Rai

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Vineet1Vineet Rai is the Founder and Managing Director of Aavishkaar and Co-founder and Chairman of Intellecap Group of companies. He holds a post-graduate diploma in Forestry Management from the Indian Institute of Forest Management, Bhopal. He has more than 18 years of experience in leading innovative interventions in the development sector and brings a unique understanding of enterprise-based development approach through his pioneering interventions in venture capital, micro enterprises, microfinance investments and social investment banking.The fields of social impact and social entrepreneurship are areas India is leading in, and yet, people know almost nothing about it. Rai expressed his fear of not getting through to an audience completely uninitiated to the concept of impact investing and promised to make his speech as simple as possible. “I believe that Indians are very high on common sense and I am doing something simple, so it should not be very hard. Impact investing is a cake you can have and eat too, which is why a lot of people don’t believe in it. People think that you cannot be making money while making a difference to someone’s life,” he said. Rai proceeded to show some videos on impact investing and what companies in India are doing in the area.

Rai explained how Rotarians were impact investors without knowing they are making investments similar to his own. “The critical point one should focus on is to do this with the right intention but none of us can really grasp another person’s intention, so that’s the difficult part. This concept of a right intention actually came up in the west. I always thought Indians were the ones who could craft a certain word that brings subjectivity to decision-making but I was surprised when I discovered that this happened in the west. They said that this intention was to be accompanied by some sort of a financial return. Now there are no caps to either the investment or the return you can make, which is how a lot of you sitting here are already impact investors and social entrepreneurs without even knowing you are.

“This is actually a problem the western world brought to us because as Indians, we started looking at what this definition involving the right intention really meant. Although impact investing started in our country, we don’t believe in documenting ideas and so it always took place in the US or Europe and we were left trying to decode their documentation of the work we were doing.

“So what I am sharing with you is my understanding of it, which is any person with the right intentions along with an investment to make would lead to a better world with rich people. However, if that were true, our economic problems would have been solved a long time ago,”
he explained.

Rai then moved on to elaborate on how his team at Aavishkaar began with trying to demystify the word “intention”. He said, “Intent should be crafted in such a manner that people can see why you are different. The closest alternative we came up with was ‘to have the appetite for an unconventional investment’. This applies to the entrepreneur and the investor and the risk involved here is unlike the standard investment risk subject to changes according to market fluctuations but a very real chance of failure. Once you start demonstrating this intent, the written discussion becomes highly complex and unpredictable. There are far too many questions that remain unanswered in this business because you don’t know why you keep making losses for long periods or where a huge chunk of profit comes from if it does; in this ambiguity, the intent to make a difference shines through.”

He introduced Rotarians to the two entities created by him and their contribution to the field of impact investing. “The name impact investing actually got coined as recently as 2008 and people across the globe are still grappling with the question of what it stands for. Aavishkaar is a venture capital fund registered under SEBI and I wasn’t aware of how difficult Indian bureaucracy is, up until that point. I had a degree in forestry and did not understand finance at all. The other entity I started was Intellecap, when I was 29 years old. I started them when I had very little experience, no understanding of the challenges and almost no money. I exhausted my entire savings in setting up these companies, which have come a long way since.

“We have raised approximately a hundred thousand crores in Aavishkaar; the company now invests in more than 50 enterprises, employs more than 800 people and has five to six different subsidiaries,” he explained.

“We made the first acquisition in micro-finance in India and the first venture debt institution in the country as well. These things essentially built a platform for youngsters who want to delve into the socio-economic problems that our country deals with. If you have the courage and interest and are willing to caveat yourself with the fact that you may not be a wealthy man or woman, then it is going to be a very rewarding space for you. You may not be rich but you will be a well-respected member of society,” he concluded.