Why Home First Finance is in Caspian’s anti-portfolio
Caspian was not sure whether Home First Finance founder Manoj Viswanathan could make a smooth transition from Citigroup to managing a startup
At Caspian, we fund early-stage companies with new ideas and untested business models, which aims to bring about a positive social or environmental impact. Since 2005, we have launched four funds and invested in several impact sectors.
After a positive experience with microfinance, in 2008, we started exploring other financing needs of low-income and underserved communities. The idea of providing long-term, small-ticket, secured home loans to those with informal, undocumented incomes, was a novel one at the time. It had promise, and the potential to attract good quality entrepreneurs.
We invested in two affordable housing finance companies (A-HFCs) between 2009 and 2012: Micro Housing Finance Corp. and Aptus Value Housing Finance.
And, we were actively looking for more. It was under these circumstances that we met Manoj Viswanathan in early 2010.
He was looking to start Home First Finance Co. He had a successful career at Citigroup, a strong track record of managing a large lending business, and was backed by reputed promoters. Having invested in an A-HFC, we didn’t need much convincing on the opportunity, but were not sure of two things—one, if the transition from a large MNC to a startup would be a smooth one for Manoj and, two, if his team could actually take the leap.
Looking back, this was clearly a missed opportunity. Home First Finance went on to raise capital without much trouble, has had a great run for eight years and is a well-respected HFC today. In less than 10 years, A-HFCs have created a distinct model and a new category within inclusive finance that is now regarded as a huge opportunity by mainstream players. We certainly could have deployed more capital to A-HFCs than we did.
Mona Kachhwaha is director (investments) at Caspian.