Impact-focused venture capital firm Next Bharat Ventures (NBV), a wholly owned subsidiary of Japan's Suzuki Motor Corp., has launched its second impact fund with a target corpus of ₹2,000 crore.
"We want to deploy capital into companies which want to improve the quality of life in local economies, which is something India really needs," firm founder and chief executive Vipul Nath Jindal told Mint.
The fund's thesis centres on agritech, rural healthcare, livelihoods and AI applications aimed at India's larger non-urban population. The focus is to back founders and businesses working in agriculture, rural healthcare, gig workers, artificial intelligence for local communities, and local craftsmanship.
To be sure, the impact investment sector has only a clutch of venture capital firms actively deploying capital. According to startup intelligence platform Tracxn, there are only about 119 social impact investment firms in India. Notable among them include Omnivore, and Aavishkaar Capital which has traditionally invested in areas like financial inclusion, food, agriculture and education.
Next Bharat's strategy diverges from the standard venture playbook where firms try to find breakout companies that can generate large returns over the standard 10-12 year fund life. Instead, the firm wants to ensure that there are 200-300 small and medium enterprises built by entrepreneurs in India over the next 12-15 years. The bet is that scaled, profitable businesses serving local economies can generate returns without needing outsized unicorn valuations.
"We need more elephants, not unicorns. These companies should have horizontal scale. It's not like we're looking for just one billion-dollar company, but hundreds of multi-million-dollar businesses," Jindal said.
But even as the fund size has gone up, cheque sizes will remain conservative — in the ₹1-8 crore range. Capital for portfolio construction will be deployed over the next four years to back 40-50 companies.
NBV writes cheques mostly to entrepreneurs whose businesses have begun to generate some sort of revenue, which will continue. It will reserve just above 50% of fund II to back winners from the current portfolio, mostly in their Series A rounds, where the firm is comfortable going up to $3 million in follow-on funding. "We still believe the ecosystem lacks top of the funnel. So we have to sort of be at the initial stage of the startup where we invest in early-stage ventures," Jindal said.
On exits, NBV is steering founders away from conventional mergers and acquisitions or main-board IPO paths. Jindal wants portfolio companies to prioritise profitability over valuation from an early stage and eventually list via SME public offerings, rather than chase fast secondaries. It's a philosophy consistent with the duration of fund II, which has been set at 15 years.
Japanese backing
The firm's fund II is anchored by Suzuki Motor, which has contributed a majority of the money. The rest of the capital for the new investment vehicle comes exclusively from Japanese investors, with no domestic limited partner base.
Last year, Mint reported that several Japanese companies and their corporate venture arms have begun to look at India more closely due to the nature of the matured startup ecosystem and growth of companies being created here. Additionally, they found that compared to Southeast Asia, startups were able to provide them with better exits through the public markets.
"When Japanese investors look at India, they look at Bharat more. They feel that India's tier-2 and tier-3 geographies are going to be the next growth engine for the country," Jindal said.
To date, Next Bharat has supported more than 50 impact startups, investing in over 20 of them through capital, mentorship, and ecosystem support. Several portfolio companies have also initiated business pilots with companies in Japan.
Its portfolio includes companies such as Sistema.bio, which provides biogas and clean energy solutions for smallholder farmers, Hasiru Dala Innovations, a circular economy and waste management enterprise, MeMeraki, an online platform connecting traditional artisans with global consumers, and Atypical Advantage, a startup promoting employment and inclusion for people with disabilities.