What is a Social or Impact Enterprise? Most Active Sectors in this Space Intellecap: Building a Supportive Ecosystem Enterprise Life-cycle Stages Incubators and Accelerators

1. © 2014 Intellecap. All rights reserved
Introduction to Impact Investing in India
November 2014

2. © 2014 Intellecap. All rights reserved
What is a Social or Impact Enterprise?
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A for-profit enterprise dedicated to bringing about either an environmental benefit, or a social benefit –i.e. provide affordable products or services to rural, low-income, under-privileged populations.
Maximize topline while maximizing impact.
Usually, low margin, high volume business.
Operate in difficult, under-penetrated markets.
Innovate less on technology, more on products, services, pricing, distribution.
High geography, execution, first mover risk.
Usually a Pvt. Ltd. setup.
Ability to scale to offer return to investors.

3. © 2014 Intellecap. All rights reserved
Impact Enterprises in India Increasingly Attracting Investments
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Source –Intellecap Report: Invest, Catalyze, Mainstream

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Most Active Sectors in this Space
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Technology based learning, supplementary platformsStudent / teacher learning aids, kits, etc. Vocational Training
Pre-schools, K-12 etc.
Edu
Dairy
Supply chain efficiency
Farm Equipment
Warehousing / Cold storage
Contract Farming
Agri
mHealth, Tele-health etc.
ERP systems
Diagnostics centres, Labs
Tech enabled delivery
Low-cost medical devices
Health careMicrofinanceBusiness Correspondence models
Financial Technologies
Financial Inclusion
Solar devices
Thermal Solutions
Energy financing solutions
Biomass / Biofuels
Clean Energy
Clean Drinking Water / Accessibility
Waste Management
Bio / portable solutions
Community Water Solutions
Water & Sanitation

5. © 2014 Intellecap. All rights reserved
Intellecap: Building a Supportive Ecosystem
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Founded in 2002, Intellecap is a pioneer in the impact investment space, with a mission to
provide innovative business solutions that help build and scale sustainable enterprises
dedicated to social and environmental change.
Largest Social Enterprise Forum Globally
Angel Investment Network
SME Debt Lending
Investment Banking
Providing assistance throughout the lifecycle of an enterprise
Identifying and giving exposure to impact enterprises throughout the country
Bringing the best impact investment opportunities to individual investors
Providing debt financial to impact enterprises without collateral
Raising capital from venture capital and private equity firms for growth stage enterprises
Backed by excellent relationships with all kinds of players in the space
(including foundations, corporates, governments) and a strong research team.

6. © 2014 Intellecap. All rights reserved
Enterprise Life-cycle Stages
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Concept / Business Plan Stage (up to INR 1cr)
Pilot / Proof of Concept /
Beginning of Revenues
(INR 1-3cr)
Business Model Finalized, Scale Up
(~INR 5-10cr)
Further Expansion / Growth (>INR 15cr)
Market Leader
Idea / Idea Testing
Pre- Incubation
Incubation
Accelerator
Media, Forums, Awards & Platforms
Angel Investors / Networks
Venture Capitalists / Early Stage Funds
Private Equity
Strategic Buyers / IPO

7. © 2014 Intellecap. All rights reserved
Incubators and Accelerators
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Incubators
AcceleratorsIncubators:
Often association with a university
Most often non-profit
Usually go when you are idea / business plan level
Usually offer physical space
Full time over 6 months –2 years
Aid in business plan ideation and building
Aid in incorporation
Offer mentoring
Usually take stake in the companyAccelerators:
Usually go once you already have some proof of concept / execution on the ground
Offer business plan deep dive
Investment deck and financial model building
Often have a peer to peer review component
Sessions over 3-6 months
Tie up with funding partners at the end of the program

8. © 2014 Intellecap. All rights reserved
Awards, Events, Media
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Awards / Platforms / Events
MediaEvents:
Networking
Knowledge building
Bouncing your idea off investorsAwards / Platforms:
Exposure to investors, other players
Visibility and credibility
Jury panels
Bootcampsin business modeling, financial modeling, etc.
Usually a cash prize for winners as grant / soft termsMedia:
Visibility and credibility
Articles / online media circulated widely
TV shows, etc. take time to record and are not watched by too many
Put links on your website

9. © 2014 Intellecap. All rights reserved
Enterprise Life-cycle Stages
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Concept / Business Plan Stage (up to INR 1cr)
Pilot / Proof of Concept /
Beginning of Revenues
(INR 1-3cr)
Business Model Finalized, Scale Up(~INR 5-10cr)
Further Expansion / Growth (>INR 15cr)
Market LeaderIdea / Idea Testing
Pre- Incubation
Incubation
Accelerators
Media, Forums & Recognition Platforms
Angel Investors / Networks
Venture Capitalists / Early Stage Funds
Private Equity
Strategic Buyers / IPO

10. © 2014 Intellecap. All rights reserved
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Intellecap Impact Investment Network (I3N or I-cube-N) 60investor members and partners. 50carefully vetted enterprises showcased.
800+ enterprises screened. 9enterprises funded
Deep domain knowledge of Intellecap, a 10-year old advisory firm dedicated to impact.
Quarterly showcases of carefully screened enterprises. Focus on impact, sustainability, scalability.
Investment horizon of ~5 years. Average return expectations for angel investors: 8%-15%.
Exit usually via further rounds of capital raise by VC / PE firms.
Knowledge sharing through monthly newsletters, sector deep dive tele-seminars.
India’s first angel network focused on funding impact enterprises.
The network is an initiative of and is supported by

11. © 2014 Intellecap. All rights reserved
Select Institutional Members and Partners ofI3N
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Omnia Education
Venture Lab
DriveChange
Energy & Education

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Our High-Touch Process
Pre-Showcase Engagement
Referrals + feet on the ground + deep pan-India sourcing
Post-Showcase Engagement
Showcase and Facilitate
Co- Investments
Multi-Pronged Deal Sourcing
Careful Screening
Angel Co-Investment Model
Pitch in front of an exclusive network of 60 investors
Getting you the Money:
•Identify the right investors
•Facilitate conversations, meetings and field visits with investors
•Negotiate valuation, terms, conditions and structure of investment
•Assist in drafting of important documents like term sheets, SSHA etc.
Making you Investor ready:
•Assist in preparation of collaterals (IM, model etc.)
•Deep-dive into financial model
•Fine-tune investor presentation
•Mock pitches

13. © 2014 Intellecap. All rights reserved
Our criteria
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Background and Commitment of the Promoter Team
Uniqueness of the Idea or Model
Size of the Market
Progress so Far / Demonstrated Proof of Concept on the Ground
Robustness and Scalability of the Business Model
Low Competition / Barriers to Entry
Early stage enterprises are usually evaluated on the following. Apart from the impact, the other factors of evaluation are common across impact enterprises and regular for-profit startups.
Impact

14. © 2014 Intellecap. All rights reservedEnterprises Funded by I3N Angel Network
In the last 2.5 years, 9 of our ~50 showcased enterprises have received investments, and we are currently in advanced stages of facilitating 3more investments. Sector: AgricultureCurrently, raising Series A round
Sector: Healthcare
Raised a bridge round and currently raising Series A round
Sector: Education
Post investment, in the market to raise a follow on round of INR 5cr.
Sector: Livelihoods
Post investment, have raised a follow on round of INR 10cr.
Sector: Skills Training
Currently, raising Series A round
Sector: Crowdfunding.
Currently, raising Series A round
Sector: Clean EnergySector: Clean Energy
Sector: Healthcare
A Medical Device Company

15. © 2014 Intellecap. All rights reserved
Other Players
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Angel Investment and Mentoring Networks
Early Stage Funds
Angel Networks:
 Networks of individual investors,
early stage funds
 Investors co-invest as a group
 Each investor in the network is
the decision maker
 Usually upto 2-3cr in funding
 Most often, faster than funds.
Could have longer transaction
timelines if not able to fill the
deal
 Varied group of investors
expands mandate
Funds:
 Very early funds have ticket
sizes between 50 lakhs and 2-
3cr
 Many are members of angel
networks
 Have well-defined mandates
 Main partner / IC is the decision
maker
 Can have longer transaction
timelines because of stress on
DD, small teams, etc.

16. © 2014 Intellecap. All rights reserved
Typical Investment Process
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Prepare Collateral: IM + Financial ModelApproach Angel Investors
Pitch
Business Due Diligence
Term SheetLegal and Financial DD
Share-
Holder’s
Agreement
Receive Investment
Fund raising can take as long as 6 months or even more at times!
PATIENCE and FLEXIBILITY are critical to a faster and a smoother fund raise!

17. © 2014 Intellecap. All rights reserved
Thank You!
http://www.i3n.co.in
i3n@intellecap.com
Aditi Shrivastava
aditi.shrivastava@intellecap.com
+91 9987824798
SohilShah
sohil.shah@intellecap.com
+91 9820917047
17

18. © 2014 Intellecap. All rights reservedStartupWave India’s first free-to-use virtual incubator
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Launched in April 2014, StartupWave offers a mix of online and in-person delivery models for low cost and scalable incubation
Tailored for idea or early stage enterprises seeking mentorship or incubation support
Currently offers pre-incubation services that are designed for idea to pilot stage startups and are tailored to help them get accepted into incubators
Brings together investors, mentors and incubators on a common platform
Extended incubation support for startups will be launched on the platform shortly
StartupWave is democratizing incubation by providing in-place support to any startups that has a business ideaStartups
Space Incubators
Angel InvestorsMentors
www.startupwave.co
StartupWave has been conceptualized by Intellecap in partnership with Government of UK’s Department for International Development in India and GIZ on behalf of the German Ministry of Economic Cooperation and Development (BMZ)
If you’re an idea-stage entrepreneur looking for incubation support or incubators and accelerators get in touch! http://www.startupwave.co/beta/contact/

19. © 2014 Intellecap. All rights reserved
19Fundraising 101

20. © 2014 Intellecap. All rights reserved
When is Your Business Ready to Receive Capital?
"Don't raise a lot of money. Then you'll be on the express train. Take the local train --it goes slower and there are more places to get off.“
~ Mark Suster, Founder BuildOnlineand Coral, Investment Partner at GRP Partners.
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•You have proof that your business is viable and can scale. E.g. pilot, paying customers, signed partnerships etc.
Tip: You have a calendar of milestones and can show that you have achieved the first 2-3 goals.
•You have built a team around your startupwith part of 2ndline of management + field staff in place
Tip: At least one of your team members has past experience/academic background in your sector.
•You are dynamic as a startupand ready to pivot your business model based on customer feedback and market needs.
Tip: You have already refined your model by the time you meet an investor and can show how your model has evolved.
•You are focused as a startupand have one core area of operations.
Tip: If your core business needs significant demand creation before it can take off; then you probably need a hybrid model with grant funding before you think of equity.
•You have realistic forecasts for the next 6 months and a good idea of the next 12. You are raising seed capital to see you through the next 12-18 months now.
Tip: You already know that you will be raising a follow-up round after 18 months at (hopefully) a higher valuation.

21. © 2014 Intellecap. All rights reserved
How Much? What Kind? Who From?
21How Much to Raise
•Start the process of capital raising when you still have 4-6 months of operating cash left.
•If you are in prototype stage, raise the capital you need to finish testing and go to market.
•If you already have a proof of concept / are already generating revenues, raise the capital you need for 12-18 months.
•Cash flow statement (from your financial model) will give a good picture what how much you need.
•Be asset light –investors don’t like giving money for land, capex, patents.
•Don’t raise too little – fundraising is time consuming and often you dilute the same stake regardless.
What to Raise
•Many instruments at your disposal:
•Equity
•Quasi-equity / convertibles
•Debt
•Grants
•Raising equity is glamorous, so most entrepreneurs think of equity first.
•Equity is NOT cheaper than debt.
•What to raise equity for: hiring, marketing, sales, building product.
•What to raise debt for: capex, working capital, etc.
•Ok to raise grants, but don’t develop the habit of soft money. Who to Raise From
•To begin:
•Self
•Friends, family, fools
•Soft(er) money:
•Awards / incubators / accelerators
•Government bodies
•Debt:
•Venture debt funds
•Banks
•Equity:
•Angel investors
•Venture Capitalists
•PE funds
•Make a list of investors: Not only ones that would be interested in you, but also ones that you are interested in.

22. © 2014 Intellecap. All rights reserved
Enterprises Funded by I3N Angel Network
In the last 2.5 years, 9 of our ~50 showcased enterprises have received investments, and we are currently in advanced stages of facilitating 3more investments. Sector: AgricultureCompany Profile: Agrostaris a direct- to- farmer channel thataddresses significant gapsin the traditional rural agricultural retail supply-chain. Investment Size: INR 4crRevenue Growth post investment: 1000% Currently, raising Series A round
Sector: Healthcare
Company Profile:
iKureprovides primary healthcare to patients in rural India.
Investment Size:
INR 1cr
Revenue Growth post investment:
200%
Raised a bridge round and currently raising Series A round
Sector: Education
Company Profile:
Meracareerguideis an online career counselling and career assessment platform to help students make informed career decisions.
Investment Size:
INR 1cr
Revenue Growth post investment:
200%
Post investment, in the market to raise a follow on round of INR 5cr. Sector: LivelihoodsCompany Profile: LabourNetis a skills development company for informal sector workers. Investment Size: INR 1.5crRevenue Growth post investment: 400% Post investment, have raised a follow on round of INR 10cr from institutional investors. Sector: Skills TrainingCompany Profile: Head Held High trains rural youth in English, Computers, and Math, and places them in local jobs. Investment Size: INR 2.5crRevenue Growth post investment: 200% Currently, raising Series A round
Sector: Crowdfunding.
Company Profile:
Kettois a crowdfundingplatform for causes bringing accountability, instant tax receipts, post-donation engagement to donors.
Investment Size:
INR 77 lakhs.
Revenue Growth post investment:
100%
Currently, raising Series A round