The document summarizes the launch of the India Inclusive Innovation Fund, which aims to drive inclusive growth through innovative entrepreneurship addressing challenges faced by those at the bottom of the economic pyramid. The fund will provide capital to scalable, sustainable ventures addressing issues like healthcare, food, education and more. It will be professionally managed and target a modest 12% annual return along with measurable social impact. Case studies are provided of existing inclusive innovations showing such ventures can be world-class, accessible and scalable while addressing important social issues.

1. MSME and National Innovation
Council
Launch
The India Inclusive Innovation Fund
27th January 2014

2. India has key Developmental Challenges
• Healthcare, food, nutrition, agriculture, education,
energy, water, financial inclusion, livelihoods.
• Globally and in India such challenges are addressed in 2
ways – Philanthropy and government grants / subsidies.
• These can never be adequate & when the fund flow
stops, the good work stops !
ˉ Corporates following global best practices commit 1% of PBT to
CSR – this means a company with $1 bn. revenues commits $1mn !
ˉ Routed through NGOs, managed by committed and passionate
people but not efficient users of capital, with little experience of
building scalable / sustainable enterprises
ˉ Government handouts have similar challenges & systemic
inefficiencies

3. Leveraging the power of Innovation
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Innovation has transformed our lives through:
– a business model that combines innovation with the dynamism of enterprise
– a financial construct that encourages investors to take risks inherent in
innovation
This model - “Venture Capital” - has attracted the best brains in the world
to solve the problems of the affluent, vastly improving our lives
Intend to use the same model to drive innovation and attract the best brains
in the world to solve the problems of the poor.
Creating a new class of capital willing to accept modest financial returns
coupled with measurable social returns
Investing in ventures that improve the lives of our citizens at Base of the
Economic Pyramid, and create wealth & employment
But which are profitable & therefore scalable & sustainable, thus creating
significant impact , disproportionate to the initial investment
India Inclusive Innovation Fund

4. Inclusive Innovation: Does It
Work?
Narayana Hrudyalaya
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NARAYANA
HRUDUYALAYA CARDIAC
HOSPITAL
DR DEVI SHETTY; BANGALORE, INDIA
Healthcare for the Poor
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WORLD-CLASS. Full-spectrum
cardiac care for poorer citizens.
Mortality rate at 2%; hospital-acquired
infection rate of 2.8 per 1000; in line
with global best-in-class
EFFICIENT. Supply side process
innovation reduces cardiac surgery costs
to just USD 3,000/ operation (compared
to USD 7,000 in India, USD 50,000 in
the US)
ACCESSIBLE. Revenue model
innovation (micro-insurance schemes)
makes surgery accessible at a few cents
per month.
SCALABLE. Within 3 years of
founding, treating 60,000 outpatients,
7,500 cardiac surgeries; many therapies
done over telemedicine. Profitable.

5. Inclusive Innovation: Does It
Work?
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Narayana Hrudyalaya
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SELCO INDIA
HARISH HANDE; KARNATAKA, INDIA
Renewable Energy for
the Poor
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INNOVATIVE. Solar-powered
electricity sold as an affordable
service (not as expensive product)
to poorer, off-grid urban and rural
customers.
ACCESSIBLE. Revenue model
innovation (pay-as-you-go billing;
distribution through local
entrepreneurs; micro-finance
facilitation through grameen banks)
makes electricity accessible – and
custom-provided – at a few cents per
day.
SCALABLE. Sold and financed over
115,000 systems. Profitable: INR 12
mn profit from INR 170 mn revenue
base, FY2011-12.

6. Inclusive Innovation: Does It Work?
The HIndu
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JAYASHREE SANITARY
NAPKINS
A MURUGANANTHAM;TAMIL NADU,
INDIA
Hygiene & Livelihood
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INNOVATIVE. Sanitary napkins
are inaccessible to 88% of Indian
women: high capital costs of
production (USD 500,000 per
machine) are unaffordably passed on
to customers. Jayaashree’s simplified,
UV-based technology (USD 2500 per
machine) allows them to be made
and sold at a few cents a pack
ACCESSIBLE. Manufacturing and
distribution innovation (simplified
cellulose processing and sanitising
technologies) makes hygienic
feminine care available to poorer
households.
LIVELIHOOD GENERATING.
Napkins and sold locally by rural
housewives, in small-scale units:

7. Inclusive Innovation: Does It Work?
• INNOVATIVE. The Jaipur Foot is $45 is an
ultra modern prosthetic device made of selflubricating, oil-filled nylon. It has higher
functionality compare to a similar $12,000 limb
produced in the US –
– is both flexible and stable, even on irregular terrain
– Special feature is lightness and mobility,
– those who wear it can run, climb trees and pedal
bicycles.
JAIPUR FOOT
MR. DR MEHTA, LATE MR. RAM
CHANDER SHARMA & DR. P.K.SETHI;
JAIPUR, INDIA
World-class artificial
limbs
• WORLD CLASS Knee Replacement developed
in cooperation with Stanford University costs a
mere $20
• ACCESSIBLE. An open door policy for
anyone with disability without any
discrimination –social, religious or gender.
• SCALABLE. 20 centers across India, serving
65,000 patients each year, an annual budget of
US$3.5M.,>1.2 million limbs till date.

8. IIIF Objectives
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Drive inclusive growth by igniting innovative entrepreneurship that
addresses Bottom of the Pyramid needs
Mobilise capacity to identify and scale innovative solutions that will
address problems of the disadvantaged
Create an ecosystem of innovative solutions, business models and
approaches that reach beyond IPs/Patents
Balance social and financial returns, simultaneously achieving
social good and economic sustainability
Employment / livelihoods creation at the bottom of the
pyramid will be a key bias for the fund’s investments
Mentor, develop skills, build capacity : create dedicated support
networks and education programmes for socially focused
entrepreneurs
Pool innovators and entrepreneurs focused on the bottom of
the pyramid: partner with incubators, entrepreneurship cells, angel
networks, VC Funds, etc.

9. Fund Characteristics
• Structured as an autonomous, Rs. 5,000 fund, first close Rs. 500
crores
– Indian Government contributing 20% ( Rs. 100 crores ) to first close
through Ministry of MSME
• Balance contribution from public sector banks, financial institutions,
insurance companies, multilateral / bilateral development agencies,
Indian & global corporates,
• Fund Life: 9 years, extendable by up to 2 years (subject to approval of
contributors)
• IRR: Fund will target Internal Rate of Return of 12% per annum
• Hurdle Rate: 8% per annum
• Management Fee: 2.5% declining to 1.5% based on the size of corpus
• Focus Sectors: Include (i) healthcare; (ii) food and nutrition; (iii)
agriculture; (iv) education; (v) energy; (vi) financial inclusion; (vii)
environment; (viii) technology as an enabler, etc.

10. Fund Characteristics (cont’d)
• Will Invest directly in BOP enterprises, across the
venture development cycle: majority in seed/early tage
• Will also invest indirectly through other BOP-focused funds
• Professionally managed by world class professionals
• Will operate as a for profit entity, providing investors
modest financial returns, coupled with measurable social
returns
• Will Source pipeline via a multitude of on line and off line
channels
• Will Partner with all stakeholders locally and globally, learn
and share experiences
Create a Model for the World to Emulate

11. Fund Management
• Governing Council
– Comprises eminent people from industry & govt. to oversee
the thesis of the Fund
• Investment Committee
– Mix of successful business people - entrepreneurs,
management / domain / industry experts, and
representatives of investors & management team
• Management Team
– Comprises successful serial entrepreneurs and experienced
fund managers
– Will get a salary and “carry” – incentivized equally on social
and financial returns

12. Why the Fund Should Succeed
• India has the right resources and competencies
– World-class entrepreneurs; world-class technological capabilities; world’s largest
young talent pool; strong government focus
– Entrepreneurial bug has bitten India: a rising culture of inspired engineering and
business school graduates choosing entrepreneurship over job security
• India has the right talent
– Capable of doing more with less for more
– Innovative approach to problem solving: beyond jugaad, focusing beyond IP:
developing new business models, go-to-market approaches
– Aware of bottom 500 million needs – that often define their own context
• India has the right market
– World’s largest market for products / solutions for the poor
– Market explodes for the right offering at the right “Indian” price point
– Mobile subscribers went from 1 mill to 800 m in ten years as call rates & handset
prices dropped exponentially and became affordable by the poor, creating major
empowerment
• India right place to prove model on scale & offer to the World

13. Thank You
For more information on India Inclusive Innovation Fund visit
www.innovationcouncil.gov.in