Nagaraja Prakasam left his software job to fund enterprises that have a definitive impact on society
Simultaneously, he mentored Rodrigues in other aspects. “He gave us insights into how to become an investor-friendly company without diluting our core objective: To create zero-waste entities through conversion of waste to resources in large tech parks, companies and apartments,” says Rodrigues. “Naga gave this objective a tangible image when he consistently talked to investors about Saahas ‘owning the waste’.” This, she adds, has helped her enterprise position itself as a company that owns waste that can then be sold to various recyclers. “Every month she [Rodrigues] ships 250 tonnes of Tetra Pak back to Tetra Pak,” says Prakasam.
Since the IAN investment, Saahas has tripled its revenues and now manages approximately 30 tonnes of waste per day. “She started as an NGO to fight with the government…Right now we are accelerating the Series A round funding,” he says.
Even his investment in FreshWorld has a social impact aspect, although the purpose with which it was launched hasn’t been met. In Bengaluru, there are about 15,000 pushcart vendors who walk 12 km a day to sell fruits and vegetables. FreshWorld’s vision was to get these vendors to drive electric vehicles and deliver farm produce to the consumers’ doorsteps. While the startup failed to convince the vendors to change their set patterns, they have now started to hire unskilled, Class 10 dropouts from employment exchanges in Hassan and Tumkur districts to drive their 32 electric vehicles that sell around 7 tonnes of vegetables per day. FreshWorld aims to turn these drivers into micro-entrepreneurs by helping them get a loan of Rs 2.5 lakh to own the electric vehicle. “The more they sell the greater would be their profit share,” says Prakasam.
The idea of investing in social enterprises is still not very appealing to mainstream investors. For instance, K Ganesh, entrepreneur, angel investor, and partner at GrowthStory, believes that the social sector would not pass muster when viewed in terms of hyper growth, multimillion-dollar fundings, quick exits, potential IPOs, and good mark-up on valuations. That said, Ganesh adds, “The opportunity is huge, the need is great and for a different type of investor it can lead to good returns for a much lower risk. It is encouraging to see the focus and support from angel investors like Prakasam.”
“Impact investment is for patient capital,” points out Prakasam. “It needs more time when compared to so-called hyper-growth companies. But now we see that they are not that hyper at all—for every success, there are a few failures, as there is room for only few companies to reach that scale [$1 billion valuation].”
In the last two years, Prakasam has played a key role in setting up the Nativelead Foundation in Madurai to encourage local entrepreneurs to start ventures and create jobs in tier II and III towns. The foundation has a separate investment arm—Native Angels Network (NAN)—that provides early-stage funding and mentoring. Through NAN, Prakasam has led investments in Happy Hens, a Madurai-based enterprise producing organic eggs, and Rainstock, which provides affordable rainwater harvesting solutions.
Repeats Prakasam, “Most equity funding is for them [the 250 million people speaking English].” With around 150 local angel investors [typically traditional business families], who are willing to bet on local entrepreneurial ideas and talent, he hopes NAN will change that.
Recently, Ganapathy Venugopal, co-founder and CEO of Axilor Ventures, an early stage venture capital fund and accelerator, accompanied Prakasam to Madurai to participate in a Nativelead programme and attend a meeting between Prakasam and the founder of Rainstock.
“I was amazed at how well the entrepreneurs had come prepared for the meeting, better than most you get to see,” says Venugopal. “When most of the focus is on the top 20 percent of the population, it is critical to nurture local investors closer to where the entrepreneurs are. Nativelead is so far ahead of its time.”
For Sachdev of Uniphore, Prakasam is still a pillar of strength. Even after multiple investors have come onboard Uniphore, Sachdev continues to look to Naga to deliver the bad news first. That’s because, says Sachdev, “I have never seen him panic and react in a negative way.”
And that’s the kind of open dialogue that Prakasam likes to have. As he says, “If you know the problem early, you can also figure out a way to solve it.”
(This story appears in the 11 November, 2016 issue of Forbes India. To visit our Archives, click here.)