Social Enterprise in India Financing Small Entrepreneurs

Written by on September 4, 2012 in Asia, Entrepreneurship - No comments

Less than a year ago, Hardika Shah of Bengaluru, India, launched Kinara Capital, a non-banking finance company (NBFC) to support promising small and medium entrepreneurs in the country. With a management consultancy experience of more than two decades with Accenture, it was a bold move for Shah to venture into lending for small and medium enterprises.

Shah says that she realized about the potential of skilled Indian entrepreneurs nearly a decade ago, and noticed their spirit to take on the world, given an opportunity. Her involvement with social enterprises at the Global Social Benefit Incubator program at Santa Clara University and a four-month project for Acumen Fund in India provided her the necessary direction for the future.

Shah decided to create a social and business finance enterprise when she realized that financing was a critical issue for small and medium entrepreneurs in India. She says: “I spent two months in late 2009 travelling in India talking to anyone and everyone — from microfinance CEOs, private equity investors, venture capitalists and bankers to small business owners in villages and in cities — to understand whether the microfinance model could scale to meet the needs of micro and small enterprises. The challenge was to set up a model that was scalable, low cost and yet could service the need of micro enterprises.”

Less than a year ago, Hardika Shah of Bengaluru, India, launched Kinara Capital, a non-banking finance company (NBFC) to support promising small and medium entrepreneurs in the country. With a management consultancy experience of more than two decades with Accenture, it was a bold move for Shah to venture into lending for small and medium enterprises.

Shah says that she realized about the potential of skilled Indian entrepreneurs nearly a decade ago, and noticed their spirit to take on the world, given an opportunity. Her involvement with social enterprises at the Global Social Benefit Incubator program at Santa Clara University and a four-month project for Acumen Fund in India provided her the necessary direction for the future.

Shah decided to create a social and business finance enterprise when she realized that financing was a critical issue for small and medium entrepreneurs in India. She says: “I spent two months in late 2009 travelling in India talking to anyone and everyone — from microfinance CEOs, private equity investors, venture capitalists and bankers to small business owners in villages and in cities — to understand whether the microfinance model could scale to meet the needs of micro and small enterprises. The challenge was to set up a model that was scalable, low cost and yet could service the need of micro enterprises.”

Shah’s enterprise received initial investments from impact investors such as Unitus, Halloran Philanthropies and John Ayliffe. From the very beginning, Shah was clear in her mind that her company’s strategy would be to plug into the supply chain of businesses and self-help groups. To begin with, Shah tapped into the networks of Villgro, Industree and Mother Earth. She says: “Such an approach reduces our cost of acquisition and also helps us become part of the entire supply chain fabric.” Her enterprise chooses to finance projects that will have the maximum social impact, all other things being equal.

Source: Outlook

Photo Credit: evobrained

Vikas is a staff writer for the Sustainable Development news and editorial section on Justmeans. He is an MBA with 20 years of managerial and entrepreneurial experience and global travel. He is the author of “The Power of Money” (Scholars, 2003), a book that presents a revolutionary monetary economic theory on poverty alleviation in the developing world. Vikas is also the official writer for an international social project for developing nations “Decisions for Life” run in collaboration between the ILO, the University of Amsterdam and the Indian Institute of Management.

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