India’s Blue Ashva Capital, which recently made the first close of its maiden SME and startup focused fund at $60 million, is looking to clock investments primarily in traditional sectors that have a focus on sustainability.
“While it is generally accepted that SMEs are a superset that is inclusive of startups, it is also evident that new-age startups are perceived and treated differently compared to most SME businesses and continue to attract most of the venture capital in the market,” said Blue Ashva Capital founder Satya Bansal.
However, this is not to say that the firm will not invest in new-economy startups. “While we look for exciting new-age startups, we also see a strong potential for growth in the broader SME segment,” said Bansal, who was earlier the CEO at Barclays Private Bank in India. “Most SMEs do not attract the right attention from mainstream investors even if they are profitable and have the potential to scale. We believe this has to change.”
The fund is sector agnostic and is currently scouting for opportunities in both seed and Series A deals in sectors such as manufacturing, consumer, agriculture, healthcare, financial services and climate change technology.
But how does Blue Ashva Capital plan to marry the two worlds of social impact and profitable ventures? “There has been a perception that a tradeoff exists between impact and profitability. I think this approach is flawed because it treats the two as mutually exclusive, when, in fact, purpose-driven businesses have the potential to generate much higher returns in the long-run.”
Edited excerpts of the interview: