India: Impact investor Aavishkaar to inject $5.4m in Kottaram Agro Foods

Prashant Parameswaran, MD Kottaram Agro Foods Pvt Ltd Soulfull during the Valedictory Function of Organics & Millets 2018 - International Trade Fair

Aavishkaar, part of the impact investing-focused Aavishkaar-Intellecap Group, is investing about $5.4 million (Rs 35 crore) in Kottaram Agro Foods, a Bangalore-based packaged foods startup that markets its products under the brand ‘Soulfull’, it announced on Thursday.

The investment will be routed through its Aavishkaar Bharat Fund, the firm’s sixth fund till date, it said in a statement.

The fund is backed by institutional investors such as the UK’s development finance institution CDC, Small Industries Development Bank of India (Sidbi), and National Bank for Agriculture and Rural Development (Nabard).

“The tangential outcome of Soulfull products is increase in demand of ancient grains that will address problems of marginal Indian farmers and reduce environmental stresses on land since these grains can grow in arid areas, are pest resistant and need minimal fertilizers,” said Vineet Rai, MD of Aavishkaar.

In November 2017, Aavishkaar had raised $95 million in the first close of its $200 million Aavishkaar Bharat Fund. It then said that it expects to achieve the final close of the fund in the next 12-18 months. The fund is targeting early-to-mid stage investment opportunities in sectors such as healthcare, agriculture, clean technology, education and financial inclusion.

Kottaram is the fund’s second investment. Founded in 2011, the company processes Ragi (finger millet) into healthy breakfast and snack options such as flakes, Ragi bites, muesli and ready-to-cook oat-millet meals.

Prashant Parameswaran, MD & CEO of Kottaram Agro Foods said, “There are immense opportunities in the packaged foods industry in India which is growing rapidly at 20-25%. The partnership with Aavishkaar will help Soulfull strengthen its product portfolio, accelerate marketing and expand its distribution reach to over 50,000 retail outlets in the next 3 years.”

Founded in 2002, Aavishkaar has made more than 58 equity investments, across sectors and geographies including South Asia, and has raised six funds delivering commercial returns with close to $300 million assets under management, the statement said. It is now considering launching its 7th fund in Africa.

Other venture capital firms in the country that have either mobilised funds, or are doing so include IDG Ventures India that marked the final close of its third fund at about $200 million. In January this year, Endiya Partners reached final close of its debut fund at $26 million, as per the media reports. In a recent interview with DEALSTREETASIA, Unitus Seed Fund said that it is expecting to make the first close of its second fund at $15.4 million in the next few weeks.

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