A clincher was also SKS founder Vikram Akula's plan to leverage the microfinance distribution network to sell a range of products from insurance to consumer goods, mobile phones, and even home loans. "This is the next big thing for us," says Chadha. He claims that they are now actively looking at bottom-of-the-pyramid projects.
Or take IT-rural, set up by a group of software engineers from the south Indian state of Tamil Nadu. A clutch of U.S.-based VCs are circling the startup technology venture, which develops solutions for rural India. The company doesn't just provide a bunch of computers and conduct basic-training classes, but has a Web site to educate farmers, giving them information about crop patterns, nature of soil, crop diseases, and remedies. IT-rural also has established backward and forward linkages, from buying the seeds to branding and retailing products.
The company has just finished a pilot project in the 30 villages of the Pulivendala district in Andhra Pradesh. According to Ramakrishna Thiruchelvam, the brain behind IT-rural, the project has covered about 30,000 people and 6,000 farmers cultivating more than 20,000 acres, "raising the GDP of the villages substantially." Some of their fruit has even made it to the shelves of Singapore's retail stores. IT-rural is currently negotiating with the state government to undertake similar IT-related projects in other villages. Good Business, not Goodwill
But don't mistake such investments as charity. Clearstone Venture Partners, based in Santa Monica, Calif., has put US$5 million into DigiBee Microsystems, which expects to pocket handsome profits by selling low-end mobile phones to poor Indians. "We are excited about consumers choosing differentiated products," says Rahul Khanna, a Clearstone director.
And two California VC funds--Walden International and New Enterprise Associates--are considering a US$5 million investment in Novatium, a Chennai-based company that has developed a US$100 personal computer. The machine uses microprocessors similar to those found in cell phones, and Novatium hopes to offer a suite of products including Internet connectivity, application software, and services for US$10 a month, according to founder Rajesh Jain. Novatium expects to sell 3 million machines, with the potential to reach 40 million households by 2010. Says Alok Singh, CEO of Novatium, "We have always been market-driven."
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