May 20, 2019

The British development finance company CDC Group has invested $15 million in Omnivore Partners India Fund 2, which announced a close at $97 million last month.

Founded in 1948, as the Colonial Development Corporation by the Overseas Resources Development Act, CDC Group is the world’s first development finance institution. For 70 years the group has made investments in poor countries of the world with the mission to support businesses throughout Africa and South Asia and to “do good without losing money.”

The fund focuses its capital on countries with a weak private sector, a challenging investment climate, and a scarcity of jobs. As such, CDC has selected its specific geographic focus because more than 80 percent of the world’s poorest people live in the two markets of Africa and South Asia.

“This demonstrates our commitment in providing long-term capital to effect real improvements in people’s lives,” said Alagappan Murugappan, managing director, Asia Funds and Capital Partnerships.

In the 1990s CDC Group made its first investments in India’s tech industry, and continues today with a $15 million commitment to India-based impact agrifood tech investment fund Omnivore Partners India Fund 2.

Co-founded by Mark Kahn and Jinesh Shah, and with offices in Mumbai, New Delhi, Bengaluru, and Chennai, Omnivore Partners focuses on venture capital investments spanning Seed and Series A rounds for companies in the agtech sector including digital platforms, precision ag, IoT, UAVs, remote sensing, and Big Data solutions. The firm also looks for investment opportunities in companies creating branded food products and novel ingredients, along with start-ups looking to improve rural livelihoods with supply chain, water management, and fintech solutions for smallholder farmers.

The Omnivore Partners India Fund 2 announced its first close at $46 million in February 2018, out of a targeted $75 million. Upon its first close, Kahn said, “In our first fund, it was 100 percent domestic investors. For the first close of our second fund, we deliberately chose to focus on raising funds from foreign investors. The value add they bring includes defining and measuring impact, focus on environmental and government policies,” going on to add that the firm expected a 50-50 split between domestic investors and existing investors for the second half of the fund.

Fund 2 has already made five investments in recent months:

Doodhwala – a hyper-local online milk delivery service;

AgNext – an agricultural sensing and solutions startup;

TartanSense – an agtech and robotics platform;

DeHaat – an online agribusiness platform; and

IntelloLabs – a tech-based platform offering India’s farmers end-to-end services.

Fund 2 is also reserving capital dedicated to making follow-on investments through future rounds.

“Direct access to water, food and clean energy are the pillars on which to build strong and healthy communities,” said Murugappan. “I am excited by this investment momentum and the subsequent impact we are dedicated to delivering over many generations.”

Omnivore’s first fund was launched in 2012, and holding a $38.8 million close the following year, at which time the firm’s thoughts turned toward the launch of Fund 2.

From a strategy perspective, Kahn explained to GAI News in April 2016, “There are some small changes (in Fund 2) but it’s really the lessons learned from Fund 1 being applied as opposed to an overall macro change in strategy.”

Two significant lessons learned that will be applied to Fund 2 include time horizon and location. Kahn explained, “We understand now that the amount of runway that deals need in India to reach the stage where they can be syndicated with deeper larger generalists funds is a lot longer than we originally thought. We’re incorporating that into the next fund.”

He added, “We’ve seen companies that are in start-up hubs like Bengalore, Delhi or Pune find it easier to do all these things. As a result, Fund II will focus more on these start-up hubs for investments.”

– Lynda Kiernan