Non-profits start with energy but lack systems, so struggle for funding: Roopa Kudva of Omidyar Network

Over the past seven years, the India arm of Omidyar Network, an investment fund started by eBay founder Pierre Omidyar in 2004, has put more than $200 million into 70 organisations in the country. The Silicon Valley-headquartered early-stage investment fund works on philanthropic principles and invests in both non-profit and for-profit companies, focusing on companies that do social good. Since 2004, the venture has invested over $1 billion in for-profit and non-profit companies worldwide, and entered India in 2010. It recently opened its second India office in Bengaluru. Omidyar’s most recent investment in India is in Goodera, a for-profit company that helps corporates channel money for CSR activities. India managing director Roopa Kudva, who joined the venture in 2015, explains why financial inclusion is top of its list of priorities.

How does Omidyar choose which startups to back?
We provide two kinds of funding, both referred to as investments — we fund early-stage equity investment in for-profit enterprises, and provide grants to non-profit firms. We support companies that work for the base of the pyramid (poor and underprivileged) and the middle-class to improve access to services that have been denied to them traditionally. Non-profits in India typically struggle for funding because of a lack of trust. They start with great energy but lack systems and good standards of reporting, which leads to a lack of trust. We have done equity investments in over 70 organisations in sectors such as consumer internet and mobile, education, financial services, governance and citizen engagement. We look for organisations that use technology to create impact.

Do you have a corpus that you are looking to invest in India?
We are not a traditional fund that goes out and raises money to have a corpus. We are funded by Pierre Omidyar, who was 31 years old when he became wealthy beyond what he could have imagined. So he wanted to distribute his wealth to impact people’s lives positively and at scale by using innovative technologies and business models. Globally, we have invested over $1 billion and impacted a billion lives. We don’t have a limit to how many companies we can invest in. Our portfolio in India is comprehensive and is the only country in the world where we built across several sectors. Our philosophy is that any gains we make from investments become available to invest in new businesses. So when I say it’s philanthropic, Pierre has given us the money and is not expecting to take anything out of it. That’s good for us, so then we can invest in new companies with greater impact.

What are the areas you are focusing on?
One of the new developments we are excited about is Aadhaar and IndiaStack. This is created as public infrastructure and has provided opportunity for a new wave of entrepreneurs. These are companies that are innovating for the next half a billion set to come online for whom English might not be the language of choice.

Why did Omidyar decide to open a second office in India?
India is the most exciting geography for the network. First, the potential of achieving impact is huge. Second, the ecosystem is very positive. The drivers of social impact are gathering greater momentum. We have strong technology infrastructure coming up in the country with smartphones, Aadhaar, and low cost digital payments. All these factors coming together at once make it interesting for us. We have about 25 people in India now.

Do you look for companies outside the top 10 cities and reach out to entrepreneurs who can’t reach you?
At the highest level, when you look at what is happening in technology-based entrepreneurship, all the startups are coming mainly from the top three cities. Outside of the three or four main cities, the quality of talent available drops significantly. There are examples in our portfolio of companies that are not from cities, such as OverCart, which manages returns.

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