Sangam Summary

Sangam Ventures is a new type of accelerator that provides seed capital and tailored business support to early-stage energy enterprises who serve low-income communities – enabling them to refine their business models, demonstrate viability and attract the growth capital needed to deliver large-scale impact. The business is currently working together with Shell Foundation to create a new seed-stage energy fund in India to be scaled up in 2016.

Market Need

480 million people in India lack access to electricity

Energy impacts all aspects of life, households, businesses and community services. In India, where 480 million people lack access to electricity, start-ups are emerging with modern and affordable energy solutions for low-income customers – but pressure to raise capital and deliver returns often means they prioritise rapid expansion before validating their business model and therefore build unsustainable businesses.

     
  Existing incubators in India are typically unwilling or unable to invest in early stage energy companies due to a lack of sector knowledge or an inability to provide active hands-on support to mitigate risk. As a result, energy start-ups in India currently have few options to secure appropriate finance and skills support to grow sustainable businesses. These same energy start-ups hold the key to improving access to sustainable energy, increasing resource productivity and hence supporting inclusive development and communities that are resilient to climate change.  
     

j-village-scene-(1).jpgBusiness Model

In 2012, Shell Foundation and First Light Ventures teamed up to test an innovative approach to supporting energy enterprises – leading to the co-creation of Sangam Ventures.

This new accelerator takes a different approach to most venture funds by focusing exclusively on energy enterprises in India with high potential to generate significant social impact, and employing a low-volume, high-touch approach needed to support new businesses in the sector.

In practice this means:

     
 
  1. Working proactively to identify underlying challenges faced by the under-served markets which are considered unviable investment opportunities by commercial investors today
  2. Investing in early-stage enterprises that have the potential to fill these market gaps at scale (typically equity investments between $100,000 and $2m).
  3. Improving the probability of success by providing extensive business support to help enterprises refine their business models, prepare for scale and attract growth capital.
 
     

Sangam also seeks to build an integrated energy portfolio by investing in companies that provide complementary services to each other and to the sector – in order to fill critical gaps in the energy value chain. The aim is to build a supportive ecosystem to accelerate growth of energy enterprises inside and outside their portfolio.

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