Jun 7, 2020 · 34m · neon-show
Sushma Kaushik on the Exit thesis of Aavishkaar Capital & investing in socially responsible startups
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In this episode of the 100x Entrepreneur podcast, Sushma Kaushik, Partner at Aavishkaar Capital, discusses how the pioneering firm delivers commercial venture returns through impact investing, disciplined exit strategies, and inclusive leadership across India's evolving startup ecosystem.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
Siddhartha as informed peer 3.4 Guest teaching 3.4 Guest disagreement 0.9 Siddhartha pushing back 0.6
speaking balance: gold is Siddhartha, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 30:54 Rejecting the intentional gender quota framing
The guest directly dismisses the host's premise that their team diversity was an intentional balancing act, insisting candidates and founders received zero special brownie points and were selected purely on merit.
Hardest push from Siddhartha ▶ 6:35 Host challenges impact investing returns against VC hurdlesThe host questions the financial viability of impact funds, pressing the guest on whether they can realistically meet the standard VC LP hurdle rate of 15 to 20 percent IRR.
Biggest teaching moment ▶ 26:07 Correcting host on IFC secondary buyout policiesWhen the host guesses that IFC buys out their secondary stakes, the guest flatly corrects him by pointing out that IFC never provides exits as a matter of institutional policy.
Siddhartha holds their own ▶ 17:59 Host cites exact portfolio allocation breakdownThe host demonstrates sharp prep and domain literacy by quoting Aavishkaar's exact portfolio distribution of 87 percent seed and early-stage companies to probe their growth strategy.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Siddhartha as informed peer | Guest teaching | Guest disagreement | Siddhartha pushing back | Why |
|---|---|---|---|---|---|---|
| Sushma Kaushik's Decade-Long Journey with Aavishkaar Capital | 3 | 2 | 0 | 0 | The host asks open-ended introductory questions about the guest's career shift and Aavishkaar's evolving fund thesis. The guest provides an expansive overview of growing from a thirty-million-dollar fund to a billion-dollar platform without tension. | |
| Achieving Commercial Returns and 25% IRR in Impact Investing | 5 | 5 | 1 | 2 | The host challenges whether impact funds can match typical venture capital return benchmarks of 15 to 20 percent IRR. The guest firmly counters by stating their realized portfolio clocks around 25 percent IRR and a 3x MOIC, surprising the host. | |
| Defining Responsible Businesses: Microfinance and Soulfull Case Studies | 2 | 4 | 0 | 0 | The host asks for clarity on what separates responsible businesses from standard ones. The guest educates the host with deep domain examples in microfinance credit practices and native drought-resistant crops like Soulfull ragi. | |
| Fintech Strategy: Chqbook and Financial Inclusion Across Portfolios | 3 | 3 | 0 | 0 | The host prompts discussion on the Chqbook investment and the broader fintech portfolio. The guest details the five-hundred-billion-dollar missing middle credit gap and the watering hole customer acquisition strategy. | |
| Investment Check Sizes, Growth Strategies, and Public Listings | 4 | 2 | 0 | 1 | The host demonstrates portfolio knowledge by citing that 87 percent of Aavishkaar's deals are seed or early stage and asks about the growth exception. The guest outlines ticket sizes ranging from one to fifteen million dollars and the Equitas IPO. | |
| Backing Professional Entrepreneurs and Structuring an Exit Thesis | 4 | 4 | 2 | 1 | The host asks if backing first-time founders rather than serial entrepreneurs is deliberate. The guest reframes this by explaining they back corporate professional entrepreneurs, emphasizing their firm is primarily in the business of exits. | |
| Corporate M&A Dynamics and Secondary PE Buyers in India | 3 | 5 | 2 | 0 | The host suggests developmental finance institutions like IFC might be secondary buyers. The guest immediately corrects the host by noting IFC never gives secondary exits and points to commercial private equity funds instead. | |
| Celebrating Exits and Building a Mature Venture Ecosystem | 3 | 3 | 1 | 1 | The host asks whether exited founders are excessively glorified in the ecosystem. The guest asserts that exits deserve celebration given India's shallow capital markets and explains the systemic missing layers in domestic secondary liquidity. | |
| Fostering Gender Diversity and Board Governance in Venture Capital | 4 | 3 | 2 | 0 | The host asks whether Aavishkaar's high gender diversity metrics were an intentional effort to rebalance VC equations. The guest nuances the answer, clarifying that hiring and investments are purely merit-based while board diversity is handled intentionally. |
Statements from this episode (15)
Kaushik: Aavishkaar reached nearly $1B in debt and equity assets in 2020
“To say that we started from thirty million and today in 2020, we are close to a billion dollars in both debt and equity assets.”
Aavishkaar Capital manages $450M in equity AUM with 32 exits
“We manage close to six funds now. This is across six funds. We have about four and 50 million dollars of assets under management in terms of equity across the six funds. And from the six funds we've made close to 69 investments and 32 full and partial exits”
Aavishkaar Capital achieves 3x realized MOIC and 25% IRR
“We stand to at close to three X MOIC on the realized investments. And we clock approximately 25% in terms of IRR as well.”
Kaushik: Impact investing funds should not compromise on financial returns
“I don't think returns can be compromised just because we are called impact investors. And I'm sure that's true for any kind of PCS-based investing funds.”
Kaushik: Indian microfinance has expanded to over two lakh crore rupees
“And in the last 1015 years, the sector has really come out very strong. What started off as a few thousand, you know, or a few lakhs in size is now over two lakh crores in sector size, right?”
Kaushik: IFC report estimates small business credit gap at $500B
“And so you know, there's also a report by IFC written by IntelliCap Which talk of the missing middle and the credit gap in that missing middle is what they estimate close to about five hundred billion dollars, right?”
Kaushik: 70% of Chqbook's target small business segment lacked credit cards
“So I was quite surprised to see that 70% of the customer segment did not have access to credit cards, right?”
Kaushik: Aavishkaar backed Equitas at the business plan stage before its IPO
“One such example was Equitas small finance bank. When they first came to us they were just a business plan but we really, he had a very compelling story and very strong track record of his own. And so when we started off they just about had the license to begi…”
Kaushik: Two to three Aavishkaar portfolio companies will list when markets improve
“So right now we Equitas is one. There are a couple of them who are waiting for markets to improve to list. So there are two, maybe three of them who would list once the market conditions improve.”
Kaushik: Aavishkaar backs institutional professionals over family-run businesses
“So when we say we back first time founders, what we mean is we back a professional entrepreneurs you know, people who have probably been working as a professional in large institutions. Who aspire to become entrepreneurs in their own right. So those are the ki…”
Kaushik: Venture capital is the business of exits, not investments
“We are not in the business of investments. We are actually in the business of exits, because only if we are able to generate exits and returns for our investors, will we be able to successfully continue raising our funds and then continue investing.”
Kaushik: Most of Aavishkaar's successful exits are secondary sales to PE
“So there have been M&A as well, but actually most of our successful exits have come from trade sales to other private equity or other larger funds who have bought out our states. So most of our successful exits have been those so not, not so much on M&A.”
Kaushik: Aavishkaar exited consumer brand Jaypore to Aditya Birla Retail
“We had one very successful exit on M&A when we sold an online consumer brand called Jaipur to Aditya Birla Retail.”
Kaushik: Well-diverse teams tend to perform far better than homogenous teams
“Most often enough, you've seen that teams which have a healthy mix tend to do better. And, you know, and now when you read a lot of global literature, you see that it is true that well-balanced, well-diverse teams tend to do far better than very homogenous tea…”
Kaushik: Aavishkaar intentionally ensures gender balance on portfolio company boards
“What we do consciously is we try to create corporate governance. Even at the board levels, we try to ensure there is gender balance on the on boards. We try to bring in senior women leaders who are able to add a lot of value. And then because we also believe t…”