The funds will be used to make direct investments in startups in the areas of education, skills training, and financial inclusion, as well as in the foundation's existing seed-stage fund, the India Educational Investment Fund. MSDF previously had backed two early-stage venture funds, the Unitus Seed Fund and Menterra Venture Advisors.
Impact investing has been largely dormant in India over the last two years, Inc42 reports. According to Venture Intelligence, there were forty-nine deals worth $106 million in 2014 and fifty-seven deals worth $104 million in 2015, with fourteen transactions amounting to $42 million so far this year.
"A large part of the $50 million will go toward funding startups," said Debasish Mitter, MSDF's country director for India. "This is also because, while we are an extremely active impact investor, we are increasingly finding that the venture capital space is struggling to get money and ventures in areas of our interest are even more starved. We are looking to increase our offerings to ventures, which currently include grants, equity financing, debt, and non-convertible debt offerings."