India’s small and medium enterprises have the potential to contribute greatly to the country’s economic growth and help extend its benefits to more poor people by raising family income and creating jobs. Unfortunately, investors are unable to make investments into promising small businesses because of high risks and transaction costs. As a result, these enterprises lack access to the capital they need to grow.

USAID worked with Small Enterprise Assistance Fund (SEAF), a U.S.-based not-for-profit organization, to develop the India Growth Fund. This venture capital fund provides business support to small and medium enterprises in promising sectors such as life sciences, media and entertainment, specialized retailing, light engineering and infrastructure-related services (such as healthcare, logistics and distribution). The fund also provides post-investment technical assistance in marketing strategies, management, finance and corporate governance.

To date, the India Growth Fund has leveraged a modest USAID investment to attract more than $160 million from international, domestic, public and private investors. The fund has committed investments of more than $140 million in fifteen enterprises, including an agriculture-biotechnology venture, a home textile manufacturer, a machine tools manufacturer and a software developer that provides transport and logistics solutions for small and medium sized enterprises. These investments have helped create new business opportunities and support the creation of over 2600 jobs. The fund also plans to make investments in another three to four enterprises.