How Vineet Rai Built Aavishkaar from ₹5,000 Savings into a Billion-Dollar Impact Platform
Vineet bought a dying MFI losing ₹2 crores a month. Today it manages ₹7,000 crores.
A forester who once chased bears in Odisha’s jungles has spent more than two decades proving that lending to low-income entrepreneurs can be both profitable and transformative. Then came a fresh wave of crises in the 2020s that tested everything he’d built.
In October 2001, Vineet Rai registered a small entity in Gujarat called Aavishkaar India Micro Venture Capital Fund. His working capital was barely more than a few thousand rupees in personal savings. His thesis was simple but radical for its time: poor people are not poor because they lack capability, but because they lack capital.
Today, Aavishkaar Group manages well over a billion dollars in assets, employs several thousand people across Asia and Africa, and has backed dozens of companies as one of their earliest investors. Multiple portfolio companies have gone public, and recent years have seen marquee exits in dairy and food as well as large global institutions backing Aavishkaar’s specialised funds.
The journey from a few thousand rupees to a global impact platform is anything but linear. It runs through a near-wipeout in Andhra Pradesh, regulatory shocks in the mid-2020s, and a philosophy Vineet calls “aggressive patience.”
Check out the video of the conversation here or read on for insights
The Forester’s Education
Vineet is not a product of IIM or Wall Street. He graduated from the Indian Institute of Forest Management in Bhopal, a school that taught sustainability before the word became fashionable.
I graduated in physics, chemistry, and maths in 1991. Now, 1991 is a fabled year in India’s economic history, so you can understand, finding a job was impossible.
His first job was at Ballarpur Industries, a paper manufacturer, where he spent his days in remote forests. He had a jeep, a motorbike, and thousands of people reporting to him. It sounded exciting until he got married and his wife refused to live in the jungle. That forced migration to cities changed everything.
Between 1997 and 2001, Vineet ran what he believes was India’s first startup incubator, GIAN in Gujarat. There he worked with grassroots innovators, rural mechanics who had developed solutions like a tilting bullock cart. The innovator had created something useful. Vineet had generated orders. But no entrepreneur was willing to manufacture at scale.
When he finally found someone willing to try, the entrepreneur asked a question that broke something in Vineet’s understanding of risk:
He said, ‘Do you get a salary?’ I said, ‘Yes.’ So he said, ‘You will keep getting your salary. But if I fail, what will happen?’ I had never gone through a day where the salary would not hit my bank account. So it surprised me.
The only capital available to entrepreneurs was collateral-based bank loans. You had to risk your house to start a business. Vineet proposed a ₹100 crore fund to his board. They rejected it. He resigned on March 1, 2001.
Four and a Half Years for the First Million
The early years were defined by scarcity. Vineet moved to Mumbai and discovered that school fees alone were ₹20,000 when his life savings were ₹5,000.
It took four and a half years, from October 2001 to March 2005, to raise his first $1 million (roughly ₹5 crores at the time).
I was literally running the fund without fees, without anything, without a structure. My salary was ₹10,000 rupees because if I ate away everything, there was also the cost of running.
He survived by consulting through Intellecap, an advisory firm he co-founded. His first investors were Indians in Singapore: Anant Nageswaran (now Chief Economic Advisor to the PM), Sanjeev Sanyal (PM’s Economic Advisory Council), and Jayesh Parekh. The first fund eventually raised ₹59 crores and returned approximately ₹63 crores, a modest gain but a return nonetheless.
Generating return is very, very difficult even today. That I returned the money itself is a miracle. Even now, people struggle to return the money.
The Microfinance Bet and the Andhra Apocalypse
While running his first fund, Vineet developed deep expertise in microfinance through Intellecap’s advisory work. His second fund, an $18 million vehicle with IFC, FMO, and ICICI, focused specifically on microfinance institutions.
He invested early in companies that would become giants: Equitas, CreditAccess Grameen, Utkarsh Bank, Suryoday. The thesis was simple: poor women, organized into joint liability groups where they guarantee each other’s loans, are creditworthy. The returns were strong enough that Vineet developed a dangerous confidence.
We were doing so well that I used to think I am God’s gift to investing. Then came 2010 and I was brought to earth.
The Andhra Pradesh government passed an ordinance that effectively told borrowers they could repay microfinance loans “when and if they want.” The fund lost 45% of its capital. But because the remaining investments performed well, it still returned 2x to investors in dollar terms.
Then Vineet did something counterintuitive. In 2012, while the sector was still in crisis, he used everything Aavishkaar had collected since 2001 to buy Arohan, a tiny Kolkata-based MFI losing ₹2 crores a month with a net worth of just ₹14 crores.
In another six months, it wouldn’t have existed. We took the risk of buying that company for about ₹12 crores.
Today, Arohan manages approximately ₹6,000 to ₹7,000 crores in assets and serves over 2 million women borrowers across 17 states.
Technology as Survival
When Vineet bought Arohan, he asked a naive question: how do I know the numbers in my balance sheet are true when the money is spread across 17 states, thousands of branches, and 9,000 employees?
The answer was core banking software, a system that automatically shuts down at midnight and prevents manual manipulation.
At 12 o’clock at night, it shuts down on its own and there is nobody who can do any hanky-panky with it. The six months of nightmare setting it up has kept us happy for 10 years.
Arohan built layers of technology on top. Every employee is geotagged. The lending process is paperless. Collections are 90-95% cashless through UPI. The company can approve a loan in 30 minutes and credit money directly to a borrower’s bank account anywhere in India.
The 2024 Storm
The microfinance sector entered 2024 with momentum. Then came a perfect storm.
In summer 2024, severe heatwaves swept Bihar and Uttar Pradesh, Arohan’s core markets. Temperatures exceeded 45°C for weeks, making daily wage labor impossible. Income shocks translated directly into missed EMIs. Industry-wide, gross non-performing assets surged to 16% by March 2025, nearly doubling from 8.8% the previous year.
There could be a bad monsoon, a climatic intervention, a political intervention, local disturbances, a riot. Everything influences microfinance.
Then came the regulatory hammer. On October 17, 2024, the Reserve Bank of India issued a “Cease and Desist” order against Arohan and three other NBFCs, citing “usurious pricing.” The ban was lifted in January 2025, but the damage was significant: Q2 FY26 revenue declined 16.4% year-on-year and net profit collapsed by 56%.
The planned IPO, targeting approximately ₹1,800 crores, was pushed further into 2026.
The Grey Hair Thesis and Strategic Pivots
Vineet’s investment philosophy has a counterintuitive edge. He believes youth works for unregulated tech, but regulated finance requires experience.
Entrepreneurs see governance as interference, while governance is actually the safety net they need to deal with extreme challenges.
He is equally sharp on valuations.
We are valuing companies so high that they will end up giving half-x returns. Just because somebody has given high valuation doesn’t mean I have to.
Recognizing the volatility of microfinance, Aavishkaar has diversified. The Global Supply Chain Support Fund, set up with Germany’s KfW, provides debt to profitable companies in Africa and Asia that need working capital but do not want equity dilution. JICA’s $40 million investment in August 2025 signaled Japan’s interest in using Aavishkaar as a conduit for its “China Plus One” supply chain strategy.
In October 2025, Aavishkaar announced a ₹500 crore defense and deep-tech fund with Jamwant Ventures, a firm founded by former Indian Navy officers. The fund will back 20-25 startups in areas like solid rocket propulsion and autonomous systems.
The Empire Today
The Aavishkaar Group now comprises four main entities:
Entity Assets Focus
Aavishkaar Capital ~$600M Equity impact investing
Arohan Financial ~$800M Microfinance
Ashv Finance ~$100M MSME lending
Credit Fund (GSCSF) ~$100-150M Global supply chain debt
After 24 years, Vineet maintains perspective:
To set up a 2-gigawatt cell manufacturing facility, you would require billions of dollars, just one factory. At $1.2 billion, we are all bonsais. We are not yet trees.
For founders seeking capital, his advice is characteristically direct: have a hard conversation with yourself about what your business actually is before approaching investors.
Invariably, entrepreneurs have ghosts in their own minds. They start saying things which are probably not relevant in order to convince the investor. Very high honesty to yourself probably helps.
The story of Aavishkaar is not finished. The microfinance sector remains stressed. The Arohan IPO is pending. Climate risk is becoming credit risk in ways the industry has not fully priced. But Vineet has spent 24 years proving that capital can flow to places where conventional wisdom says it cannot.
Whether the bonsais finally become banyan trees depends on what happens next.
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