Join our Waitlist for Expert Advice!

This Institution Backed Unicorns At Early Stage, And It's Not a Traditional VC. Find Out IFC, a World Bank-backed institution, looks at start-ups that are solving a well-defined large problem with solid founding teams and a path to profitability

By Debroop Roy

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

IFC
Ruchira Shukla, Head of Venture Capital, South Asia, IFC

Despite being a sister organization of the globally-known World Bank Group, the International Finance Corp (IFC) is not a much talked-about name in the Indian venture capital circuit.

People in India often don't realize that the institution is one of the most active venture capital investors in the country, according to Ruchira Shukla, head of venture capital for IFC in South Asia.

"The reason people don't realize it is that when they look at VCs, they look at the traditional funds out there and they compare what they do amongst each other," Shukla said in an interview with Entrepreneur India.

Some of IFC's major investments in the country include online grocery company Big Basket, edtech platform Byju's and eyewear retailer Lenskart. Shukla said Byju's valuation has risen 11 times from when IFC first invested in the company.

When investing in start-ups, Shukla looks at four essential things.

Solving A Problem

One of the first things she looks at is whether the entrepreneur fully understands and is passionate about trying to solve a well-defined large problem.

"It has to be a well-defined problem and it has to be a large problem," Shukla said.

If the problem isn't large and doesn't consequently have a large addressable market, the business would never be able to become big and sustainable, she added.

Founding Team

For the institution to back a start-up, the founding team has to be solid, according to Shukla.

IFC closely watches the background of the team to see if it works well as a unit and would be able to wade through the tough periods that invariably crop up.

"The worst thing you want to see is a fallout of the founding team...that can be highly unsettling for the business," she said.

Path to Profitability

One of the other important things that IFC looks at before investing is whether there is a marked path to eventually turning a profit.

"Most start-up businesses are not profitable at the time they are seeking funds, which is the reason why they are seeking funds," she said.

Profitability of nascent well-funded companies has become a global talking point in recent times as several start-ups have failed to put a stop on cash burn and business models that require constant fund raising to stay afloat.

"We think that (path to profitability) is essential because the only way a business can survive in the long term is by making profit," said Shukla.

Impact Metrics

It is also important that a start-up is making some kind of impact, solving some kind of problem in the society.

"That sort of ties back to my point about solving a problem." Shukla explained. If a start-up is solving a problem,it does make an impact to a particular section of the society, she said.

IFC looks for key impact metrics and tracks those metrics for its portfolio companies, she added.

Debroop Roy

Former Correspondent

Covering the start-up ecosystem in and around Bangalore. Formerly an energy reporter at Reuters. A film, cricket buff who also writes fiction on weekends.
Leadership

4 Bold Leadership Moves Every Successful CEO Uses to Navigate Change

Ready to turn fear into fuel and lead with confidence? In this article, I share how leaving my corporate job without a plan led me to build a thriving business. Learn four bold strategies to embrace uncertainty and turn challenges into opportunities for growth today.

Starting a Business

Schools Fall Short on Teaching Financial Literacy — Here's 3 Ways Parents Can Raise Future Entrepreneurs

Entrepreneurship is not just for adults. Teaching kids the basics of business and finance from a young age will serve them well in life, no matter what path they pursue.

Thought Leaders

These 3 Trends Will Change What It Means to Be an Entrepreneur in 2025

Here are three entrepreneurship trends from the new Global Entrepreneurship Monitor report that are changing the landscape for the future.

Social Media

Stop Chasing Algorithms — Here's How Creators Can Take Control of Their Content and Monetize on Their Own Terms

Social media platforms promise creators visibility, but the real challenge lies in relying on algorithms for income.