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June 22, 2011

Profile of social venture investor Omidyar Network

From the Business Today profile of the philanthropic investment firm founded by Pierre Omidyar, founder of Internet company eBay.
Unlike other philanthropic organisations, ON does not come with a project-centred approach. Rather, it enters with the intention of building institutions. The two main requirements are: the organisation should fit into the ON portfolio and be scalable.

Swati Ramanathan, Chairperson of the Indian Urban Space Foundation and co-founder of Janaagraha, an NGO working on urban quality of living, says the benefit of ON comes from its disciplined funding. In Janaagraha's case, while $3 million (Rs 13.8 crore) was given for three years, a third of the funds is for unrestricted use, while another third is tied to achievement of pre-determined metrics and the final third portion depends on the ability of the organisation to raise at least twice as much from other sources.

This, according to Jayant Sinha, Mumbai-based Partner, ON, ensures that the organisation makes the most of the network's money - leveraging to raise more funds and building fund-raising capacity. And, like a venture capital firm, this also ensures there is an exit built into the investment. As a proportion of overall funds, ON's contribution tapers over its period of investment.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in