Tamul & Upaya Social Ventures
Upaya Social Ventures’ timely loan during the height of COVID gave Tamul the shot of liquidity they needed to meet their working capital requirements, pay their vendors, artisans, and rural youth suppliers.
Upaya Social Ventures
Revenue-Based Financing is a loan investors give to companies in the form of financial capital in exchange for a predetermined percentage of their future revenue. Investors continue to receive returns until the initial capital amount, plus a multiple is repaid.
60% - 90%
NO. OF ARTISANS
Tamul is the only established producer of disposable tableware that promotes sustainable livelihoods in Barpeta, one of the poorest areas of the country. They provide livelihoods to over 2,500 workers across Assam (northeastern India) to manufacture and distribute environmentally-friendly, leaf-based tableware.
They give artisans access to a safe, dignified work environment, skills training, and opportunities to advance within the company.
increase in incomes of rural households in Assam, thanks to Tamul
For Tamul, working capital is a constant struggle and often inaccessible. They have easier access to philanthropic and CSR grants meant for skilling, training and rehabilitation but being based in a remote area cut off from metros and an established network, accessing even these types of funding becomes a challenge. Government relief schemes are often too time consuming and complicated to be a viable option.
In March 2020, Tamul was on the verge of closing a follow-on equity round, which would have more than met their need for ₹50 lakhs ($62,500) of liquidity. But India’s COVID lockdowns put paid to that and the deal was cancelled. Overnight, Tamul went from planning business expansion to a fight for survival.
A crowdfunding campaign to help save their employees’ jobs successfully raised ₹28 lakhs ($35,000) and helped 1,800 households stay afloat. But they still needed working capital to continue production and keep the business afloat.
“A lot of things in India happen because of personal networks, not because of systems in place designed to help you. If you are lucky enough to have those personal links, you can work the system. If you don't have those connections, it doesn’t matter if you have every single document and process in place, you will not be able to get through the system.”
— ARINDAM DASGUPTA, CO-FOUNDER & CEO, TAMUL
Upaya Social Ventures, an impact-first, early-stage investor whose mission is to create dignified and lasting jobs for the poorest of the poor, stepped in and offered Tamul a loan with repayment in terms of a revenue-based investment.
Upaya’s timely loan during the height of COVID-19 gave Tamul the shot of liquidity it needed to meet their working capital requirements, pay their vendors, and pay their 3000 women and rural youth suppliers.
They extended Tamul a revenue-based loan of ₹20 lakhs ($25,000) with a 6-month grace period, taking a 5% share of monthly revenue, across a 36-month period. Upaya proposed a 1.1x multiplier, meaning that the total amount repaid would be capped at ₹22 lakhs ($27,500).
The intent of this catalytic capital was to support the enterprise during the pandemic and as such, Upaya considered entrepreneur-friendly, flexible terms, and timeline and return expectations were based on the context, capacity, and time Tamul would take to return to normalcy.
By the end of 2020, orders were picking up again, though not quite to pre-pandemic levels. They negotiated a 6-month extension on the grace period — that Upaya granted — a move that paid off when the second, more brutal, COVID wave swept through India in April 2021 and brought business to a standstill again.
Tamul used this capital to pay their vendors for raw materials, pay salaries, continue production, and stabilise and sustain operations. Today, their revenue stands at ₹1.65 crores ($206,250), they export to five countries, and they have managed to retain most of the jobs that existed pre-COVID.
“Investors looking to invest in the artisan sector need to be in it for the long haul, and need to understand impact better. Impact must be primary. They need to factor in geography, product, sector, and have a clear understanding of rural marketing to help communities break the poverty cycle and access opportunities for sustained, dignified livelihoods.”
— ARINDAM DASGUPTA, CO-FOUNDER & CEO, TAMUL
Provided working capital when traditional financing was not an option for an ambitious, mission-critical enterprise in distress.
Features of catalytic capital in this case:
Not an Off-the-Shelf Solution: Customised, flexible and friendly, understands the HCM’s needs and challenges.
Patient: Gives and extends a grace period to allow the enterprise to get back on its feet during a time of unprecedented crisis.
Concessionary: Costs are capped to ensure it’s reasonable, not a burden and does not weaken a fragile but critical livelihood-providing enterprise in a remote area.