Innovator Identification Camp 2006 [VIT – Technology Business Incubator]
Chennai September 26, 2006 Presentation by R.V. Dilip Kumar SIDBI Venture Capital Ltd
SIDBI Venture Capital Ltd. (SVCL)
Wholly Owned Subsidiary of SIDBI Established to carry out business of setting up, advising and managing Venture Capital funds Professionally managed AMC Currently managing Rs.600 cr of VC funds as Investment Manager
Venture Capital
Equity/ Equity type Investments in unlisted companies Profit and risk sharing Flexible financing Detailed due diligence High level of handholding
Venture Capital (contd..)
High risk – high return Selective Investment Hands-on Approach Ownership & control shared Little returns in early years Repeat financing
Traditional Bank Finance vs Venture Capital
Focus on entrepreneur, project and growth prospects rather than security High risk, high return & high failure scenario Instruments – Debt vs Equity In case of failure – returns nil/negligible Time horizon for returns – Long Asset based financing vs Strength of Idea Focus on security vs Growth Prospects
National Venture Fund for Software and IT Industry (NFSIT)
Set up as a Trust Fund registered with SEBI Inaugurated by the Hon’ble Prime Minister in December 1999 1st fund with Government contribution Tenure - 10 years (close ended) Corpus - Rs.100 crore Contributors - SIDBI, MCIT (GoI) and IDBI AMC – SIDBI Venture Capital Ltd. Trustee – SIDBI Trustee Company Ltd.
NFSIT
cr corpus Dedicated to Software & IT Industry Investment by way of equity/ equity type instruments Several hundred business plans examined Co-investment with other funds
Rs.100
Investments in software services, products, ITES, Internet initiatives etc.
Major Events
NFSIT assisted unit selected for case study on VC funding in developing countries by John Hopkins University, USA
SIDBI Growth Fund
Structured as a unit scheme of SIDBI SME Venture Fund, registered under Trusts Act and with SEBI Corpus size Rs.500 crore Initial corpus of Rs.100 crore committed by SIDBI Balance Rs.400 cr contributed by commercial banks. 8-year close-ended fund. Registered with SEBI.
SIDBI Growth Fund
To meet the long term risk capital of SME units and to provide mentoring support Focus on growth sectors like –
Biotech, IT, Pharma, Food processing, Retailing, Service sector projects Light Engineering etc
SIDBI Growth Fund
Proven technology or business model Sound Management Team Sustainable competitive IPR and a well differentiated market positioning Clear exit plans for VC investors Potential of being market leader
Exit Strategy
Preferred exit route – IPO Strategic investor Buy back M&As Bigger VC Fund investing etc.
Role of SVCL
SMEs require high level of handholding Active management participation by SVCL Nominee directors appointed on all investee cos. Quarterly internal audit by outside CA firm, progress reports and visits Help create systems, provide strategic input for key functional areas Help in resource mobilisation and fund raising