Small Industries Development Bank of India (SIDBI) signed a Memorandum of Understanding (MoU) with Life Insurance Corporation of India (LIC), in the presence of Jayant Sinha, MoS for Finance, for supplementing Government’s efforts under ‘Fund-of-Fund’ operation for the Venture Fund industry.
The MoU was executed for the purpose of establishing a fund with SIDBI by LIC for contributing to the corpus of MSME focused venture capital funds along with India Aspiration Fund (IAF) being managed by SIDBI.
SIDBI constituted a Venture Capital Investment Committee (VCIC) comprising of experts besides two senior officials from SIDBI for screening the proposals received from Fund Managers. The team so far has cleared proposals for an aggregate commitment of around Rs. 1400 crore to 38 venture capital funds.
In order to scale up operations and bring in more long term institutional players LIC decided to establish a fund with SIDBI for contributing to the corpus of MSME focused venture capital funds along with IAF. LIC will be contributing upto 10% of the Fund size of IAF to be managed by SIDBI. The signing ceremony was held as a part of Startup Conclave 2016 organised by SIDBI wherein large number of domestic venture fund managers, startups and angel network were present.
SIDBI CMD Kshatrapati Shivaji, in his welcome address, summarized the role being played by SIDBI as a proactive financial institution, addressing the gaps in the MSME eco system. He also emphasized the role of Startups and the transition.
He added that SIDBI recently launched the web platform www.sidbistartupmitra.in for connecting all the stakeholders in the ecosystem. The signing of the MoU was preceded by two panel discussions viz. boosting supply of domestic capital – alternative structures; and raising debt for Startups.
The finance Minister while complimenting SIDBI and LIC on this initiative emphasised the need for more such initiatives by SIDBI to augment the sources of domestic capital to support venture funds with focus on Startups and growth stage MSMEs.
One of the key initiatives under the Action Plan is to provide funding support for development and growth of innovation driven enterprises and for achieving this objective Government has set up a Fund with an initial corpus of `2500 crore and a total corpus of `10,000 crore over a period of four years. An amount of Rs.500 crore was already released for the Fund of Fund for Startups.
LIC CMD K Roy, while speaking on the occasion, said that though it has been supporting venture funds for the past two decades, it was thought appropriate to assign supporting of smaller funds to institution like SIDBI as LIC would be able to concentrate on larger Funds. He was confident that with the professional committee constituted by SIDBI to screen the proposals for supporting various Funds, the initiative would prove beneficial for the eco system.
Image Courtesy: Business Line
