SIDBI launches fund to promote innovation & entrepreneurship

Shri Kalraj Mishra, Hon’ble Minister of Micro, Small & Medium Enterprises today launched ASPIRE Fund, a Fund of Funds with a corpus of `60 crore, to be administered by Small Industries Development Bank of India.
The ASPIRE Fund is part of a major initiative by the Ministry of MSME, Government of India under “A Scheme for Promotion of Innovation and Rural Entrepreneurship and agro industry(ASPIRE)” with an aggregate corpus of `200 crore for promoting innovation and rural entrepreneurship through rural livelihood business incubators, technology business incubators and fund of funds. Under the Scheme, a fund of fund with a corpus of `60 crore has been assigned to SIDBI for supporting various Venture Capital Funds registered with SEBI for investing in startups in the agro and rural space.

Speaking on the occasion, Shri Mishra said that the growth of the MSME is intrinsically linked to that of the country and the MSMEs are the catalysts of Growth in the country. The government initiative such as Aspire Fund is just one of the many steps in providing the necessary support environment to unleash the potential of MSME and to enable them to realize their true potential. Shri Mishra highlighted the need to develop the skill of the youth especially in the rural areas and provide technology inputs to the sector to make them more efficient and competitive.

Shri Mishra also mentioned that promotion of rural livelihood business incubators (LBIs) which aims at training the youth to set up small business would not only meet one’s own livelihood needs but may also help others in their livelihood. The technology business incubators (TBIs) would promote innovation and rural entrepreneurship which meets the need for more inspiring and aspiring individuals. He said that the `60 crore ASPIRE fund of funds which will be managed by SIDBI to meet the needs of innovative idea of young visionaries. Towards this, SIDBI would contribute to various angel / venture capital funds for investing in start-ups / early stage enterprises focusing on value addition in the rural economy and job creation through social impact funding. Hon’ble Minister of Micro, Small & Medium Enterprises also handed over sanction letters to a few venture funds under the ASPIRE Fund.

Earlier, Dr. Kshatrapati Shivaji, I.A.S., Chairman and Managing Director of SIDBI, in his welcome address, summed up the role being played by SIDBI as a proactive financial institution addressing the financial and non-financial gaps in the MSME ecosystem. Under the  financial intervention, SIDBI has been extending assistance directly to MSMEs in niche areas which are not normally addressed by banks viz. risk capital in the form of  subordinate debt/ mezannine debt to growth enterprises, receivable finance scheme for addressing the problem of delayed payments, schemes for service sector enterprises and special scheme for implementing energy efficiency and cleaner environment techniques. While  emphasising the role of start-ups and the transformation these enterprises are bringing in the economy through their disruptive business models, he added that SIDBI has been extending assistance in the form of venture debt selectively through its Startup Assistance Scheme as well as through support to various venture funds under its fund-of-funds operations.

Dr Shivaji mentioned that there are good number of venture capital funds operating in the agro and rural space and the ASPIRE Fund corpus would be effectively deployed towards bringing about growth and development of MSMEs in the agro and rural space. He also highlighted that `20 crore has already been sanctioned to two venture capital funds and one more proposal for commitment of contribution of `10 crore is under process.  

Under  fund of fund  operations, besides ASPIRE Fund, SIDBI is also managing India Aspiration Fund [IAF] which was formally launched by Hon’ble Finance Minister in August 2015 under which so far 35 Funds have been extended an aggregate support of Rs.1211.75 crores (Funds targeting total corpus of Rs. 12805 Crores). SIDBI has also operationalised Fund of Funds for Startups [FFS] under the Startup Action Plan launched by Hon’ble Prime Minister on the 26^th January 2016. Three funds have since been given commitments aggregating Rs. 105 crores under FFS  after publilcation of operational guidelines by DIPP in August 2016.

He added that SIDBI has been active in this intervention through fund of fund operations for more than a decade and  has so far supported cumulatively 107 funds including 11 regional funds with an aggregate commitment of `3047 crores.  Based on drawal of around Rs.1138 crores, so far from the above aggregate commitment, these funds have invested in 804 enterprises with an equity support of Rs.10822 Crores out of which ` 4826 crores were invested in 652 MSMEs.

In the startup space, he also added that the web portal launched by Hon’ble President of India www.sidbistartupmitra.in in March 2016 serves to connect all the stakeholders in the eco system. Nearly 2000 startups, 100 investors and incubators have registered on the platform and cumulatively so far more than 75 applications have been accepted for processing for investments by investors through the platform.

While reiterating SIDBI’s commitment for the overall development of the eco system, he elucidated the role of SIDBI in the Stand up India Scheme which was launched by Hon’ble Prime  Minister in March 2016. Under this scheme each bank branch is  required to sanction two loans for aspiring SC/ST and women entrepreneurs. He explained how the entire scheme has been operationalised using web based platform www.standupmitra.in wherein aspiring young entrepreneurs can apply for loans on online and which could be picked up by banks. Reserve Bank of India has enlarged the outreach of the platform through “udyamimitra.in” and extended the scope for coverage for all the aspiring young entrepreneurs other than those covered under the Stand Up India Scheme.

With Stand up India, Startup India and MUDRA schemes, SIDBI has participated in the Financial Inclusion programme of Government of India and  has increased its effectiveness by making these programmes through digital intervention i.e. webbased on line platforms.

The launch function was also attended by Ms. Chitra Ramkrishna, CEO&MD, senior officials from Ministry of MSME, Government of India ,  Representatives of leading venture capital funds, senior bank officials and investment bankers.