Guwahati: SIDBI Venture Capital Limited (SVCL), a wholly owned subsidiary of SIDBI, is highlighting its commitment to a partnership approach in its investment strategy. Incorporated in 1999, SVCL manages funds focused on diverse sectors, including startups, manufacturing SMEs, service entities, agri-businesses, and financial inclusion companies.
The company focuses on identifying strong and ethical leadership teams capable of executing innovative business models or robust, scalable businesses. SVCL views its investments as partnerships and seeks entrepreneurs with similar principles and objectives, aiming to develop businesses built on solid foundations. The investment management company has a long history of supporting various themes, including early-stage technology businesses, and remains committed to fostering growth within the MSME sector.
Business North East (BNE) recently spoke with Arup Kumar, Managing Director of SIDBI Venture Capital Limited, to gain insights into the company's key investment criteria for selecting businesses, how it differs from other private entities, whether it has any special themes for women-led startups, and the local support systems available for startups in the Northeastern region.
Excerpts from the Q&A interview:
BNE: SIDBI Venture Capital Limited primarily focuses on funding startups and MSMEs. So, what are the key investment criteria for selecting businesses?
Arup Kumar: At SIDBI, we have been working towards promoting, financing, and developing all the players in this ecosystem, supporting them as MSMEs. For the last 25 years, we have supported MSMEs in various sectors, with themes evolving based on national priorities and current needs. Initially, the focus was software and IT. Subsequently, it shifted to growth capital for MSMEs. Currently, we manage two Deep Tech-themed funds: Atmanirbhar and Ubharte Sitare.
Ubharte Sitare is a joint initiative of Exim Bank and SIDBI to support export-oriented units. We also support promising Deep Tech ventures. The Atma Nirbhar Fund focuses on Deep Tech, including Defense, Space Tech and Biotech, where we can co-invest. We also directly support these types of entities. Eligibility-wise, businesses must be startups with an idea and have typically completed an Angel funding round. Even without revenue generation, we offer support through various instruments and engagements if potential exists.
BNE: How is SIDBI Venture different from other private entities?
Arup Kumar: With 25 years of experience, eleven (11) funds and seven (7) closures, our vintage is unmatched. Coming from the pedigree of SIDBI, an apex institution and DFI, our focus is not purely commercial. It is on impact and intervention to achieve national development goals through our various funds. Each fund had a distinct focus aligning with the needs and national priorities of the time, which will continue. Today, with the emphasis on Make in India and considering the gap in Space Tech compared to Western countries and China, we are catching up thanks to ISRO's recent achievements.
Through various funds, including the upcoming government space tech fund (which we are partnering in) and funds for defence and R&D, tries to provide much-needed support to entities working in these areas. We aim to prevent startups from flipping - establishing themselves here but then seeking funding and relocating to Western countries. Developing our internal capabilities through funding support will allow us to tap into the export potential in the Global South, which represents a significant market. We also support state-level funds, like those in Assam, Tripura, Maharashtra, West Bengal, and Bihar, which commercial funds often avoid.
BNE: What are your thoughts on the Northeastern region's venture investment landscape?
Arup Kumar: Traditional funding comes through banks, NBFCs, and MFIs. Alternative investment routes, including seed capital, angel funding, and venture funding, are used when traditional funding is unavailable. The Northeastern region lags in this second category (AIF setup) due to a less developed ecosystem. As a DFI, SIDBI Venture provides standard venture funding and focuses on ecosystem building and capacity building for ecosystem players, in addition to hand-holding startups. VC funds are hesitant to invest in areas lacking supporting mechanisms. Startups seeking venture or seed funding need due diligence, financial modelling, pitching skills, and legal compliance expertise. While these services are well-developed elsewhere, they are lacking in the Northeast. We are addressing this gap.
Our recent program had experts from Bangalore and Mumbai conducting sessions to educate and upskill local players. We plan to engage them in longer-duration programs. Developing these local agencies will attract other VC funds to support Northeastern startups.
BNE: Are there any special themes for women entrepreneurs?
Arup Kumar: While women-specific programs exist, it is crucial to remember that women constitute around 50 per cent of the population. Sustainable growth and achieving our aspirational journey are impossible without their full participation. Startups operate in a fiercely competitive environment. As discussed this morning, startups need a viable idea, proof of concept, a strong business case, and the passion to address a specific problem and target a defined market. When we see these qualities, we provide additional support to both male and female entrepreneurs from the Northeast to bring them to a level where they can receive funding.
BNE: Are there any local setups supporting startups in the Northeastern region?
Arup Kumar: Yes. I am pleased to see a vibrant setup in Assam: Startup Assam, aka The Nest. This government of Assam initiative, currently managed by EY, provides significant support through ecosystem programs, pitching guidance, hand-holding, and mentoring. They are doing excellent work.
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