KITVEN- Providing investments to the SME sector

BANGALORE, INDIA: Karnataka Information Technology Venture Capital Fund (KITVEN Fund) is committed to providing investments to the SME sector, especially in the field of information technology, biotechnology, and nanotechnology in Karnataka and in the process will help in bringing about competitive products which can move up the value chain. It is also involved in financing for growth and expansion of already established companies.

They understand the need to provide more than just financial support to upcoming and promising companies and associate with businesses which can have an economic and developmental impact in the state. They are on the lookout for management teams with a strong and dynamic spirit and an established track record which will have the potential for substantial future earnings power and increased market share

What do you look for in an entrepreneur before investing in his future?
Normally, in an entrepreneur we look at his credentials and a good track record. Apart from this, since we will be working together, we also look for a strong sense of integrity and commitment in him/her. It is very important for us that he or she is sure and passionate about the whole venture. Another important factor that is considered is the team in place-both the entrepreneur and his team need to be dynamic in nature and should have an unparalelled synergy.

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What are the typical mistakes an entrepreneur commits when seeking investments?
While we understand the excitement of starting one's own venture, the most common problem that we have noticed over a period of time is that the entrepreneurs coming up with plans which are overambitious and having unrealistic goals. In their excitement, they tend to set targets for themselves which are unachievable. We, as investors, try to make them understand by guiding them about the hurdles they are likely to face. When we see that the entrepreneur is being overoptimistic with his or her plan, we sit down and have discussions over the roadmap.

What is your level of involvement in an investee company?
We have a board of directors who do the routine discussions and reviews with the company. Our involvement really happens only at these board meetings. We give the company and the entrepreneur enough freedom with their day-to-day activties. We do not interfere in the area of daily operations. Our focus is more on the direction the company is headed towards. We procure monthly statements to see what are they achieving as a company.

{#PageBreak#}If things seem to be going bad post-investment, do you get involved operationally?
Well, it is not really in our interest to get involved operationally. What we do instead is try and identify the reasons for anything that is going wrong for the business. We also find out how and how much of the things are deviating from the original plan. There might be plenty of reasons for things to not work out. Sometimes there might be a fault in the plan itself or sometimes it may occur due to the people involved. Whatever be the case, we help the entrepreneur in assessing the mistakes committed and bringing the business back on track.

How do you decide on a timeline in which you would want to make an exit?
Normally, we stay invested in a company for a minimum period of three to five years. Other than this, we do not plan as such about the exits. We are always mentally prepared to take the right decisions at the right time, which is in the interest of both the entrepreneurs as well as us.

What are the areas of conflict (of interest) with the investor that an entrepreneur should be aware of?
We are not really familiar with conflict situations because everything is already discussed and taken care before hand. It is only when the entrepreneur goes in a completely different direction that we go for finding out the reasons and the circumstances that led to it. For now, all I can say is that the SME sector is doing really well. We are especially receiving good proposals from that sector. The new entrepreneurs coming out with their businesses are doing well.

Source: www.dare.co.in