BANGALORE: Prime Minister Atal Behari Vajpayee last week launched the National Venture Fund for software and IT industry (NFSIT). The initial amount of Rs 100 crore has been set up by the Small Industries Development Bank of India (SIDBI) and the newly formed Ministry of Information Technology (MIT).
It has already received 38 proposals with venture capital of Rs 136 crore, as against the created corpus of Rs 100 crore. The basic objective of the NFSIT is to meet the total fund requirements of the software and IT companies, particularly small enterprises, to enable them achieve rapid growth rates and maintain their competitive edge in both domestic and international markets. The fund will develop international networking and enable assisted units to attract co-investment from international venture capitalists in the subsequent rounds of financing.
Mr Vajpayee assured the IT industry that the fund would not be administered in a bureaucratic manner. "If necessary, we would further modify and improve its operations by learning from successful venture funds abroad, where these have sunk deeper roots,'' he said. "Our Government has decided to create conditions that will enable more and more successful IT enterprises to grow on Indian soil and to grow world-class. This is necessary not only for wealth creation, but also for employment generation,'' he added. Mr Vajpayee described the NFSIT as a new initiative by the Government in uncharted territory. He recalled his meeting with a delegation of the Indus Entrepreneurs Group from Silicon Valley, which has amassed useful experience in promoting and managing venture capital for new IT companies and also the superior idea of 'angel funds'. He felt that the advice and consultancy provided by such fund managers to start-up companies on a sustained basis would be very critical.
The Minister for Information Technology Pramod Mahajan said, "we are ready to welcome IT companies to start units in India with red carpet and certainly not with red-tape.'' The initial contributors to the NFSIT are SIDBI, MIT and the IDBI. SIDBI Venture Capital Ltd., a wholly owned subsidiary of SIDBI, is managing the fund. The extent of investment for a proposal would depend on the size, nature and shape of the project, expected growth rate, etc. The fund will as consider co-investing with other venture capital funds. The minimum investment would preferably be above Rs 50 lakh per unit.