Category: Finance

Finance, Startups

Karnataka to draft Startup Act

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Karnataka to draft Startup Act to boost the state’s entrepreneurial activity

19 Jul, 2014, 2205 hrs IST, Malavika Murali & Krithika Krishnamurthy, ET Bureau
“We hope to become the unequivocal IT innovation and startup capital in the world,” said IT-BT secretary Srivatsa Krishna.
BANGALORE: The Karnataka government is drafting a new act to boost the state’s entrepreneurial activity.The Startup Act, the first of its kind in the country Is expected to be in force in two months.

“We hope to become the unequivocal IT innovation and startup capital in the world,” said IT-BT secretary Srivatsa Krishna.

Krishna recently met state biotechnology secretary Tanusree Deb Barma and Nasscom Product Council Chairman Ravi Gururaj to discuss issues including issues giving startups global visibility, better linkages to academia and industry, ease of doing business in the state and accessibility of early-stage risk capital.

“We see funds available for 2-5 year-old companies, not in the initial 1-2 years. We are looking at that space,” said Barma.

At present Karnataka providesan initial grant of Rs 5 lakh to nine colleges to each to fund research on projects to solve local problems and find solutions to local needs as part of the ‘Karnataka New Age Incubation Network.’ Startups are eligible for plug-and-play space with internet at a concessional rate of Rs 5-15 per square feet.

“There is a lot of political will to get support this ecosystem,” said Barma.

Barma said the state will also announce a biotech-focused venture capital fund which will operate as a fund of funds.Separately, Nasscom’s 10,000 Startups initiative will also get bigger in scale in Karnataka. A new warehouse will include incubators focused on verticals like design, the Internet-of-Things, and biotechnology, among other things.

As part of the expansion, women-founded companies may get free incubation space for six months, said Gururaj.

“It’s not a lot of money but it’s symbolic. We’re hoping that will push the agenda further,” he said.

http://m.economictimes.com/news/emerging-businesses/startups/karnataka-to-draft-startup-act-to-boost-the-states-entrepreneurial-activity/articleshow/38693516.cms

 

Finance, News

Budget 2014: 3 reasons why India needs more entrepreneurs, not a Rs 10,000 crore fund

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by Alok Kejriwal

So what can the government do? Encourage the rise of entrepreneurs! How? By exposing all the problems and challenges that the government wants to solve in its business; the government operating the biggest business of them all!

In his budget speech, finance minster Arun Jaitley spoke about ‘funding’ entrepreneurs and casually slipped in “promotion of entrepreneurship and start-up companies remains a challenge. While there have been some efforts to encourage, one principal limitation has been availability of start-up capital by way of equity to be brought in by the promoters. In order to create a conducive eco-system for the venture capital in the MSME sector it is proposed to establish a Rs 10,000-crore fund to act as a catalyst to attract private capital by way of providing equity, quasi equity, soft loans and other riskcapital for start-up companies.”

Shucks. How badly the FM has fared in understanding the real problem about entrepreneurs. To put it contextually (at least for me), it’s like the FM trying to play Candy Crush and failing at Level 1 itself — implying that he hasn’t understood the game at all!

I argue that India needs 10,000 entrepreneurs, not Rs 10,000 crore to start with! These are my reasons:

1. Capital chases entrepreneurs. Entrepreneurs don’t chase capital!

I would like to meet 100 ‘entrepreneurs’ who qualify for Mr Jaitley’s funding corpus. Honestly, they don’t exist. In the past five years, I have been a jury member, spectator and even a mike runner at more than 100 start-up events in India and let me say this with utmost authority that India still lacks the depth and breadth of solid entrepreneurs.

What we have are contest-crazy business plan pitchers; copycats who begin their pitches by saying, “If X is the Y of USA, we will be the same for India”. Then we have a few burnt out mid-40s/50s suit-and-tie types, who want to earn the badge of ‘startingup’ rather than really being an entrepreneur.

So what can the government do? Encourage the rise of entrepreneurs! How? By exposing all the problems and challenges that the government wants to solve in its business; the government operating the biggest business of them all!

Now imagine a ‘portal’ that has 10,000 business problems that the government needs to solve! Examples: how to make a road that lasts in Mumbai? How to reduce immigration lines at airports? How to make people honk less while driving? What music to play in Delhi Metro? How to make money from public gardens? How to create a search engine to find a particular government official? How to light government buildings up at night using solar power?

Give me 10,000 hours and I will come up with 10,000 problems the government needs to solve.

Now, if the stated problems genuinely need to be solved by the government, then entrepreneurs will respond to these demands! Funding them is a trivial matter.

2. Clarity not charity

Will $1.6 billion suddenly fire up the Indian entrepreneur system? Is the government dreaming? Heck, Flipkart has swallowed up $1 billion just by itself to build one of the many e-commerce sites! So what will $1.6 billion achieve?

And how will this be given out? Which entrepreneur in his right mind wants a ‘soft loan’ from the government when she knows that her chances of succeeding are 1 out of 1,000 shots? Who wants ugly ‘notices’ of defaults to land up at their homes when they cannot return the money?

What the government needs to offer is clarity, not charity! Please, Mr FM, be clear. Explain what you mean and how you intend to support entrepreneurs.

3. Inspiration, not aspiration!

The government may ‘aspire’ to be the ‘catalyst’ of entrepreneurs, but who cares? What has the government done in the past to prove that it deserves to fund entrepreneurs? Is Air India an example of success? Or Doordarshan? Or MTNL? Or the Indian Railways? Are the balance sheets of our nationalized banks a great financial success story? How many noble laureates do we have working in the government?

Entrepreneurs look for inspiration, not aspiration! A few hours spent with the most iconic VCs in the world transform entrepreneurs and make them think beyond their imagination. VCs who have funded the first rounds of Google, Facebook, Yahoo and the likes share stories and learnings that entrepreneurs would give anything in the world to have access to. VCs open boardroom doors and have an overflowing chest of money for deserving entrepreneurs. Can the government even claim to have any of these?

Mr FM, we don’t want you to ‘spray and pray’ with our money. If you want to really encourage entrepreneurs in India and get monetary gravity for them, then prove that you can be entrepreneurial and set your own house in order. Remember, we have funded you.

Then, let’s talk.

The writer is a digital entrepreneur and blogs at http://therodinhoods.com

http://m.economictimes.com/news/economy/policy/budget-2014-3-reasons-why-india-needs-more-entrepreneurs-not-a-rs-10000-crore-fund/articleshow/38693085.cms

Finance

SEBI Consultation Paper for Crowdfunding in India

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Dear friends,

Enclosed please find a consultation paper released by SEBI on 17th June 2014.

SEBI is seeking public opinion on this consultation paper. The questions are listed below.

I will be happy to consolidate responses received from you in a single document and submit it on everyone’s behalf acknowledging each individual who responds.

You may also send your response directly by e-mail to Mr. Aditya Sarda (adityas@sebi.gov.in) or Mr. Ankit Goel (ankitg@sebi.gov.in).

Look forward to your responses by July 5th 2014.

Regards,

Yogesh

 

PS: Feel free to share with others who may be interested in this subject.

Consultation Paper on Crowdfunding in India 20140624

 

 

Consolidated List of all Questions  (These questions are listed in the order of different sections of the consultation paper. For further information and SEBI’s suggestions please refer to corresponding section of the consultation paper)

 

8.0 Is Crowdfunding really needed ?

Q1  Given that Crowdfunding is still in nascent stages and most of the jurisdictions around the world have taken a guarded view by allowing it in a restricted manner, do you think India is ready for crowdfunding or is it premature to introduce such risky investment channel ?

9.1.4 The Accredited Investors:

Q2 Are the Accredited Investors mentioned in paragraph 9.1.4 suitable to participate in the risky investments of crowdfunding? Is there a need to expand or reduce the categories of investors or expand or reduce safeguards? Specify along with the rationale.

9.1.5 Investment Limits:

Q3 Are the Investment Limits specified in paragraph 9.1.5 justifiable with respect to the respective investor classes? Are they too high or too low? Specify along with rationale.

Q4 Is the limit of investors upto 200 besides QIBs or employees of the company under a scheme of employees stock option, as specified in Chapter III – The Companies (Prospectus and Allotment of Securities) Rules, 2014, adequate or is there a need to amend such rules to allow upto 1,000 investors, excluding QIBs or employees of the company under a scheme of employees stock option?

9.1.6 Investment Conditions:

Q5 Are the Investment Conditions mentioned in the paragraph 9.1.6 enough to warn and guard investors regarding the risky nature of crowdfunding? Specify changes, if any, along with the rationale.

9.2 Who can raise funds from Crowdfunding Platform and Limitations on capital raised?

Q6 Given that the companies coming for crowdfunding lack any significant track record, are the conditions and requirements mentioned in paragraph 9.2 enough to fend off fraudulent issuers? Specify changes, if any, along with the rationale.

9.3 Disclosure Requirements on Issuer

 Q7 Are the disclosure requirements for a company interested in raising funds through crowdfunding platform mentioned in paragraph 9.3.3, enough to enable investors in an informed decision making ? Specify changes, if any, along with the rationale.

Q8 Due to the lack of history and track record, it is important that the issuers provide future projections of their business to facilitate investors in decision making. What should be the criteria to ensure that the projections are realistic and achievable and not misguiding in nature?

Q9 What should be the continuous disclosure requirements for a company once it gets displayed on the platform? How it should be ensured that there is no information asymmetry between various prospective investors?

9.4 Who can set up a Crowdfunding Platform?

 Q10 While Class I entities are already under SEBI’s purview and have a successful track record in managing issues and securities, Class II entities have a specialized domain knowledge in the field of start up mentoring and funding. Is a joint venture between the two classes a better idea than to allow them to launch their own crowdfunding platforms separately?

Q11 Any suggestions on some other possible entities which can be included in Class II with a tentative list of qualifying criteria?

Q12 Any suggestions on some other possible entities which can be included in Class III for the purpose of providing platform for FbC? Also specify their tentative qualifying criteria?

9.4.5 Requirements on Crowdfunding Platform:

 Q13 Any suggestions on some additional or reduced requirements on Crowdfunding Platforms?

Q14 Are the measures mentioned in paragraph 9.4.6 enough to ensure a seamless operation of the Crowdfunding Platform and avoidance of any conflict of interest? Suggest changes, if any, along with the rationale.

Q15 Any suggestions on the role and responsibility of the screening committee and its composition etc.?

Q16 Given that only Accredited Investors may be allowed to invest through Crowdfunding Platforms, it is important that their due diligence is conducted properly to confirm their eligibility. Are the entities mentioned in paragraph 9.4.4 capable in doing the same? Any suggestions in this regard?

Q17 Making the platform’s revenue directly dependent on the fee from the issuers may lead to a conflict of interest. What could be the possible alternative revenue mechanisms for the platforms which may eliminate or reduce such conflicts?

Q18 Should there be any restriction on the fee charged by a crowdfunding platform to an issuer for getting access to the platform or an accredited investor for registration or should this be left as a commercial decision by the platform based on market forces?

9.5 Equity based Crowdfunding (EbC)

 Q19 Any suggestions on the requirements in EbC to make it more transparent and investor friendly?

Q20 Any suggestions on the requirements in DbC to make it more transparent and investor friendly?

Q21 Is there any need to prescribe the limit on the leverage a company can take through DbC?

Q22 Is there a need to change the rules regarding appointment of Trustee and creation of Debenture Redemption Reserve in case of private placement of debt with no intention of listing which seeks to issue debentures through recognized crowdfunding platform?

9.7 Fund based Crowdfunding (FbC)

 Q23 Any suggestions on the requirements in FbC to make it more transparent and investor friendly?

9.8 Procedure for offering through a Crowdfunding Platform

 Q24 Any suggestion to simplify the procedure as specified in paragraph 9.8 within the existing legal framework?

9.9 Secondary Market

 Q25 Any suggestion on additional avenues of exit or liquidity of securities in crowdfunding?

9.10 Protection from Cybercrimes

 Q26 What kind of security features and IT Policies should be put in place to make the crowdfunding platform safe and secure from all sorts of cyber crimes?

Finance

A Boon for Small Farmer Entrepreneurs

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Venture Capital Assistance Scheme (VCA) for Small Farmers
• VCA: It is an interest free loan provided by SFAC, always in conjunction with a bank loan, for setting up of agribusiness projects (including Dairy and Poultry)   upto a project cost of Rs. 500 lakh
• VCA Amount: 40% of promoter’s equity or Rs. 50.00 lakh whichever is lower in NER/Hilly States (26% of promoter’s capital in rest of the country).
• Minimum project size: Rs. 15.00 lakhs (Rs. 10.00 lakhs in NE and backward districts)
• Tenure: Same as that of Term Loan sanctioned by bank/FI
• Individual entrepreneurs, coops, FPOs, SHGs, companies etc. all eligible to apply
• Assistance to prepare DPRs through empanelled consultants of SFAC/State SFACs

Click Here for the brochure

Click Here for the presentation

Click Here for their website for more details

Finance, News

SEBI opens crowd-funding window for start-ups

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Capture
Move to provide alternative source of funds; safeguards built in to protect retail investors

In a move that will help start-ups struggling to raise funds, SEBI is warming to the idea of allowing crowd-funding, a popular concept in developed countries.

Crowd-funding is seeking funds (in small amounts) from multiple investors through a web-based platform or a social networking site for a specific project, business venture or social cause. SEBI came out with a consultation paper on crowd-funding on Tuesday to provide alternative financing sources to start-ups. It wants the issue fund-raising capped at ₹10 crore a year for each start-up.

However, companies which want to raise more than ₹10 crore may do so by listing shares on an SME platform or main board of a recognised stock exchange, SEBI said.

To ensure that retail investors do not end up bearing all the risks of start-up ventures, the market regulator proposes to permit only certain retail and accredited investors to participate in crowd-funding.

Retail investors who can participate in crowd-funding should be getting advice from an investment consultant or a portfolio manager or should have passed an appropriateness test (may be conducted by an institution accredited by the National Institute of Securities Markets or the crowd-funding platform).

Also, only investors with a minimum annual gross income of ₹10 lakh and those who have filed income-tax returns for at least three financial years will be eligible to participate.

Investors “have to issue a certificate that they will not invest more than ₹60,000 in an issue through the crowd-funding platform, and not invest more than 10 per cent of their net worth, which excludes the value of the primary residence or any loan secured on such property.”

Accredited investors, the other set that can invest in start-ups, include qualified institutional buyers, companies with a minimum net worth of ₹20 crore, and high networth individuals (HNIs) with a minimum net worth of ₹2 crore.

Though there is no cap on QIBs, a maximum of 200 HNIs and retail investors can participate in an issue.

RestrictionsThere are curbs on fund raisers too. According to the SEBI proposal, a company promoted, sponsored or related to an industrial group with a turnover in excess of ₹25 crore or which has an established business is not eligible for crowd-funding.

Also barred are realty companies, listed corporates and firms which have been in existence for more than two years. The crowd-funding route is not open to a company that proposes to use the funds raised to provide loans or make investments in other entities.

Start-ups shall not use multiple crowd-funding platforms nor advertise their offering or solicit investments from the public. The issuer should compulsorily route all crowd-funding issues through a SEBI-recognised platform.

Only national stock exchanges and SEBI-registered depositories are eligible to set up a crowd-funding platform. SEBI is also open to allowing technology business incubators promoted by the Centre or a State government to set up a crowd-funding platform.

Now, the market regulator will wait for comments and suggestions on the consultation paper from industry and market participants.

(This article was published in the Hindu Business Line print edition dated June 18, 2014)

 

Finance

SBI – Youth for India

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SBI Youth for India is a fellowship programme initiated, funded and managed by the State Bank of India in partnership with reputed NGOs. It provides a framework for India’s best young minds to join hands with rural communities, empathize with their struggles and connect with their aspirations.

SBI Youth For India Fellowship 2014 logo

SBI Youth for India 2014 Fellowships

The Programme seeks to help India secure an equitable and sustainable growth path by:

  • Providing educated Indian youth with an opportunity to touch lives and create positive change at the grass root level in rural India.
  • Providing NGOs working on development projects in rural India with educated manpower whose skill sets can be used to catalyze rural development.
  • Promoting a forum for the Programme alumni to share ideas and contribute to rural development throughout their professional life.

Last Date for Applications :  June 30th, 2014

To apply and know more visit : http://www.youthforindia.org/

Courtesy : http://indiamicrofinance.com/sbi-youth-india-fellowship-2014.html

Education, Finance

Scholarship for Female Indian Entrepreneurs

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The Bonita Trust, the Israel Asia Leaders Fellowship, and the Sofaer International MBA at Tel Aviv University present a unique scholarship opportunity for Indian Female Entrepreneurs.

The Bonita Trust Israel-India Leaders Scholarship includes:

  • Full tuition at Tel Aviv University’s International MBA
  • Full participation in the Israel-Asia Leaders Fellowship
  • Potential seed funding for an Israel-India venture following program

 

Requirements

  • Relevant for the 2014-15 academic year
  • Applicants must meet the admission guidelines for both the Sofaer International MBA and the Israel-Asia Leaders Fellowship
  • GMAT or GRE is required

Interested applicants are asked to complete the following form.

Questions can be sent to: 

Sofaer International MBA: Rebecca Ash, Admission Director, rebash@tauex.tau.ac.il

Israel-Asia Leaders Fellowship: fellowship@israelasiacenter.org

http://en-recanati.tau.ac.il/imba/bonitatrust

Calendar, Finance

SIX special loan options for Women Entrepreneurs

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8th March, International Women’s Day
In partnership with Moneylife Foundation, Bhartiya Mahila Bank (BMB), the new
government bank and India’s first Women’s Bank,
offers a one-time opportunity for quick processing of these loans on 8th March
If eligible, you may even get your sanction letter on 8th March at the hands of 
CMD Mrs Usha Ananthasubramanian
Special Loan Products:
  1. SME Easy loan: For traders, services and manufacturers – 100 bps concession for women entrepreneurs
  2. Kitchen Modernisation Loan: For renovation of kitchen & purchase of electronic and electrical appliances – longer repayment period of 7 years
  3. Beauty Parlour loan: Term loan for purchase/construction – attractive rate of interest and low processing charges
  4. Catering Service Loan: Term loan for purchase of utensils, gas connection, stove, tiffin boxes, etc – low processing fees
  5. Child Day Care Centre/ Creche Loan: Term loan for purchase of cutlery, gas connection, refrigerator, furniture, office equipment, etc – easy repayment in 5 years
  6. SHG Loan: Both term-loan and working capital – no processing fees with insurance facility available
Eligibility for loans from Rs5 lakh-Rs25 lakh:
A) An established and profit-making business with experience of 2 to 3 years.
B) New entrepreneur skilled in any activity, desirous of implementing a new profitable project with established market demand.
C) Income-Tax returns for the last two/three years.
For forms, brochures and information, contact:
  1. Bharatiya Mahila Bank Ltd, Ground floor, Air India Building, Nariman Point, Mumbai, 400021.
    Email: br.mumbai@bmb.co.in | Tel: 22022603 / 04
  2. Moneylife Foundation, 315, Hind Services Industrial Estate, Shivaji Park, Dadar, Mumbai 400028.
    Email: foundation@moneylife.in | Tel: 49205000
    (Moneylife Foundation is an NGO, which is only facilitating distribution of forms/information)

Courtesy : Firdos Shroff

Finance, Startups

5 Bootstrapping Tips to Cut Costs at your Startup

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Bootstrapping refers to the process of starting a business without external capital. It provides you with greater control in the initial days of a venture. However, since you are not sourcing capital from an investor you need to be extremely cautious with your cash. In this video Prof. Radhika Meenakshi Shankar, Founder, Wise Owl Consulting, and a Start-up Mentor shares “5 Bootstrapping Tips to Cut Costs at your Start-up.”