The government has floated a Rs 200 crore ($32 million) venture capital fund to back entrepreneurs from the scheduled castes (SC), a social group representing people from socially backward strata in the country. This comes nearly a year after the previous finance minister proposed to float such a fund.
The fund would invest up to Rs 15 crore in backing such entrepreneurs with a six-year investment holding period.
Union Minister of Social Justice and Empowerment Thaawar Chand Gehlot on Friday formally announced the ‘Venture Capital Fund for Scheduled Castes’.
Industrial Finance Corporation of India (IFCI), which also runs a separate VC fund to back SMEs, will act as sponsor, settler and asset management company/nodal agency to operate the scheme. IFCI has contributed Rs 50 crore to the fund of which Rs 5 crore comes as a sponsor and Rs 45 crore as an investor.
The government did not say which other bodies contributed to the rest of the corpus.
The government said this is a social sector initiative to be implemented nationally to promote entrepreneurship amongst the SCs who are oriented towards innovation and growth technologies. This is to increase financial inclusion for SC entrepreneurs and to motivate them for further growth of SC communities.
It is also intended to enhance both direct and indirect employment generation for SC population in India.
Last year in the Budget speech in February 2014, the former FM P Chidambaram had said this fund can be supplemented every year.
This followed another fund christened India Inclusive Innovation Fund launched in January 2014 by the government with an initial corpus of Rs 500 crore, of which Rs 100 crore was committed by the ministry of micro, small and medium enterprises. The remaining Rs 400 crore was to come from 12 public sector banks. This fund is styled as an alternative investment fund.
In the private domain, another social inclusion fund was being raised by Varhad Capital. The firm was set up by a team of IIM grads looking to raise India's first venture capital fund dedicated to Dalit businesses. The fund had total a target corpus of Rs 500 crore over a 10-year period and the firm had managed to scoop up around Rs 42 crore out of the initial target milestone of Rs 200 crore as of November 2013.
(Edited by Joby Puthuparampil Johnson)