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Few takers for SIDBI Venture Capital

THE TERM ?Venture Capital? remains a misnomer among a majority of owners of small and medium enterprises (SMEs) in the Lucknow-Kanpur industrial belt of Uttar Pradesh.

india Updated: Jun 11, 2006 01:39 IST

THE TERM ‘Venture Capital’ remains a misnomer among a majority of  owners of  small and medium enterprises (SMEs) in the Lucknow-Kanpur industrial belt of Uttar Pradesh.

In the past one-and-a-half years, the SIDBI Venture Capital Ltd, having a corpus of Rs 500 crore, had received barely three proposals seeking equity participation (two from Lucknow and one from Kanpur) in the ‘manufacturing sector’ category, Ashish Khare, manager , Sidbi Venture Capital Ltd, Mumbai, told Hindustan Times.

The three proposals received from SMEs for venture funding are being studied for equity participation by SIDBI Venture Capital Ltd, in Mumbai. We are hoping that more number of SMEs from Uttar Pradesh would apply for venture funding in  future, he said.Currently, awareness regarding what constitutes venture capital funding is still lacking among a majority of  entrepreneurs in the State, he said.

Khare said leather processing units in the Kanpur region are more interested in taking credit from banks and other financial institutions rather than looking for equity participation in their units by any venture capital company.The Sidbi Venture Capital Ltd offers Rs 1 crore as funding for small units and Rs 10 crore for SMEs with equity participation in a venture under the Rs 500 crore corpus created by the Union Government for SMEs, he said.

Most of the venture capital funding is focused in states such as Delhi, Mumbai and Southern states where the software units of  global IT majors have a base in the country. “Even in places such as Noida in Uttar Pradesh there is not much demand for venture capital funding despite the presence of  some software units in the region”, he added.

Executive Director of Indian Industries Association (IIA) in Lucknow DS Verma, when asked about the lack of interest among the SME owners in the Lucknow-Kanpur region regarding venture capital funding, commented : “Venture capitalists demand a minimum capital investment of Rs 5 crore in a small unit to be eligible for equity participation in a venture. This is not possible especially for small units across the State.”