Move Beyond the VCs for Funds The government of India is providing alternatives to funding for start-ups

By Sanchita Dash

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A VC and a start-up founder complete a love-hate story that ends with the latter's survival. Talk about investments and it's not possible to think of one without the other. So, even while entrepreneurs talk about the tantrums of a VC or the lack of funds, they can't undermine the importance of investors who give the stamp of validation to their ideas and are also their only source of funds.

Start-up founders have often raised an alarm, saying that we need to stop judging a start-up just by its valuation -- something that is not just a VC's favourite but also the media's. They want the focus to be redirected, if not solely but majorly, to the ideas of their start-ups.

The government of Indian, meanwhile, with its various initiatives to promote entrepreneurship, has been trying to involve everyone in the ecosystem.

Pushing the idea of a digital India, the government has rolled out many programmes and allocated huge funds to develop the start-up environment of the country.

With this, the government has made itself more approachable to the start-ups either directly or via third-party agencies for funding.

Under the new arrangement, one doesn't necessarily have to give up on the ownership of one's company or a major portion of equity.

SIDBI's Initiatives in Alliance with the Government
Small Industries Development Bank of India (SIDBI) with its various programmes has been rooting for entrepreneurship. Be it Startup Mitra, Standup Mitra or Udyami Mitra, all have been designed to help and facilitate innovation.

Talking about the start-ups that are eligible to get funds, SP Singh, general manager, SIDBI said, "Start-ups that are innovative especially in the manufacturing sector or are in the services sector and have innovative processes will be eligible for funding. Currently, we are providing end-to-end solutions to MSMEs and are promoting green funding. We have also dedicated an INR 10,000-crore fund."

They are also providing collateral free loans to start-ups and MSMEs. "We have set up a credit guarantee fund trust for MSMEs. Any venture, which is viable and has been approved by the board, can receive financial assistance of up to INR 2 crore without any collateral. The scheme is available to all banks that are member lending institutions of this trust," said Singh.

'Banks are sitting on a pile of cash, looking for viable projects to invest in'

With the digitization drive, banks have become start-up friendly and are on the lookout for innovative solutions. From introducing accelerator programmes to turning mentors for start-ups to partner or acquire them, banks are even launching start-up branches that cater completely to the needs of entrepreneurship.

Through SIDBI too, one can reach out to the many banks that are on their platform. "We have even come across incidents where one particular project has been assisted by three banks. Till now, banking has been demand-driven but from now, it's going to be supply-driven. It's going to be a customer-driven market, where the customer will demand premium according to the viability of the project. In association with banks, we have already assisted 35,000 entrepreneurs, under the Standup India Mitra portal. Currently, the banking system is sitting on a pile of cash, the only thing we need are innovative solutions/viable projects," added Singh.

INR 10,000crore fund-of-funds

With the Startup India initiative, the government had set aside an INR10,000 crore fund that will propagate entrepreneurship. The fund-of-funds was set up to facilitate job creation. Through the same, the Atal Innovation Mission has even provided assistance to incubators in their jobs to help start-ups scale. In addition, Niti Aayog will set up Atal Tinkering Labs in 500 schools across the country to, "cultivate one million children as neoteric innovators".

Wavy Line
Sanchita Dash

Entrepreneur Staff

Former Senior Correspondent, Entrepreneur India

In the business of news for 5 years now. Making my way across India thanks to my career. A media graduate from Symbiosis, Pune, I have earlier worked with Deccan Chronicle (South India's leading English daily), T-Hub (India's largest incubator) and Anthill Ventures (a speed-scaling platform). 

Stories, movies and PJs are my thing. 

If you hear 'The Office' opening score randomly, don't worry it's just my phone ringing. 


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