Venture capital fund for Dalits now a reality

Money is no longer going to be a hurdle for entrepreneurs in scheduled caste (SC) and scheduled tribe (ST) communities

Written by ENS Economic Bureau | Mumbai | Published: June 4, 2013 1:40:23 am

Money is no longer going to be a hurdle for entrepreneurs in scheduled caste (SC) and scheduled tribe (ST) communities. For the first time in the country,a venture capital fund is being launched to create entrepreneurial role models in the Dalit community which normally find it tough to access capital and professional mentoring.

Finance minister P Chidambaram will flag off the fund in Mumbai on Thursday.

The idea of a venture capital fund proposed by Dalit Indian Chamber of Commerce and Industry (DICCI) has finally taken shape with the Securities and Exchange Board of India (Sebi) clearing the proposal to raise Rs 500 crore for 10 years through a close ended fund,styled DICCI SME Fund (DSF). 

“This is Category-I SME Fund and we target to raise Rs 160 crore in the first closure. We will finance around 25 Dalit entreprenuers initially. We will finance their projects,support them to grow and exit when they become of running the business smoothly,” said DICCI president Milind Kamble.

According to Kamble,SIDBI has already committed Rs 10 crore while talks with other banks and financial institutions are on. The plan is to create entrepreneurial role models within SC/ST communities that will attract educated SC/ST youth to the entrepreneurship.

“We expect to create four kinds of social impacts through our fund while generating internal rate of return of over 25 per cent: Financial inclusion for SC/ST SMEs through access to equity capital markets,economic empowerment through wealth creation,employment creation for SC/ST youths and capacity building through the investee companies,” Kamble said. 

“The Varhad Group is the fund manager of DSF. Prasad Dahapute is the founder of the Varhad Group and MD of Varhad Capital,” Kamble said.

Prior to setting up of Varhad,Dahapute was head of research at PUG Securities and co-head of equity research at Standard Chartered,heading India equity research team independently. He was instrumental in getting mandates in private equity and joint ventures. He has worked with HSBC as utility analyst for India,China and Korea and Antique stock broking as senior vice-president Research.

As the fund manager,it will help the proposed SME Fund to raise money from wealthy investors and institutions and invest in startup and small- and medium-size Dalit enterprises with strong growth potential.

Dalit writer and thinker Chandra Bhan Prasad said,“The proposed fund will go a long way boosting the self-esteem of Dalits. We want to prove that Dalits are capable of creating ventures and run them successfully. Small-time Dalit entrepreneurs find it tough to raise capital from banks. This will become a success… State and the private sector can also come up with similar plans.”

The biggest challenge is to create benchmarks for Dalits in terms of accessing capital and pitfalls thereof,and where to turn for advice and mentoring as knowledge-gap on the contours of globalised capitalism is too wide,Kamble said. 

A senior official of Confederation of Indian Industry (CII) said,“We already have a tie-up with the National Scheduled Castes Finance & Development Corporation for SC/ST empowerment in business. This fund is the next step towards creating entrepreneurs in this community.”

Boost to entrepreneurs

* Sebi clears the proposal to raise Rs 500 crore for 10 years through a close ended fund,styled DICCI SME Fund

* The Varhad Group,as the fund manager,will help the proposed SME Fund raise money from wealthy investors and institutions

* SIDBI has already committed Rs 10 crore while talks with other banks and financial institutions are on

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