Electronics Development Fund

Electronic Development Fund Policy is one of the critical initiatives of Government of India to promote the electronics system design and manufacturing. The Electronics Development Fund (EDF) is a Fund of Funds which foster the R&D and innovation in technology sectors like electronics, Information Technology and Nano-electronics. EDF supports the Venture Fund and Angel Fund, and Private Equity Funds focusing in the area of electronics sectors. EDF encourages more entrepreneurs towards the product and technology development. In this article, we will look at the Electronics Development Fund Policy in detail.

Objective of the Electronics Development Fund

The principal objective of the EDF policy is to support Daughter Funds, including the Early Stage Angel Fund and Venture Fund in the area of Electronics System Design and Manufacturing, Nano-electronics and IT.

The supported Daughter Fund will promote innovation, R&D and product development in the specified fields of ESDM, nano-electronics and IT.
The funds will support the acquisition of foreign companies and technologies for products imported in India in large volume.
The core focus of the Daughter Funds is to develop domestic design capability. The Daughter Fund supported will create a resource pool of IP within the country in the specified fields

Vision of EDF

The vision of Electronics Development Fund is to develop the Electronics System Design and Manufacturing sector to achieve Net-zero imports by 2020.

Anchor Investor

EDF is promoted by the Department of Electronics and Information Technology, Ministry of Communications and Information Technology, Government of India as a Digital India initiative. Department of Electronic and Information Technology, Ministry of Communications and IT, Government of India is the Anchor Investor.

Investment Manager

Canbank Venture Capital Fund Limited is the investment manager for the electronic development fund.

Salient Features of EDF Policy

The salient features of Electronics Development Fund are explained in detail below:

The Electronics Development Fund (EDF) will be created in a financial institution like SIDBI or a similar organisation.
The Electronics Development Fund should make investments in the Daughter Funds which would invest in ESDM, nano-electronics and IT sector. This EDF fund should act as a catalyst to attract private venture fund investors to such Daughter Funds.
The EDF participation in the Daughter Fund would be on a non-exclusive basis.
The corpus of a Daughter Funds will be determined by market requirements and the capacity of the Fund Managers to cater to the requirements of the Fund. The EDF will typically take minority participation in the Daughter Fund. The entire responsibility of raising funds, investing and monitoring individual investments will be the responsibility of the Fund Manager of the Daughter Fund.
In the ESDM sectors, the EDF participation in Venture Capital Funds will be available across the value chain of ESDM sectors and its ecosystem including fables semiconductor start-ups, R&D, the materials technologies required for an electronic device, design and manufacturing and product designs.

Target Beneficiaries

Any Daughter Funds which is registered in India and abides with relevant rules & regulations including the SEBI regulations on Venture Fund and is set up to achieve the objectives described above will be eligible for support from the Electronics Development Fund.

Eligibility Criteria

A Daughter Fund should be created within India, as per Indian laws and regulations to be eligible for support by the Electronics Development Fund.

The Daughter Funds supported under the Electronic Development Funds should be professionally managed
For the Daughter Funds, to be eligible for support by the EDF,should have track records and investment experience in the relevant sectors in which it makes its investments. The experience should be

equivalent to the activities of the proposed Daughter Fund
The Daughter Fund should be set up in India, as per the prevailing Indian laws and regulations. The Fund Manager of the Daughter Fund will ensure that the laws of the land have fully complied with respect to setting up and operation of the Fund.

Selection of Daughter Funds

The Investment Manager of the Electronic Development Fund will look for a combination of the following qualities in selecting fund managers or Daughter Funds:

The fund management team should be the knowledgeable, experienced, and stable management team
The management team should have technical people who understand the Nano-electronics, ESDM, IT and related sectors
The Daughter Funds should have the ability to network and raise the balance funding from other resources
The Daughter Funds should have thebility to align with the requirements of the EDF and to provide risk capital especially to the company developing new technologies in the area of ESDM, IT, Nano-electronics and related sectors
The stable and proven investment approach of the Daughter Fund will get preference
Rigorous and due diligence methodology in selecting the Daughter Funds
To enter into the Documentation that protects the EDF/Government of India interests
The Daughter Funds should have the ability to add value post-investment
Superior investment returns (absolute and relative)
Evidence of value creation through operational improvement

Documents Required

The fund managers need to furnish the following documents to obtain the money from the Electronics Development Fund (EDF):

Application Form
PPM, Presentation and other related documents
The Audited Financial Statements of the Fund /Investment Manager for the last 3 years

Investment Process

Electronics Development Fund (EDF) investment process is explained in detail below:

Submit Application

The Application form in prescribed format to be submitted by the Prospective Daughter Funds of the EDF.

The application form for Electronics Development Fund is attached here: [pdf-embedder url="https://www.indiafilings.com/learn/wp-content/uploads/2019/07/Application-1.pdf" title="Application"]

Screening

The Investment Manager will screen the proposals of the fund managers for raising the amount from the Fund and select the eligible proposals based on the management team, ability, fund focus, performance history, etc. This evaluation will be performed by the Management Team.
The Investment Manager will perform the preliminary screening of the daughter fund proposals through the in-house team of the Investment Manager.
The Investment Manager will pursue a due diligence process that will focus on establishing a thorough understanding of a manager’s strategy, value creation capabilities, technical knowledge, expertise, prior performance, portfolio management skills administrative integrity and organisational stability.

Get Sanction Letter

The Shortlisted prospective daughter fund will be placed before the Management Board for deliberation or discussion on the proposals. The Sanction letter will be issued to the approved Daughter Funds or fund managers.