Last updated: December 17th, 2019 6:01 PM

West Bengal MSME Venture Capital Fund

MSME requires timely and adequate capital infusion during the early and growth stages. By considering the rapid growth of MSMEs in the State, the MSME and Textiles Department, Government of West Bengal has launched a Rs 200 crore West Bengal MSME Venture Capital Fund. The WB Fund has been registered with the Securities and Exchange Board of India (SEBI) under the SEBI (Alternative Investment Funds -AIF) Regulations, 2012 as a Category-I Venture Capital Fund. The primary investment focus of the fund is to identify and invest in profitable and scalable business ventures, including an innovative business model or new products and technologies. In this article, we will look at the West Bengal MSME Venture Capital Fund in detail.

The objective of West Bengal MSME Venture Capital Fund

The West Bengal MSME Venture Capital Fund’s investment objective is to invest in start-ups, emerging or early growth stage investments in the West Bengal MSMEs both manufacturing and services.

Benefits of West Bengal MSME Venture Capital Fund

The benefits of West Bengal MSME Venture Capital fund is explained in detail below:

• The WB Fund will provide equity capital to startups, emerging or early-stage MSMEs with innovative business models or new products and technologies that have the potential to bring superior value propositions in a globalized and competitive market.
• About 20% of the WB Fund will be earmarked to provide incubation support to start-ups through tie-ups with established incubators in the State such as the IIM Calcutta Innovation Park (IIP) among others.
• Mentoring and handholding support will be an integral co-arrangement associated with the WB Fund.
• The MSME and Textiles Department is creating a Mentor and Professional Support Group consisting of Bankers/Professional Institutions, Consultants and Industry Associations.
• Mentor and Professional Support group will provide mentoring and professional support to guide selected entrepreneurs to the next level of business.
• The mentoring arrangement will boost the confidence of banks to enhance bank lending to the MSME sector in the State.

Know more about the Tex Venture Fund

Investment Criteria

The investment criteria for the West Bengal MSME Venture Capital Fund is listed as follows:

• The West Bengal MSME Venture Capital Fund is sector agnostic. The preference will be given to MSMEs promoted by women entrepreneurs.
• The WB fund is looking for investing in companies with the innovative business models or new product and technologies which have potential to bring superior value proposition in India and globally to the customer & clients and high growth in earnings and profitability.
• WB Fund is looking for the investment in projects offering the potential for attractive growth and earnings.

Key Criteria for Project Selection

The key criteria for project selection are explained in detail below: Growth Sectors: SVCL is looking for investment opportunities in the sectors identified by the Fund in order to earn a high return. High entrepreneurial drive: SVCL select and consider an investment opportunity only where it finds the high entrepreneurial drive in the promoters of the firm and who have the ambition to take the firm to the next level. High scalability and non-cyclical business: SVCL aims to invest in promising businesses having the potential for high scalability and can reap dividend by quickly and cost-effectively by reaching to its target customers. Sectors preferred should be relatively insulated from the periodic downturn of the economy. Investment period and well-defined exit plan: SVCL prefers to invest for an optimum period of investment in order to create and realize the value in the investment. SVCL seeks to invest in ventures with well-defined exit path within a reasonable period in order to create and realize the value in the investment.

WB Fund Details

The West Bengal MSME Venture Capital Fund will be limited to Rs.9 crore to profitable and scalable business ventures including the innovative business model or new product and technology which would have potential to provide social benefits (economic, societal, environmental) to the people of West Bengal.

Funding Pattern

The West Bengal MSME Venture Capital Fund will be invested in eligible companies by way of equity (unlisted securities) or convertible instruments.

Target Period

The target period for the West Bengal MSME Venture Capital Fund Investment will generally be 4 to 5 years. The Fund would strive to achieve attractive risk-adjusted returns through long term capital.

Documents Required

Documents required for West Bengal MSME Venture Capital Fund is listed as follows:

Pertaining to Company

• Tex Venture Fund MOA and AOA document
• MSME registration documents
• KYC/Due Diligence details (PAN, VAT, TIN, Sales Tax, Excise and Customs) of Company, Service Tax)
• The certificate under State Tax on Profession, The Trades Unions Act 1926 and Employment Act, 1975
• A certificate under the Shop and Commercial Establishments Act.
• Tax returns of the last three financial years

Pertaining to Financial

• Audited financial statements of the firm for the last three financial years, with the schedules, notes
• Auditor’s Report
• Un-audited financial statements of the firm for the most recent date.
• The detailed financial model with assumptions and linkages

Pertaining to Capital Structure

• Details of investment and the investors with a copy of Subscription and Shareholding Agreements
• Corporate Structure – Detailed block diagram indicating holdings, cross-holdings in various associate firms, subsidiaries

Company Details

• Incorporation details, year-wise milestones achieved
• Certifications and JV details
• Government and statutory approvals
• IP details
• External credit rating if any, with rating rationale and Credit rating history

Business Model

• Detailed industry and business information
• Market and industry information such as background, growth, market scale, pain points, opportunity including sources of information
• Manufacturing process flowchart
• Competition players
• Description of Products and services (value propositions and differentiation)
• Sales and marketing
• Geographical presence
• Key customers and suppliers
• Order book (historical/executed/pending/underbidding with timeline)

Application Procedure

The West Bengal MSME Venture Capital Fund application procedure is explained in detail below:

• To obtain the Maharashtra State Social Venture Fund, the applicant needs to submit an application form in the prescribed format.
• The application form for West Bengal MSME Venture Capital Fund is attached here:

• After providing the details in the application form, forward the application to msfund@sidbiventure.co.in. Once the application is verified, the fund will be initiated.