The Samridhi Fund is a social venture capital fund, formulated with contribution from the Small Industries Development Bank of India (SIDBI), Department of Internation Development (DFID), Life Insurance Corporation of India (LIC) and United Insurance company limited (UIIC). The principal objective of the Samridhi Fund is to provide risk capital to scalable companies which support economic, social or environmental benefits to the poor in low-income states of India. The Samridhi fund is being managed by SIDBI Venture Capital Limited (SVCL), a subsidiary of SIDBI.In this article, we will look at the Samridhi Fund in detail.
Features of Samridhi Fund
The fund is mainly applicable to the companies which have a developmental impact in low-income States of India such as Bihar, Uttar Pradesh, Madhya Pradesh, Odisha, Chattisgarh, Jharkhand, Rajasthan and West Bengal. Further, these companies should have the following characteristics:
- The enterprises should be economically viable to get the Samridhi Fund
- In order to get financial assistance under the Samridhi Fund, the enterprises have to provide access to markets of the poor
- The firm needs to be socially relevant and impact the poor as customers, producers or employees
- If a company increases the flow of capital of the low-income states of India, such company can easily avail the benefits of the Samridhi Fund
- The firms which focus on the environment, social and Governance also matters eligible for the financial assistance under the Samridhi Fund
Financial assistance is provided as part of the Samridhi Fund to social enterprises which can deliver both financial and social returns.
- The fund is mainly applicable to the companies which have a developmental impact in the low-income States of India
- As described above, the primary investment focus of the Samridhi Fund is growth stage investments in undertakings with target beneficiaries from eight low-income states of India
- It is also available for the companies having established business model and excellent promoter with an experienced management team which create jobs.
- The enterprises which enhance the disposable incomes, quality of life and infrastructure of the poor in eight low-income States of India can quickly get the Samridhi Fund
Samridhi Fund is provided for companies which are MSMEs, and mainly provided in the following high-impact sectors:
- Water and Sanitation
- Agriculture and Allied Activities
- Financial Inclusion including MFIs
- Livelihood Building
- Affordable Healthcare
- Clean Energy and Green Technologies
- Education and Skill Building
Nature of Samridhi Fund
Samridhi fund generally ranges from Rs.5 to Rs.25 crore and will be structured as equity or equity-linked instruments and convertible instruments (debentures, preference shares) to suit the requirements of the Investee company.
Note: In exceptional cases, Samridhi may invest amounts outside this range, mainly when a strong developmental impact can be generated.
The eligibility criteria to obtain the Samridhi fund is listed as follows:
- Enterprises with a proven business model going for expansion which can generate developmental benefits for poor households or the community
- The enterprises must have plans to expand operations in any of the low-income states of India.
Non-Applicability of Samridhi Fund
The Samridhi fund does not apply to the following type of enterprises:
- The enterprises engaged in illegal or banned activities including the child labour are excluded from the Samridhi Fund
- Businesses dealing with hazardous chemicals, pesticides, asbestos and wastes; ozone depleting substances; and endangered or protected wildlife or wildlife products are also excluded from the Samridhi Fund
- Samridhi fund is not applicable for the arms and ammunition
- Companies which have been proven to be involved in fraud and corruption cannot avail the benefit of Samridhi fund
The enterprises seeking funding from Samridhi have to provide the following documents:
- Detailed information memorandum containing the background of the firm
- The promoter and investor details
- Past financials detailed documents
- Business Plan
- Financial Projection
The Samridhi funding process is typical taxes three to six months and involves the following stages:
- lGo/No Go Decision – based on preliminary review by SVCL and a presentation by the firm; the Investment will make a decision
- Committee (IC)
- Detailed appraisal by SVCL team
- Final Investment Committee Decision
- Due Diligence and Documentation
Application Procedure to get Samridhi Fund
The application procedure to get the Samridhi Fund is explained in detail below:
Step 1: The company have to submit the business plan in a prescribed format to SIDBI Venture Capital Limited.
You have to send an email to Email: [email protected], including a copy of the executive summary of the business plans, the profile of the management team, historical and future financial and industry information.
The business plan of the company should include the following information:
- Details of the product/ service
- Information regarding the customers and the nature and size of the markets
- Details related to the USP and IP and competitive advantage
- Need for Samridhi fund
- Information on the deliverable and goals that the firm
- The founder and the executive team details
- A credible and realistic execution plantation
In case you require any assistance for preparing the business plan, you can get in touch with the IndiaFilings.com
Step 2: Based on a preliminary assessment of the business plan, a course of further interaction with SVCL will be decided.
Step 3: The respective company will have to present their business plan. After the due diligence and documentation, the funding will be processed.