Tex Venture Fund

Ministry of Textiles, Government of India, has launched Tex Venture Fund with an initial corpus of Rs.35 crores in association with the Small Industries Development Bank of India (SIDBI) to support start-up entrepreneurs in the sector. The Fund has been registered with Securities & Exchange Board of India (SEBI) under the SEBI (Alternative Investment Funds) Regulations, 2012 as a Category-I SME Fund. The principal objective of the fund is to contribute to the development of the power loom and related textile sectors.

Objectives

• SIDBI Venture Capital Fund Limited (SVCL) invests on behalf of the Ministry of Textiles in the form of equity in MSME to kick start an enterprise or expansion.
• Investments will typically be in innovative private power loom MSME enterprises.

Financial Assistance

SIDBI Venture Capital Fund Limited invests a maximum 50% of the project cost with a ceiling of Rs 3 crore.

Investment Criteria

• The Tex Venture Fund investment focus is early and growth stage investments in Small Enterprises, as defined under the MSMED Act, 2006, and as amended from time to time. 
• Each investment will be limited to three crores. 
• The Fund will look for investing in companies involved in new and emerging fields in the textile industry and allied products and services. 
• The Tex Venture Fund would inter alia invest in areas such as the development of textile production machinery and automation, technical textiles for various applications, coated textiles, textiles for defence applications, sportswear, weaving and garment making. 
• Related products and services such as chemicals and materials also offer scope for venture investment. 
• Innovative marketing is an area which could add value to the country’s textile products.

Investment Details

• The equity shares and instruments are convertible into equity of Textile Micro and Small Enterprises.
• New products and technology or innovative business model which have the potential to bring a superior value proposition to the customers will be provided with a preference.
• Innovative private MSE companies involved in manufacturing and services in the power loom sector.
• Companies undertaking expansions which already have financial performance are also encompassed in the scope of the tex Venture Fund fund

Key Criteria for Project Selection

Tex Venture Fund is looking for investment in projects offering the potential for attractive growth and earnings. Key criteria for project selection are given below:

Strong and committed core team: SIDBI Venture Capital Fund Limited looks for management teams having demonstrated a performance track record, commitment and energy.

High scalability and non-cyclical business: SIDBI Venture Capital Fund aims to invest in promising businesses having the potential for sustainable high growth rate. Sectors preferred are relatively insulated from the periodic downturn of the economy.

Sustainable competitive advantage: SIDBI Venture Capital Fund prefers to invest in innovative business models with a sustainable competitive advantage.

A clear exit plan: SIDBI Venture Capital Fund seeks to invest in ventures with a clear strategy for exits within a reasonable time period to create and realise the value in the investment.

Documents Required

Documents required for Tex Venture Fund is listed as follows:

Pertaining to Company

• Tex Venture FundMOA 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 Promoters

• PAN Card
• Address proof
• Income Tax returns for the last three years
• A net worth statement certified by CA on a recent date
• Two references for the promoters with the contact numbers and mail IDs
• Promoters stake in various entities

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.
• 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)

Tex Venture Fund Application Procedure

The Tex Venture Fund application procedure is explained in detail below:

To obtain the Tex Venture Fund, the applicant needs to submit an application form in the prescribed format. 

The application form for Tex Venture Fund is attached here:

After providing the details in the application form, forward the application to [email protected] Once the application is verified, the fund will be initiated.

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