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Arifa Khan about Destination India 2010

Genius Incubator, UK is organizing an International Investors Forum: Destination India on November 11th and Smart Money & Genius Ideas on November 12th. Arifa Khan, Founder and Managing Director Genius Incubator talks about Destination India 2010.

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What is the vision of Genius Incubator ? What support do you offer to entrepreneurs ?

Genius Incuabtor’s vision is to make a silicon valley out of India for entrepreneurs. No deserving entrepreneur should be deprived of an opportunity to pursue his dreams for lack of capital and lack of an eco-system that enables early stage investing.

We started Genius Incubator with a simple mission: We help entrepreneurs and young companies from India access capital for their growth plans. We bridge the gap in early stage funding by providing these startups access not only to the domestic venture capital firms but also to the international community of experienced investors who can provide funding as well as guidance and vision for these companies.

How is the response so far from investors?

Let me give you the facts instead of an adjective. We have on board most of the top notch VCs that are active in early stage investing in India as confirmed investors – Sequoia Capital, IDG Ventures, Nexus India, Accel Partners, Helion Ventures, Fidelity Growth Partners, Gujarat Venture Finance Ltd to name a few. Some PE firms are also participating – Barings Private Equity, Baer Capital Partners, New Silk Route Advisors etc. Traction from these VCs and attendance of a handful of European investors who are visiting India for the first time with an eye and appetite for Indian investments is proof of the confidence they have placed in Genius Incubator and our ability to source and screen deals that are of the quality they seek.

How is the response so far from entrepreneurs?

Destination India has been heartily welcomed by entrepreneurs of all complexions as they have never before seen something like this in India, which is designed solely for the sake of getting entrepreneurs funded. We have been selective in the companies we are showcasing to our International investors, and have focused on high growth sectors of Technology, Mobile, Education, Healthcare, Consumer & Retail, Social Enterprise and Renewable Energy. And, we are well-represented across the life stages of business, sector, geography, and age profiles of entrepreneurs.

We have shortlisted 12 teams to present at Smart Money & Genius Ideas – 2 of the founders are from IIT Mumbai, 1 from IIT Madras, 3 are mature companies run by seasoned entrepreneurs with over a decade’s experience and revenues of > Rs25 cr per annum, 3 seed stage companies. As for geographic representation, we have entrepreneurs from London, Mumbai, Delhi, Pune, Bangalore, Chennai and Cochin- but all the companies will be based in India and catering to the Indian market.

Which are the popular investment sectors investors are seeking ?

All over the world, there are discernible pattrens of growing investments in Mobile/ smart phone apps, Technology, Renewable Energy

In India, we have a few sectors that are on the cusp of explosive growth like education, healthcare and retail because of Indian middle class’ growing disposable incomes, their aspirational consumption and conscious pursuit of a better lifestyle. There are some sectors that I predict to be the game changers – Alternative energy, Value added services in mobile, TV and Digital Media, Gaming and other smartphone apps. We have tried to pick companies with a combination of strong Management team, and innovative appealing idea.

What would you advise entrepreneurs who are looking to raise capital ?

Be investment ready, before you approach investors. If you can raise funds through cash generation from customers – do so and bootstrap to avoid undue dilution which you risk if you approach investors too early. If your idea needs scale, and speed to launch, then get the right team and strategy in place and approach VCs instead of bootstrapping.

I have seen from my personal observation of entrepreneurs all over the world that there is only one thing that distinguishes a brilliant entrepreneur – ability to think big. All other qualities and talent are in abundance, but vision and thinking big are lacking in many entrepreneurs. Whether you think big or small, the effort and the stress remain the same for an entrepreneur – so you might as well think big.

How is the perspective of European VC Investors different from Indian VCs ?

European VCs are still open to betting on new technologies, new products, untested business models. Indian VCs, in my limited perception are more inclined to invest in proven business models, much like private equity investments elsewhere, rather than really bet on risky ventures. But, to their defense, in India we rarely ever see good technologies and innovations happen, that are big enough to be game changers. Indian entrepreneurs most often go after service based businesses rather than on disruptive technologies or innovations to business models.

What will be the advantages of raising money from Europe v/s. raising from India ?

For entrepreneurs looking to scale up and expand internationally, having an offshore investor with expertise in those markets is an obvious advantage. Offshore investors can help with startegic guidance on expanding in their domains, and can help entrepreneur overcome knowledge and cultural barriers to doing business in a foreign country, and can also help with their local contacts.

How can Entrepreneurs seeking funds benefit from Destination India event organized by you ?

Fund raising is a full time job, which can be an expensive and unnecessary distraction to many entrepreneurs who would rather be focused on growing their businesses rather than chase the elusive VC or investor. They often do not know who to approach, how and when.

Destination India is a simple, efficient and elegant solution to fund raising challenges faced by entrepreneurs. We have created a platform where entrepreneurs can pitch to a room full of most coveted investors and have their undivided attention and feedback almost immediately – which would perhaps take them an year or more if they were to approach the same magnitude of investors on their own trying to arrange meetings, and still not be sure to get their business plans across to the decision markers, leave alone make a presentation to them.

You can find more information about the event on http://destinationindia2010.com.

About Arifa Khan :

Arifa Khan, Founder & Managing Director of Genius Incubator, has over 10 years experience in the financial services industry including six years as an investment banker in London with Credit Suisse and UBS. She has worked extensively with a variety of Private Equity and investor groups in Europe, advising them on potential acquisitions and their financing. Arifa has advised on several large size Leveraged Buyout transactions across Europe – including the Hirslanden Group (Switzerland), Clariant (Switzerland), Global Garden Products (Italy), Bodycote Testing Group (UK) and HTCC Invitel (Hungary).

Prior to London, Arifa was with Crisil in India, where she was responsible for analysing companies in the pharmaceuticals, information technology, and chemicals sectors. Subsequently, as Manager – Business Development at Crisil, Arifa worked with a number of growth oriented companies looking for potential financing alternatives through the Indian debt markets. Arifa credits her mentor Late Mr.Ravimohan, ex-chairman of Crisil, who mentored her through out her International banking stint.

Arifa has an MBA from The Wharton School of Business and a B.Tech from Indian Institute of Technology, Madras.

Source :  Press Release of year 2010

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MSEs with credit rating increase debt by 70%

CRISIL’s analysis of 1,600 micro and small enterprises (MSEs) which sought re-rating for four consecutive years or more shows 35 per cent of them saw at least one rating upgrade.
An equal number saw no change in rating, while 14 per cent were downgraded. The rest experienced multi-directional rating changes over these four years. For these MSEs who sought re-rating, their lender attractiveness was enhanced and consequently, their debt increased by 70 per cent. Those with stable ratings or upgrades witnessed improvement in their leverage profile (debt to equity ratio).
Says Manish Jaiswal, Business Head, SME Ratings, CRISIL: “SME Ratings introduce prudent risk management among MSEs and also create a credit profile trail, which is a great proof of performance when applying for loans. For lenders, such a rating history is an extremely valuable input for credit risk assessment and to reduce non-performing assets (NPA).”
CRISIL SME TRACKER

To encourage credit culture among MSEs, the central government subsidises the initial rating through the National Small Scale Industries Corporation Ltd (NSIC). If this support were to also cover annual reviews for three to five years, it will help improve the credit ecosystem of the MSE sector, where lenders can extend loans based on credit risk history. Showcasing such performance also enables fund-raising.

Currently, less than one per cent of MSEs in India are rated. Says Jaiswal, “The credit profiles of MSEs with secured lending compare well with — or are perhaps even better than — mid-corporates and retail. Given this, the hour is right for the RBI to consider risk-weighted assets for capital allocation on the basis of the performance and credit rating scheme of NSIC for MSEs. And providing a booster such as enhanced rating subsidy to MSEs with turnover below Rs 2 crore could hasten revival of the sector, and eventually acceleration of the economy, in 2017.”

Currently, less than one per cent of MSEs in India are rated

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India Aspiration Fund to boost prospects of MSME start-ups

CRISIL has analysed 1,050 start-up micro, small, and medium enterprises (MSMEs) that were rated on the basis of their 2013-14 (financial year April 1 to March 31) financials. For arriving at start-ups, CRISIL has considered MSMEs that started business operations after 2010. The MSMEs featured in the sample are primarily non-e-commerce enterprises that are in the manufacturing and services space.

The analysis reveals that seven sectors – engineering; construction; agri products; textile; printing & packaging; transport & logistics; and outsourcing & support services – account for 68 per cent of these, and 41 per cent are operational in the engineering, construction, and agri products sectors. Several of these sectors form part of the government’s 25 sectors under the ‘Make in India’ programme.


Additionally, the Government of India has recently announced a Rs 10,000-crore India Aspiration Fund to provide equity capital for MSMEs-based start-ups. The average net worth of the CRISIL-rated MSME start-ups in the sample was Rs 35 lakh as on March 31, 2014. CRISIL believes that the new fund provides start-ups with the opportunity to raise capital and to grow, and thus contribute to strengthening the economy.

Finance minister Arun Jaitley has announced the launch of India Aspiration Fund with an initial corpus of $305 Mn set under SIDBI.

The India Aspiration Fund to be set up as “fund of funds” is intended to “catalyse tens of thousands of crores of equity investment into startups and MSMEs (micro and small enterprises), creating employment for lakhs of persons, mostly educated youth, over the next four to five years,” Sidbi said.

The fund will be investing in venture capital funds for meeting the equity requirement of MSME startups.

The India Aspiration Fund will have an initial corpus of $305 Mn. “As and when required, more money can be infused,” Jayant Sinha said.

$115 Mn (INR 753 Cr.) of the total $305 Mn (INR 2,000 Cr.) seed capital has already been sanctioned for the equity fund and disbursements have started. According to SIDBI chairman and managing director Kshatrapati Shivaji, the total, $305 Mn of seed capital can be leveraged to raise $3.8 Bn (INR 25,000 Cr.)

The IAF will be managed by an investment committee which includes Harkesh Mittal, Secretary, Technology Development Board, Manipal Global Education Chairman TV Mohandas Pai, Info Edge founder Sanjeev Bhikchandani, former Nasscom chairman Kiran Karnik and Indian Angel Network cofounder Saurabh Srivastava.

“Any move by the government to assist startups is welcome. However, government announcements are usually met with skepticism, and rightly so. But I am quite encouraged to see the way “The India Aspiration Fund” is structured. Since this is going to be a fund of funds administered by SIDBI, the final money will be routed through professional funds and not some government departments. That should fuel the startup ecosystem. Two thumbs up,” said Ajeet Khurana.