Rs100-cr corpus for MSME start-up units

In order to provide seed funding to MSME start-up units, the State Government on Friday floated Odisha Venture Capital Fund (OVCF) with a corpus of `100 crore.Sources said Chief Minister Naveen Patnaik cleared the fund proposal made in line with the Gujarat Venture Fund limited (GVFl).Normally, banks and financial institutions come forward to finance enterprises having fixed assets, but don’t provide loans to enterprises based on ideas. The OVCF would provide financial assistance to such intellect-based and other lucrative start-ups, sources said.

The State Government’s contribution of `50 crore to the fund would be disbursed in two tranches, `25 crore in the current year and an equal amount in 2016-17.The MSME Department would handle venture capital (seed funding at an early stage) in equity and equity-featured capital meant for investment in new idea-based and other enterprises, which would yield high returns, sources added.The OVCF has been formed as a contributory trust to provide financial assistance in shape of equity and equity-related direct investment to projects which have high risk on investment.

The OVCF would follow the SEBI guidelines and focus on funding agro and food processing, automobile, software, IT, biotechnology, and biomedical engineering and nano technology units in the MSME sector. The Government would invest an amount between `lakh and `1 in company and the investment would have an exit horizon of three to seven years.The Gujarat Government’s GVFl has been co-opted as a partner and consultant for creation of the OVCF.