SIDBI Venture Capital, rakes in 30 % IRR from its first exit of its VC funding
bullish on SME segment, funded over 21 software units
Mumbai, August 27, 2003
SIDBI Venture Capital Limited (SVCL), the fund manager of National Venture Fund for Software and IT industry (NFSIT) established in late 1999 to meet the total fund requirements of the software and IT companies, particularly Small and Medium Enterprises, set-up with a corpus of Rs 100 crore, today announced that it has made its first exit from its venture capital funding given to TRRS Imaging Limited (TRRS).
Simultaneously, with a strategy to ramp-up its operations and expand beyond the Indian shores, TRRS, has transferred control to Indecomm Global Services which has raised US dollars 5 million from Overseas VC funds. While, SVCL on its part, by incubating TRRS for a period of under three years, has exited from its investments by generating an IRR (internal rate of rate) of over 30 per cent.
Announcing SVCL’s exit from TRRS (now Indecomm), Mr. V. K. Chopra, Chairman, SIDBI Venture Capital Limited, said, We are delighted to announce our first exit of NFSIT. The most difficult part of the VC process is the exit and to have accomplished it along with the company receiving financing for a major future expansion is the ideal end result. The exit of our fund from TRRS vindicates our faith in the SME segment that it offers tremendous growth opportunity to VCs.
SMEs contribute immensely in generating employment opportunities and also contribute by way of generating revenues, including exports, to the national exchequer. We are totally committed to our goal of supporting projects/ ventures in the SME segment and also to the development of the Indian economy, Mr. Chopra added.
With an early-stage venture capital from SVCL, TRRS now Indecomm - promoted by a group of professionals, commenced operations in 2000 as a Business Process Outsourcing company with a focus in the health care administration and financial transaction processing segment. In a short span of two years since its inception, TRRS scaled-up its business from a 60 seats operation to over 500 seats. Now, with the US $ 5 million dollar VC funding that Indecomm has received, it is integrating itself into an Offshore Entity.
Mr. Rakesh Rewari, CEO, SIDBI Venture Capital Limited, said It gives us great satisfaction to announce that we have incubated a small enterprise and barely under three years of operations, TRRS has entered the international arena and has been able to integrate itself into an Offshore Entity. Our first exit establishes the fact that VCs too can incubate projects in the SME segment and exit with good returns on their investments.
In a span of less than four years since inception, SVCL has funded over 21 projects largely in the Product, Services, IT enabled services, Internet and also Business Process Outsourcing space all in the SME segment. NFSIT along with the State/ regional funds supported by SIDBI have become the major source of VC funding for the SME segment. This structure also enables rapidly growing SMEs to avail subsequent rounds of funding from bigger VC funds.
Mr. C V Prakash, Founder and director of TRRS, stated VC funding for early stage SME besides being difficult requires deep understanding of the special features of the SME units. Specially so for us when we wanted to set up a technology assisted IT Enabled Services. SVCL assisted in setting up our systems and broad basing our Board, linkages with overseas VC funds and gave us the visibility. The support provided by SVCL is validated by the rapid growth achieved by us and the second round of funding by overseas VC funds
About NFSIT / SVCL
National Venture Fund for Software and IT Industry (NFSIT) has been set up by Small Industries Development Bank of India (SIDBI) in association with Department of Information Technology, Ministry of Communications and Information Technology (MCIT), Govt. of India. It is a close-ended 10 year fund with an initial corpus of Rs.100 crore. SIDBI, MCIT and IDBI are the contributors to this fund. SIDBI Venture Capital Limited, a wholly owned subsidiary of SIDBI is the fund manager of NFSIT. The main objective of the fund is to meet the total fund requirements of the software and IT companies, particularly Small Enterprises, to enable them to achieve rapid growth rates and maintain their competitive edge in domestic and international markets.
SVCL has committed investments aggregating about Rs. 50 crore in 21 companies. Five of these companies which availed VC investment of about Rs.10 crore from NFSIT have generated employment to over 1000 people and 3 companies have raised 2nd round funding aggregating Rs.33 crore. Investments made by SVCL are in BPO/ITES, Software Products, Software Services and Internet related businesses. The investible corpus of the fund is expected to be fully committed during the current financial year. As part of its growth strategy, SVCL is exploring the possibility of setting up a General Fund with a focus on SME units.