Venture Capital Fund for Scheduled Castes

Disclaimer…before you read ahead!

The information contained herein is of a general nature and for information purposes only, with the intent of raising awareness around various resources, schemes etc. available for women entrepreneurs in India. It is not intended to address the circumstances of any particular individual or entity. It does not purport to be all-inclusive or necessarily contain all the information that may be relevant for the reader, and may be subject to updating, revision or amendment. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to remain accurate in the future. The reader, therefore, is required to exercise their discretion; and not act on such information without appropriate professional advice after a thorough examination of the particular situation.

Furthermore, we are not a lender and are not authorized by the Reserve Bank of India to act as one. By disseminating the information contained herein, we are not soliciting any borrower or customers for the company or organization mentioned herein nor do we intend to syndicate any capital for the reader of this article.

About this scheme…

Venture Capital Fund for Scheduled Castes (VCF-SC) was launched by Department of Social Justice & Empowerment, Ministry of Social Justice & Empowerment, Government of India on January 16, 2015 to promote entrepreneurship amongst Scheduled Castes (SCs) and provide concessional finance to them.

VCF-SC is a SEBI registered Venture Capital Fund managed by IFCI Venture Capital Funds Ltd., a subsidiary of IFCI Ltd., a Government of India Undertaking

How is it being implemented?

Under VCF-SC, direct concessional financial assistance in the form of loans, equity capital and incubation funding is provided to:

• SC owned existing or new business in manufacturing, services and allied sectors including start- ups and units being incubated in the Technology Business Incubators (TBIs)

with special concessions to SC entrepreneurs who are women or disabled

What’s on offer?

I. Product

• Debt via instruments such as Non-Convertible Debentures (NCDs), Optionally Convertible Debentures (OCDs), Optionally Convertible Preference Shares (OCPS) etc.
• Equity via instruments such as Equity, Compulsorily Convertible Preference Shares (CCPS), Compulsorily Convertible Debentures (CCDs)
• Incubation Funding
• Ticket Size:
  • Debt Instrument(s): ₹10 Lakhs to ₹15 Crores
  • Equity Instrument(s): upto ₹5 Crores for up to 49% shareholding
  • Incubation Funding: upto ₹10 Lakhs per year for a period of 3 years, aggregating ₹30 Lakhs for 3 years
• Aggregate assistance will not more than two times the current net worth of the beneficiary
• Minimum 25% of investment shall be in the form of debentures
• For financial assistance above ₹5 Crores, the money released by IFCI Venture Capital Funds would be in proportion to the loan tranche released by Bank or FI or Department of Government of India

II. Purpose:

• Acquisition or investment in fixed assets
• Working capital requirements
• For more information around this, please reach out to IFCI Venture Capital Fund via means mentioned below

III. Borrower Type:

• Debt or Equity Instruments:
  • Private Limited Company, Public Limited Company
  • Proprietary Firm, Partnership Firm, One Person Company (OPC), Limited Liability Partnership (LLP) or any other establishment incorporated under any law in force should convert itself into a Private Limited or Public Limited Company before getting assistance under the Scheme
• Incubation Funding: Constitution of beneficiary may be flexible. For more information around this, please reach out to IFCI Venture Capital Funds via means mentioned below

IV. Security or Collateral or Guarantee or Insurance

• Primary Security: Assets of the project being funded or assisted under the Scheme including land, building, plant & machinery and rights on licenses or patents
  • Pari-pasu charge on assets with other lender Banks/FIs, on a case to case basis
  • Where first charge is held by Banks/FIs, second charge on assets
• Collateral Security:
  • If no mortgage is available in the form of project land, borrower might need to arrange collateral securities
  • Pledge of Promoter(s) shares: minimum 26% upto 51% of the Issued and Paid-up capital, decided on a case to case basis
  • Post Dated Cheques (PDCs) / Electronic Clearing Service (ECS), and Promissory Notes
• Guarantee: Personal guarantees of the Promoter(s) along with buyback agreement
• Insurance: For more information around this, please reach out to IFCI Venture Capital Funds via means mentioned below

V. Interest Rate

• Debt Instruments: concessional rate of 3.75% per annum for women or disabled SC entrepreneurs vis-à-vis 4% per annum for all other SC entrepreneurs
• Equity Instruments: Return expectation of 4% per annum or higher at the time of Exit. Please read this along with details mentioned under Tenure, Repayments & Pre-Closures section below
• Incubation Funding: For more information around this, please reach out to IFCI Venture Capital Funds via means mentioned below

VI. Processing Fee

• For more information around this, please contact IFCI venture Capital Funds via means mentioned below

VII. Margin Money Requirement

• For Financial Assistance upto ₹5 Crores:
  • At least 25% of the Project Cost to be funded by Promoter(s) or Government subsidy
  • Where Government subsidy is being availed, Promoter(s) will need to contribute atleast 15% of the Project Cost
• For Financial Assistance above ₹5 Crores
  • At least 50% of the Project Cost to be funded by Promoter(s) or Government subsidy or loan from Banks/FIs
  • Where Government subsidy is being availed, Promoter(s) will need to contribute atleast 15% of the Project Cost

VIII. Tenure, Repayments & Pre-Closures

• Tenure:
  • Debt & Equity Instruments: Upto 10 years
    • For debentures alone, tenure includes moratorium period upto 36 months
  • Incubation Funding: For more information around this, please reach out to IFCI Venture Capital Funds via means mentioned below
• Repayments: Repayment or Exit process will be determined on a case to case basis depending upon the nature of financial assistance and performance of the beneficiary
  • Debt Instruments:
    • For more information around the frequency of repayments, please contact IFCI venture Capital Funds via means mentioned below
    • Repayments could be made out of funds from operations, buyback or redemption by Promoter(s) or Company
  • Equity Instruments:
    • One shot repayment (Exit) by way of buyback by Promoter(s), strategic investment or IPO within the end of Tenure
  • Incubation Funding: For more information around this, please reach out to IFCI Venture Capital Funds via means mentioned below

IX. Turnaround Time

• Some of the features of this Scheme includes digital application submission, instant eligibility check, all required information at one place, one point submission of details & documents, and fast resolution
• The sanction may take about 2 – 4 months from the time of filing the application depending upon Debt or Equity Instrument and would be subject to submission of all requisite documents by the Company and its Promoter(s)
• For more information around the process & timelines, please refer to Q20 & Q26 of the FAQs here and here

Interested? Read ahead to check your eligibility….

I. Do you belong to Scheduled Castes Community and have a documentary proof?

II.

Are you setting up projects or units in manufacturing, services or allied sector?

OR

Are you a start-up or a unit being inclubated in the Technology Business Incubator (TBI)?

III.

If you are looking for financial assistance of upto ₹50 Lakhs, do the SC entrepreneur(s) in your Company hold atleast 51% shareholding and have management control, since at least past 6 months?

OR

If you are looking for financial assistance of upto ₹50 Lakhs and were earlier incorporated under any law in force as entity other than Private or Public Limited Company, do the SC entrepreneur(s) in the new successor Company (Private or Public Limited Company) hold atleast 51% shareholding and have management control, since at least past 6 months? Also, did the SC entrepreneur(s) in the predecessor entity hold atleast 51% and have management control?

OR

If you are looking for financial assistance of above ₹50 Lakhs, do the SC entrepreneur(s) in your Company hold atleast 51% shareholding and have management control, since at least past 12 months?

OR

If you are looking for financial assistance of above ₹50 Lakhs and were earlier incorporated under any law in force as entity other than Private or Public Limited Company, do the SC entrepreneur(s) in the new successor Company (Private or Public Limited Company) hold atleast 51% shareholding and have management control, since at least past 12 months? Also, did the SC entrepreneur(s) in the predecessor entity hold atleast 51% shareholding and have management control?

OR

For Incubation Funding, is your innovative idea selected by TBIs for incubation funding to cover the cost of operations and maintenance?

OR

For Incubation Funding, is yours a new Company where at least 51% shareholding is held by first time SC entrepreneurs who have been working in technology oriented innovative projects either:

• • With the support of incubation centers at IlTs, NITs, Premier Business Schools, Universities, Institutions, Medical Colleges, NSTEDB under Department of Science & Technology (DST) or supported by corporates, with good potential of commercialization and project is at implementation stage; and / or;
  • Without the support of incubation centers but are having patent/ copyrights with good potential of commercialization and project is at implementation stage;
  • Projects sanctioned by Departments/Ministries of Government of India after due appraisal

If your answers to the questions above are an emphatic YES, you are all set to avail financing under VCF-SC!

So…how big is this scheme and what has been done so far?

I. Total corpus of VCF-SC is 726.51 Crores

II. Of this, as of August 1, 2023:

• ₹461.70 Crores were sanctioned to 126 companies
• ₹343.22 Crores were disbursed to 103 companies

III. For more information on companies to whom financial assistance has been sanctioned under the Scheme, please refer here

So, now, how should you go about it?

I. For submitting application, please apply online on VCF-SC website here

II. For information on indicative list of documentation required in English, please refer here

III. What this video in Hindi for detailed guidance on how to apply and documentation required

IV. For any technical support assistance such as uploading documents etc., please contact IFCI Venture Capital Funds via:

• E-mail: support@ifciventure.com

OR

• Call 011 4173 2585, 011 4173 2567, 011 4173 2576, 011 4173 2581, 10 am through 5 pm

V. For any queries, please contact IFCI Venture Capital Funds via:

• E-mail: funds@ifciventure.com

OR

• Call 011 4173 2585, 011 4173 2567, 011 4173 2576, 011 4173 2581, 10 am through 5 pm

OR

• Visit IFCI Venture Capital Fund office here

Go on then…and do spread the word!

Sources:

1. About the Scheme 1 – English
2. About the Scheme 2 – English
3. About the Scheme 3 – Hindi
4. About Launch Date of the Scheme