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ENTREPRENEURS
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| BYST Growth Fund |
| Back |
| Vintage: |
2007 |
| Fund Amount: |
US $ 5.00 million |
| Description: |
The BYST Growth Fund has been created in partnership with the Bharatiya Yuva Shakti Trust (BYST) and intends to spur growth of identified hi-fliers to enable them become regional leaders. The potential investees will predominantly be sourced from BYST’s list of selected hi-fliers. The geographic focus of the fund is India and the fund intends to invest in about 30-35 such investees. The BYST Growth Fund will provide equity like financing to investees and become the financial partner of these entrepreneurs. The fund intends to make investments ranging from Rs. 4 lakhs to Rs. 1 crore, in multiple series. Size and frequency of investments will be tailor-made depending on requirements of the business.
The investment is going to be ‘equity-like’ that differs from a bank loan in 3 important ways:
- Equity-like financing does not require collateral security for obtaining the money.
- In case of bank loans, fixed repayment obligations are a big concern for small entrepreneurs which takes away their focus on the business. Equity-like financing demands no such fixed repayment schedule of either interest or principal.
- In many cases, the life cycle of the business may not be in tune with the interest and principal repayment schedules. Loan repayments are not structured according to cyclicity of the businesses and therefore, add further pressure on the entrepreneur. Equity-like financing, on the other hand, is patient capital.
- On the other hand, in case of equity-like financing, returns to the fund come about only when the business / company is in a position to make such a return. The magnitude of returns are also linked with how well the company is doing; if the company does very well, then the returns to fund will also be high. On the other hand, if the business suffers, then fund can even go without any return. This arrangement therefore does not create external stress to the entrepreneur.
Equity–like financing is therefore ‘entrepreneur friendly’. BYST Growth Fund will provide such financing to its investees. BYST Growth Fund will also assist in whatever way it can to help the entrepreneur realize his/her dream of growing big and become a regional player. The fund believes in supporting the enterprise and adding value to the entrepreneur over the longer term. As pointed earlier, the fund shall be more like a ‘partner’ to the entrepreneur. While each entrepreneur knows how best to run his / her enterprise, the Fund Manager team will also strive to inculcate financial discipline, improve systems within the enterprise as well as enable each entrepreneur to face future challenges.
The fund team will achieve this by regularly interacting with promoters, discussing monthly and quarterly performances, problems encountered, marketing challenges, ways of overcoming them, other inputs required etc. Ventureast has partnered with Aavishkaar Venture Management Services, a pioneer in micro–equity, to operate the BYST growth fund.
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