While innovations have propelled entrepreneurship, yet the risk taking abilities in under represented segments of technologies or new technologies have not witnessed an increase. However, with the Government declaring this decade as the decade of innovation and taking bold steps to support innovation movement in the country, things seem to improve.
The innovators from the informal sectors generally do not have a sound financial background. They mostly come up with frugal innovations to fill the technological gap between need and supply. Mostly, they are not capable to scale up the production and/or marketing of their innovation because of fund constraints. Loan as an option is also not available due to the lack of a guarantor or a collateral for mortgage generally required by banks and other financial institutions. Whatever little resources they may have, may not be sufficient for mortgaging, or they may not like to take risk with it as their livelihood depends on it. They may have been successful in converting their ideas into prototypes but then the story almost ends there.
Venture Capital Firms do not consider supporting them due to their limited fund requirement of a few thousand rupees to maximum 25 lakh while banks may not be ready to take risk without proper documentation or without collateral or a guarantor. Realizing the need of extending risk capital to grassroots innovators, NIF established a dedicated risk fund for such innovators named as Micro Venture and Innovation Fund (MVIF) of Rs 4 crore for ten years with the support of SIDBI in October2003, which got operationalised in January 2004. Under the scheme, support from MVIF is made available to innovators and entrepreneurs who are associated with NIF for technology commercialisation.
The uniqueness of MVIF of NIF is the first and only of its kind micro venture risk fund in the world, which extends financial support to grassroots innovators under a single signature on an simple agreement of understanding without any collateral or a guarantor. Unlike micro finance or conventional venture funds, MVIF invests in risk areas with high failure probability, investing in those technologies and products for which either market does not exist or may be very limited. Apart from financial returns, one of the key criteria for selection of a technology for MVIF support is social return or social value created for the benefit of society at large.
NIF extends the MVIF support to the innovators directly as well as through their regional incubators i.e. GIAN and GIAN Cells. The team at Business Development (BD) department of NIF conducts initial market assessment and makes the investment plan and the proposal, which is presented to the Fund Management Committee (FMC). The FMC evaluates and gives recommendations on the proposals submitted by BD Team. Under MVIF, on case to case basis, we are offering funds with reasonable moratorium period with monthly and also seasonal repayment with consideration of about 12.5% interest. The approval procedure is unique , fast and hassle free for the innovator as we are not demanding innovators to submit anything except simple request about their requirement. The NIF team do all documentation and provide mentoring and all kind of hand holding support to the innovator. The FMC also advises the BD team about project monitoring, commercialization strategy and suggests mid-term corrections if any. A local mentoring team also facilitates proper utilization of funds and guides the innovator from time to time. Out of total four crore fund, we have supported total 184 projects and the total sanctioned amount is Rs. 3,52,81,637 (Three Crores Fifty Two Lakh Eighty One Thousand Six Hundred Thirty Seven, only) . Disbursed Amount is Rs. 3,04,58,337 (Rupees Three Crores Four Lakh Fifty Eight Thousand Three Hundred thirty Seven only) against the sanctioned amount.