The Financial Express , Mumbai Dated 3.1.2007
Fe Centres - Sicom Capital to launch fund for SMEs for Rs 150 cr
Nanda Kasabe


Most VC funds in India target large investments above Rs 25 crore. Majority of the private equity is going into later stage businesses, leaving a gap in venture money for start-ups and SMEs. Sicom Capital Management Pvt Ltd wants to service this segment. The VC firm is in the process of raising a new fund called "SME Opportunities Fund", with a target corpus of Rs 150 crore.

The fund will focus on early stage and mid-market companies in IT, engineering and healthcare, the same as the first fund, Sicom Venture Capital Fund ," Umesh Kudalkar, CEO, Sicom Capital Management Pvt Ltd said.

Many small companies in India have good management and bright prospects but are starving for capital. If these companies receive funds at the right time, they have the ability to scale up to the ten times of their existing size. Less than five VC funds service early stage companies in India," Ajay Limaye, VP, Sicom Capital Management Pvt Ltd said. Early stage funding has lesser competition, a better deal flow and better valuations, Kudalkar pointed out.

The SME Opportunities Fund will raise funds from the domestic market from financial institutions and high net worth individuals. Kudalkar said they had received commitments for 25% of the target corpus and the rest would come by April 2007.

The firm will then begin filtering companies for investment, he said. Sicom's earlier Rs 24 crore venture fund had invested in atleast eight companies including Neilsoft, PARI Robotics and Data Patterns in Chennai.

This time around, the deal sizes would be much larger and capital infused into companies would increase to Rs 10 crore. Earlier, we would invest upto Rs 3 crore in a firm and would rope in other investors. Now, Sicom would stop looking for these," Kudalkar said.

Sicom would be scouting for companies in non-metros in western and southern Indian belt.

This is where most of the action is happening and we would attempt to get a slice of it, he said. The first phase of the fund would be closing at Rs 75 crore.

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