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Start up finance scheme MSMEs (SAS)

Scheme objective
To provide structured financing to startups and early stage enterprises
with a focus on innovative new economy businesses which are not able to
raise funds from existing banking system due to lack of assets &
collaterals and which are too “early stage” and small to elicit serious
investment interest from bigger private equity players.

Eligibility of customers
o New MSME businesses set up by promoters with experience of atleast 5
years in the same line.
o Early stage MSME units where revenue streams have commenced and
which should have break even potential in near future.

Quantum of assistance/ eligible project heads


Upto 80% of the project cost which could include Capex & Intangible
heads, WC/WC margin, Pre-operative expenses, IDC, Contingencies, any
other head required for the project.

Facility details
 Optionally Convertible debt with tenure of upto 8 years (flexible
structuring possible) including principal moratorium of 2-4 years. SIDBI
will have following rights in case a new institutional investor (VC fund,
equity fund, etc) comes in the company in future or in case of an IPO:
o to convert the assistance to equity at a pre-decided discount to the
new investor.
o to invest further amount in the company at the same terms as the new
investor.
o to convert at discount in case of IPO plans.
 Any other mezzanine structure suited to the business model and cash
flows of the company could also be used.
 Return expectation would be higher than secured debt but lower than
private equity. The coupon rate on instruments could be structured
flexibly in tune with company’s cash flows.
 No asset coverage norms or collateral requirements. While first charge
on assets of the company could be taken, the same could be sub-
ordinated in case secured lender is involved in the project or comes in
later. Personal guarantees of promoters would be insisted to required
to ensure their stake in the project.

Expectation from entrepreneurs


 Entrepreneurs would be expected to be fully committed to their
ventures and devote full time on the same.
 Entrepreneurs would implement corporate governance programme to
be offered along with the assistance by SIDBI. They would be expected
to Implement transparent systems & processes in the enterprise for
critical decision taking
 Ensure compliance with all statutory and legal requirements reqd for
the business.
 Entrepreneurs would provide regular & transparent information to
SIDBI regarding project progress viz. agreed milestones and any other
relevant information/returns required by SIDBI.
Information to be submitted for seeking In-
principle approval
Under Start Up Assistance Scheme

A Particulars of the enterprise / promoters


.
1 Name/ Constitution
2 Date of incorporation/
Commencement of
business
4 Location of office and
factory / works
5 Industry / Product
details –Proposed
6 Detailed Promoters
background, Bio Data
and Past experience. (Pl
attach detailed CVs of
all promoters)
9 Present MSME status Micro/ Small/ Medium enterprise (Manufacturing/
Service sector)
1 A brief note on Present
0 Financials
(Pl attach audited past
financials)
1 Banking Relationships Bank Facil Securit Amt. Amt. Amt. Amt.
1 of the Unit / Group ity ies Sanc Disb O/s Disb
concerns Type offered

B Project
.
1 Project genesis and
details
2 Present scale of
operations and the
purpose of proposed
investment
3 Venture outlay Capital requirement (with break-up) :
Sources of Finance (with break-up) :

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4 Assistance sought Risk capital assistance and nature of instrument :
Assistance sought under any other scheme (DCS
etc) :

5 A brief of
Implementation and
Milestones achievement
plan
6 Projections (Rs lakh) FY 10 FY 11 FY 12
Sales
PAT
Net worth
C Technology
.
1 USP of Technology,
process or product /
service.
2 Innovation, R & D,
product development
aspects.
3 External validation of
unconventional
technology, process,
product / service if
applicable.
F Market
.
1 Names of existing
Customers and value of
products/ services
offered, if any.
2 Proposed Customers and
products/ services to be
offered
3 Market Need
identification,
Opportunities and the
Market fit of proposed
solutions
4 Marketing strategy and
Selling arrangements
(existing and proposed)
5 Major competitors
6 Business Scalability
potential
7 Whether the business
model envisages for
creation of value by way

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of intellectual property,
patents, copyright,
brands, etc.
G SWOT Analysis
.
H Key risk factors and
. Mitigation
I. Exit options proposed
by the enterprise and
expected return to
SIDBI
J. Professional
References
K Any other relevant
. information

******

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Format of Bio Data of the Promoters /
Key Professionals

Name Date of
Birth
Father’s Name
Address & Contact Details
Major Skills / Area of Expertise
Details of Past Experience of
Entrepreneurship
Professional Experience Details (Pl
furnish Organization-wise)
Name of the
Organization
Designation
Association during
(period)
Key Responsibilities
Key Achievements
Relevance to the
proposed business
Educational Qualifications (Pl.
furnish graduation onwards)
Name of the Course
Specialisation, if any
University / Institution
Practicals /
Applications
Relevance to the
present Business
Certifications / Memberships#
Name of the
Certification
Validity From To
Relevance to the
present Business
References
Name, Address and
contact details
Designation of the
reference
Association since
Nature of Association
Functional responsibility in the
proposed venture
Relationship with Chief Promoter

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Note : 1. # Only professional / technical certifications / memberships to be
mentioned.
2. Please attach copies of testimonials in support of professional
achievements / certifications / memberships.
3. Please give complete details of the information and add additional space
wherever required.

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