Recently I was reading a post “Canada’s banks and lifecos launch fund of up to $1 billion to help businesses grow” in the Financial post. The top Canadian banks and Life Insurance companies were coming together to create a US$ 1 billion fund to reboot the Canadian economy by pooling funds to invest into companies in Canada. Indeed, a great initiative I thought as this would create the boost required for the economy to move forward. Reading this, my wild imagination started creating various scenarios on what if Top Indian companies get together and do a bit of “CSR: Corporate Startup Responsibility”?
Here goes my wildest imagination:
As our Honourable Prime Minister wants India to be the top nation by 2022, our 75th year of Independence, he immediately calls an emergency meeting with the Corporate honchos which included who’s who of Indian business to reboot the Startups in India. The decisions were taken immediately and as we know with our Prime Minister’s style, it was implemented immediately with transparent digital India e-implementation without any red tape of bureaucracy.
- Each Corporate were allowed to contribute tax-free amount of a minimum of 10 crores from their profits towards CSR: a with profit Corporate Start Up responsibility initiative.
- All startups can directly e- submit their business plan to an apex body called “Start Up India mission” (Fund) with a billion-dollar commitment from top 100 profit making companies.
- The criteria for choosing the startups include: each startup has to create employment of minimum 5 people including the founders, all companies have to be registered as Private Limited Companies and each company must have Mentors from a pool of mentors created by the business houses, whose responsibility would be to ensure that startups get regular advice on Finance, Strategy and growth.
- The fund will provide advice, mentorship and access to talent pools.
- The fund will have the board of Directors and representatives of Investors.
- Yearly 6000 companies would be given 1 crore as seed capital, where in Mentors would get 1% stake for the advice and the Startup India Mission (Fund) would get 9% equity (convertible debentures) for the capital brought into the company. The convertible debenture will be converted after 3 years or at the time of raising equity capital from Venture capitalists/Investors with a 30% discount to the valuation subject to a minimum 9% equity shares.
- Startups have an option to buy back the equity as well at a predefined rate within two years so that, it would help “The Startup mission” to fund the next round of startups.
- Top 100 companies who have contributed would assist these startups by creating networks to ensure the required assistance during their initial stages. Synergy would be created among the startups and these corporates which would benefit in bringing in latest technologies or cutting down wasteful expenses for Corporates by way of latest technology or process improvements.
- Each Corporate is also given an option to acquire shares if it felt that the Startup is a good bet towards backwards or forward integration.
- The profits made in the funds are reinvested into other sets of startups next year. Also, the fund would attract another US$ 1 billion in the next year as well to support these startups and a new set of startups.
Automatically if all the Top companies come together with the help of the Government towards offering tax breaks for contribution towards CSR: Corporate Startup Responsibility, don’t you think India will be the capital of Startups and a greater economy by 2022?
The following are the top 100 corporates with 3,67,000 crores profit in their books as per the latest Profit & Loss Account. Net Profit as per the latest Profit & Loss Account available.
Imagine if these funds are utilised and startups are encuraged. it will be the game changer for the Indian Economy and maybe this is what we need in this hour. Encouragement, support and a strong sense of community with a focus on business, growth and mutual profitability. This in real essence will be ’empowerment’.
Shrihari Allangala writes on matters of investment, funding and startups. He is a Director of WiseLane Ventures Pvt Ltd.