The Small Industries Development Bank of India has partnered with the Uttar Pradesh (UP) Startup Fund where Rs 40 crore will be committed to Aroa Venture Partners. Based in Hong Kong, San Francisco, and Mumbai, Aroa Venture Partners is a venture capital firm established in 2020 and invested in well-known companies such as Unacademy, Urban Company, and Cred among others. The more ambitious goal of the firm is to mobilize a reasonable sum of Rs 400 crore by March of the next financial year.
The UP Startup Fund
The Uttar Pradesh (UP) Startup Fund was created under the UP IT & Startup Policy 2017 with an initial fund of 1000 crore. It is aimed at creating, setting up, and fostering entrepreneurship and new ventures in Uttar Pradesh. Its goal is to ensure funding for these young companies so that they can grow innovations and businesses in the state. The Startup India Seed Fund Scheme (SISFS), comprising the UP Startup Fund, has certain norms that are exclusive to startups. The startup must be approved by DPIIT (Department for Promotion of Industry and Internal Trade). It should have been created not earlier than 2 years before the application date.
The startup should have a business idea defined as the plan for creating a product or service with market fit, timely and feasible commercialization, and scalability. its core product, service, business model, or distribution methodology to deal with the focal issue or problem The technology must be used in its core product, service, business model, or distribution method to deal with the problem or issue targeted. No other Central or State scheme should have arranged or given it any monetary assistance of more than Rs 10 lakh. This is because the shareholding by Indian promoters should be at least 51%.
Commitment of SIDBI
SIDBI as a limited partner, committed an amount of Rs 40 crore to Aroa Venture Partners. This partnership is beneficial for Aroa and supports its activities, especially when investing in stakes in other companies. SIDBI (Small Industries Development Bank of India) has a dedicated Code of Commitment for Micro, Small and Medium Enterprises (MSMEs). The codes provide the basic standard model of banking JS that SIDBI has to adhere to while executing operations with MSMEs. It safeguards MSMEs and highlights how SIDBI undertakes its routine activities and addresses financial challenges.
It ensures that SIDBI delivers effective and suitable banking solutions for MSMEs. Tackling the issues of transparency, timely response, and building confidence in the banking systems are important aims. This means that the code is consistent with the recommendations for best practice and goes further exceeding instruction regulatory guidelines. The code does not operate as a regulation or supervision direction but as an additional measure. Among them, number four talks about the rights and duties of both SIDBI and MSMEs and their relations and understanding.
Aroa Venture Partners Investment Strategy
Aroa Venture Partners has also admitted another general and managing partner known as Sekhar Puli. Puli has relevant experience through his positions in the US-based BV Investment Partners private equity and Rean Cloud, which he co-founded and was later acquired by Hitachi Vantara. Aroa Venture Partners intends to invest amounts of Rs 4 crore to Rs 40 crore in 20-25 start-ups. The Reinventure fund will be making investments that range from seed to Series C in innovative organizations.
Feeder Vehicle and Commitment of Aroa Venture Partners
The firm uses a feeder vehicle whereby investment capital is provided in Singapore and channeled to the master fund. This structure helps Aroa to provide more support to promising startups. Managing partner and founder Gaurav Gulati underscores the utilization of the firm to lead a change that would propel the growth of emerging startups in India. In this stage demographic momentum is at full tilt, therefore Aroa plans to support the owners of the companies and meet new demands.
Conclusion
The reported partnership between SIDBI, UP Startup Fund, and Aroa Venture Partners proves that strategic investments are conducive to the advancement and development of innovations and support for the Indian startup community. The commitment made by SIDBI focuses on MSMEs with the MISSION to promote better banking to the MSMEs by being transparent, efficient, and supportive.
