Tn'S First Venture Capital Fund Shortlists 3 Firms

Tamil Nadu's first venture capital fund is all set to clear its first batch of investments soon.

"The government has shortlisted three companies, and an investment of about Rs 5.5 crore in these companies is expected to be formally cleared in about ten days," highly placed government sources said.

The fund was jointly promoted by the state-owned Tamil Nadu Industrial Development Corporation (Tidco) and the Infrastructure Leasing and Financial Services (IL&FS) with an initial corpus of Rs 25 crore. Large IT companies have already committed investments to the tune of over Rs 700 crore in the state. However, the Tidco-IL&FS venture capital fund has been positioned to cater to the requirements of small to medium sized companies.

It is learnt that the three companies identified for investment from the fund have already met the conditions stipulated by Tidco and IL&FS.

"All the three companies are software product-oriented companies, and none of them have a high project exposure," official sources said. They, however, declined to name the companies.

The venture capital fund has been floated with the primary objective of nurturing the growth of the software sector in the state.

"More than a dozen companies had applied to the fund. The applications are currently being processed," sources said.

"The concept of a venture capital fund is yet to sink in among entrepreneurs in the software sector in the state. People have applied to us with a term lending perspective. We have to change their mind set," senior government officials who had processed the applications said.

The state government also plans to expand the corpus of the fund for software companies by next year. "We expect the initial corpus of Rs 25 crore to be utilised fully in a year's time. We will then plough in more funds," officials said.

The venture capital fund was part of a package initiated by the government to promote the software industry in the state. An IT policy announced a few months ago had spelt out specific measures to promote the small to medium companies in the sector.

Tamil Nadu has also evolved as a preferred destination for software companies. Domestic and international majors like EDS, Alcatel, HCL Deluxe, Infosys and Wipro are all in various stages of setting up operations in the state.