SEBI gives nod to $10 million Startup Village Angel Fund
Market regulator SEBI has given a fillip to the country’s first telecom incubator ‘Startup Village’ in Kerala by approving the Startup Village angel fund of $10 million that could go up to $20 million with a ‘Green Shoe’ (over-allotment) option.
The approval for the angel fund would address the problem of resource shortage for startup companies across the country. The startup village has Infosys co-founder Kris Gopalakrishnan as its chief mentor besides other leading angel investors.
What is Startup Village?
Vision: To have 1000 product startups by 2020.
Startup Village is a business hub that aims to provide beginner entrepreneurs facilities and services to help build your own enterprise. It promotes innovative thinking among students to make their breaking new ideas to come true.
It is the country’s first Public Private Partnership (PPP) telecom business incubator – set up at Kerala Industrial Infrastructure Development Corporation Park in Kalamassery near Cochin. It is a not-for-profit organization focused on promoting entrepreneurship by developing the support structure to assist them.
As a business incubator, it will provide:
- Physical infrastructure
- Technology & service infrastructure
- Mentor capital & people network.
- Conducive environment
What is the rationale of Startup Village to focus on student startups?
The rationale for focusing on students startups is based on the knowledge and awareness that some of the most innovative technology companies globally like Apple, Microsoft, Dell, Facebook, Google etc. started out as college startups.
How will it benefit a startup company?
Startup Village is a rigid eco-system pursuing the low costs and high quality for the Incubates. It provides the initial platform for a startup company to start its activities. It does not provide any sort of initial funding, but it will act as a mediator to connect the startup company with various angels in its angel network. The facilities offered at Startup Village include leased line connectivity, telecom labs, technology infrastructure, innovation zones, accounting, legal and intellectual property services, heavily discounted consulting & server hosting services, fully furnished office spaces, co-working spaces and video conference rooms and perks like three-year service tax holiday for startups to build, break and innovate.
Who is Angel Investor?
- An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.
- A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital, as well as to provide advice to their portfolio companies.
What is a Green Shoe Option?
- A provision contained in an underwriting agreement that gives the underwriter the right to sell investors more shares than originally planned by the issuer. This would normally be done if the demand for a security issue proves higher than expected. It is legally referred to as an over-allotment option.
- Importance: A greenshoe option can provide additional price stability to a security issue because the underwriter has the ability to increase supply and smooth out price fluctuations if demand surges.