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Funding

Funding Opportunities for Bioentrepreneurs

There are varieties of financial supports which are possible for biotech startups in India.

Funding Options for Biotech Startups (Financing Alternatives)

  1. Fund from operations
  2. Interested partners
  3. Fund it yourself
  4. Debt financing
  5. Friends, family and angels
  6. Incubators
  7. Financial Assistance from Government Grants
  8. Venture Capital and Private Equity
  9. Public Investment (Equity Funding)
  10. Business Loans from Banks
  11. Mergers and Acquisitions
  12. Corporate Partnering

 

      I.        Financial assistance from Government sector

Venture Fund by government: The Indian government has set up a USD 2.2 billion venture fund for supporting drug discovery and research infrastructure development projects. This is a crucial step as it increases the funding required for innovative work by the Indian biotech sector. 

(A) Biotech Ignition Grant (BIG) schemes for startups (Launched by DBT)

Biotech Ignition Grant (BIG) schemes is centered on or around individuals, or a team of individuals that will help mature nascent ideas to a stage where a startup company can be envisioned. BIG was launched in June 2012.

 (B) Small Business Innovation Research Initiative (SBIRI) for smaller companies (Launched by DBT) (Started in 2005)

Given in Two Phases

Phase I – Early stage, Pre-proof-of-concept research proposals which add to important national needs.

Phase II – Funding in form of soft loan upto Rs. 100 crores for late development and commercialization of innovative research leads when proof-of-concept is already established.

In year 2005-06, 10 applications out of 71 received support.

Call for application announced in Newspaper.

As on 2008 – 37 projects running (worth Rs. 155 crores)

396 proposals from 250 companies Of these –

75% for early stage (Phase I) research

20% for scale-up5% for combination

155Proposals – collaborations with institutions and Universities

16 Projects projects in healthcare sector

9 projects in industrial product & process development

8 projects in agriculture & other areas

Over 100 projects of small and medium entrepreneurs have been supported. SBIRI has deployed $36 million, of which $5 million in grants and $31 million in soft loans, with a debt-to-grant ratio of roughly six to one. Public SBIRI funding has leveraged an additional $33 million in private investment by recipient enterprises as their core contribution, for a total investment of $69 million across approved projects.

(C) Biotechnology Industry Partnership Programme (BIPP) for existing companies (Launched by DBT)

BIPP was launched in 2008 and has been successful scheme. Process is felt as rigorous and time-consuming. DBT funding and related supports play a “critical role” for small companies that are engaged in basic research leading to new types of drugs. Amrita Therapeutics, Perfint Healthcare is the beneficiaries of BIPP scheme. Absolute transparency and pro activeness is shown by BIPP team.

Biotechnology Industry Partnership Programme (BIPP) is a government partnership with industries for support on a cost sharing basis for path-breaking research in frontier futuristic technology areas having major economic potential and making the Indian industry globally competitive. It is focused on IP creation with ownership retained by Indian industry and wherever relevant, by collaborating scientists.

BIPP supports the development of appropriate technologies in the context of recognised national priorities in the area of agriculture, health, bio-energy, green manufacturing, when the scale of the problem has serious consequences for social and economic development. BIPP is an Advanced Technology Scheme only for high risk, transformational technology/process development. It is for high risk futuristic technologies and mainly for viability gap funding. The uniqueness of this scheme is that it is for “break through research” which enables product and process development and is patentable, with IP ownership rights resting with industry.

Funds deployed: So far 88 agreements have been signed with 72 companies involving approximately 50 start ups and SMEs. Scheme provides for both soft loan and grant. A total investment of $ 141 million has been committed with $50 million by Government of India with a matching contribution of $91 million coming in as private sector contribution. 

Department of Scientific & Industrial Research (DSIR)

DSIR promotes trade in technologies and collaborative R&D and technology development projects. For its various financial aids click http://dsir.nic.in/

  • Technopreneur Promotion Program -TePP

It is jointly operated by DSIR and DST. It aims to tap the vast existing innovative potentials of Indian entrepreneurs in order to assist individual innovators to become technology based entrepreneurs and further assist in networking and forging links for the commercialization of their developments. For detail click http://dsir.nic.in/

  • Research & Development by Industry -RDI

The RDI mainly recognize in-house R&D units in industries and Scientific & Industrial Research Organizations and give them financial incentives for Scientific Research. Click http://dsir.nic.in/

  • Scheme to Enhance the Efficacy of Transfer of Technology -SEETOT

SEETOT supports Technology Acquisition and Management via the schemes:

National Register of Foreign Collaborations –NRFC 
NRFC objective is to facilitate acquisition and management of technology in the country more efficiently. For detail click http://dsir.nic.in/division/seetot/nrfc/nrfc.html

Transfer and Trading in Technology –TATT 
Objective of TATT is to catalyze Technology Intensive Export Efforts of Industry or R&D through Grants & Technical Assistance.

  • ‘Technology Development and Demonstration Program’ (TDDP) earlier known as ‘Program aimed at Technological Self Reliance’- PATSER

Its objective is to promote industry’s efforts in development and demonstration of indigenous technologies, development of capital goods and absorption of imported technologies. It promotes the involvement of national research organizations in joint projects with industry. For more detail clickhttp://dsir.nic.in/tpdup/tddp/tddp.htm 

The Technology Development Board (TDB) will partner with the Unit Trust of India (UTI) to float an information technology venture fund aimed at promoting entrepreneurship, in biotechnology and other technology-related areas.  – Rs 200 crore 

Small Industries Development Bank of India (SIDBI)

Small Industries Development Bank of India (SIDBI) and Department of biotechnology (DBT) have decided to set up a Rs 1000 million Biotechnology Development Fund in 1998. This is to encourage private-public partnerships in the small-scale sector as well as to promote entrepreneurship in biotechnology. It is proposed that the DBT would put in Rs 200 million, while SIDBI would contribute the rest of Rs. 800 million for the fund. Earlier the proposal was of DBT-Sidbi for a Rs 500 million (Rs 250 million each) National Biotech Venture Fund but the Planning Commission of India did not agree with that proposal on the pretext that it would be better to leave it to the financial intermediaries (FIs) as it would entail nurturing and monitoring apart from financial management which FIs can do much better. At this stage, finer details of the proposal such as whether to give assistance as soft loans or set in place a programme with an exit clause that would help the fund sustain itself through royalties and so on are being worked out. The proposal is part of a larger industry orientation proposed by the DBT in its Tenth Plan Approach Paper. In collaboration with the Agriculture Ministry, a large number of decentralized production units (at least 1000 for biofertilisers and biopesticides) in the small scale sector are proposed to be established all over the country with new technology packages by the end of the Tenth Plan. 

    II.        Venture capitalists and Private equity 

India’s biotechnology sector, once an attractive destination for private investors, has seen a sharp drop in investments in the past two years as venture capitalists, and private-equity and angel funds have stayed away due to (i) regulatory uncertainty, (ii) high risks and (iii) long gestation periods.

In 2012, there were just four instances of infusion of private funds worth a total $24 million in biotech companies, according to VCCEdge, an investment tracker. In the preceding year, there were none. This compares with investments of $180 million in 2010.

In the early years of the new millennium, there were on an average 25 deals a year worth a total $200-300 million, according to industry data.

 “The concept of risk and start-up funding are new for India,” ABLE said in its representation. “Angel investors and venture capitalists are reluctant to fund biotech companies, which take 7-8 years to stem out new products.”

Following are the major Venture Capitalist (VC)/Private Equity (PE) Players some of them support various life sciences/Biotech business projects in India:

  • 2i Capital (India) Pvt. Ltd.: www.2icapital.com
  • Aavishkaar India Micro Venture Capital Fund: http://www.aavishkaar.org/
  • Abraaj capital
  • Abundance venture capital
  • Acer Technology Ventures: http://www.acervc.co.in/
  • AIL&FS
  • Alliance Venture Capital Advisors: http://www.allianceventure.com/
  • Alta partners
  • Americacorp capital Pvt. Ltd.
  • Anandrathi Real Estate Fund: http://www.rathi.com/
  • Apax partners worldwide LLP
  • APIDC Venture Capital Ltd.: http://www.apidcvc.com/
  • Associated Law Advisors: http://www.ala-india.com/
  • Avendus Advisors Pvt. Ltd.: www.avendus.com
  • Avon Capital Services Ltd.
  • Ayyar & Cherian Consultants Private Limited: http://www.ayyarandcherian.com/
  • B. P. Rao & Co.: mailto:[email protected]
  • Banc of America Equity Partners Asia
  • Baring Private Equity Partners India Ltd.: http://www.bpepindia.com/
  • Berkeley Finance & Consulting Pvt. Ltd.: http://www.berkeleyfinancing.com/
  • BTS Investment Advisors Pvt. Ltd.: http://www.btsadvisors.com/
  • Burill and company
  • Canaan partners
  • Canbank venture capital fund Ltd.: www.canbankventure.com
  • Chrys capital: www.chryscapital.com
  • CIG Realty Investors India Pvt. Ltd.
  • Clear Info-Analytics Pvt. Ltd.: http://www.clearanalytics.co.uk/
  • Coller capital Ltd.
  • D. E. Shaw India Software Pvt. Ltd.: mailto:[email protected]
  • Dawn Consulting: http://www.dawnconsulting.com/
  • Deloitte Haskins & Sells: http://www.deloitte.com/
  • Dewan P. N. Chopra Consultants Private Limited: http://www.dpncindia.com/
  • DFJ ePlanet Ventures
  • DHFL Ventures Trustee Company Pvt. Ltd.: http://www.dhflvc.om/
  • Dresdner Klenwort
  • Dua Associates: http://www.duaassociates.com/
  • Equilink Capital Management Services Ltd.: http://www.equilinkcapital.com/
  • eVentures India (P) Ltd.: http://www.eventures.co.in/
  • Evolvence Advisory Services Pvt. Ltd.: http://www.evolvenceindia.com/
  • Francis Joseph: mailto:[email protected]
  • Frontline Venture Services Pvt. Ltd.: http://www.frontlinestrategy.com/
  • Gaja Capital Partners: http://www.gajacapital.com/
  • Gandhi & Associates: http://www.gandhiassociates.com/
  • Gujarat Venture Finance Ltd: http://www.gvfl.com
  • GW Capital Pvt. Ltd.: http://www.gwcaps.com/
  • Hansuttam Finance Ltd.
  • HDFC Venture Capital
  • Headway Capital: http://www.headwaycapitaladvisors.com/
  • Henderson Global Investors (Singapore) Ltd.
  • HSBC Private Equity Management Mauritius Ltd: http://www.hsbc.co.in/
  • ICF Ventures: http://www.icfventures.com/
  • ICICI Venture Funds Management: www.iciciventure.com  
  • ICOS Capital: http://www.icoscapital.com/
  • IDBI – Venture Capital Dept: http://www.idbi.co.in/
  • IDFC Private Equity Co. Ltd.: www.idfcpe.com
  • IFCI Venture Capital Funds Ltd.: http://www.ifciventure.com/
  • IFU: http://www.ifu.dk/
  • IL&FS Venture Corporation Ltd.: http://www.ilfsindia.com/
  • iLabs Venture Capital Fund: http://www.ilabsgroup.com/
  • Indasia Fund Advisors Pvt. Ltd.: www.indiaasiafund.com/
  • Indian Angel Network: http://www.indianangelnetwork.com/
  • Indian Direct Equity Advisors (idea) Pvt.Ltd.: http://www.ideaequity.com/
  • Indus Venture Management Ltd: mailto:[email protected]
  • Langham Capital Limited: http://www.langhamcap.com/
  • Marigold Capital Management Ltd.: http://www.marigoldventures.com/
  • Mefcom Capital Markets Ltd.: http://www.mefcom.in/
  • Meta Crossover Advisors Pvt. Ltd.: mailto:[email protected]
  • Microsoft: http://www.microsoft.com/
  • Mohr Davidow Ventures
  • Motorola Venture Capital Fund: Industrial Venture Capital Ltd.: http://www.motorola.com/

mailto:[email protected]

  • Infinity Venture Capital: http://www.infinityventure.com/
  • Intel Technology India Pvt. Ltd.: www.intel.com
  • Jafco Investments (Asia Pacific) Ltd.
  • Jumpstartup Fund Advisors Pvt.Ltd.: http://www.jumpstartup.net/
  • Juris Corp, Advocates & Solicitors: http://www.jclex.com/
  • Karnataka Asset Management Company Pvt.Ltd.: http://www.kitven.com/
  • Kerala Venture capital fund Pvt. Ltd.: www.keralaventure.org
  • Kotak Private Equity Group: a group of Kotak Investment Advisors Limited http://www.kotak.com
  • KR Chawla & Co.: http://www.krcco.com/
  • Kshitij Venture Capital Fund: http://www.kshitijfund.com/
  • New enterprise Associate
  • New Path Ventures: http://www.newpathventures.com/
  • Newmedia Spark
  • Nishith Desai Associates: http://www.nishithdesai.com/
  • Novastar Capital
  • P H Parekh & Co.: http://www.phparekh.co.in/
  • Paracor Capital Advisors Pvt. Ltd.: http://www.paracorcapitaladvisors.com/
  • Passion Fund: http://www.passionfund.com/
  • PE Consulting Investintoindia (P) Ltd.: http://www.peconsulting.in/
  • Peepul Capital LLC: http://peepulcapital.com
  • Pequot Ventures
  • Pinkerton Consulting & Investigations (India) Pvt. Ltd.: http://www.pinkertonindia.com/
  • PriceWaterHouse Coopers: http://www.pwc.com/
  • PSi Inc.: http://www.psi-world.com/
  • Punjab Venture Capital Ltd: http://www.pvcl.org/
  • Rabo India Finance: http://www.rabobank.com/
  • Rajasthan Asset Management: http://www.rvcf.org/
  • Ravi Rakesh: mailto:[email protected]
  • Resurgent India Limited: http://www.resurgentindia.com/
  • Rohini Management Service pvt ltd: http://www.srirohini.com/
  • SCFPL Siemens Venture Capital: http://www.siemensventurecapital.com/
  • Sequoia Capital India: http://www.sequoiacap.com/
  • SICOM Capital Management Ltd.: http://www.sicomventure.com/
  • SIDBI Venture Capital Ltd.: www.sidbiventure.co.in
  • Silicon Valley Bank: http://www.svbank.com/
  • Sofinnova ventures
  • Step Two Corpoartion Limited: http://www.step.co.in/
  • Sudit K. Parekh & Co.: http://www.skpgroup.com/
  • SUN Group: http://www.scp.ru/
  • Technology Holdings: http://www.technologyholdings.net/
  • The Carlyle Group: http://www.carlyle.com/
  • Timeline Ventures
  • Trident Capital
  • TSI Ventures: http://www.tsiventures.com/
  • United states investments associates LLC
  • Unitus Advisors Pvt. Ltd.: http://www.unitus.com/
  • UTI Venture Funds Management Company Pvt. Ltd.: www.utiventurefunds.com
  • View Corporate Advisors Private Ltd: http://www.viewgroup.com/
  • Walden Nikko India Management Co. Ltd.: http://www.waldenintl.com/
  • Warburg Pincus India Pvt. Ltd.: http://www.warburgpincus.com/
  • Waygate Capital India Pvt. Ltd.: http://www.vjive.net/
  • Yes Bank Ltd.: http://www.yesbank.in/

 (Reference: www.indiabiotech.in)

           III.                Business loan by Banks

Now banks promote people to go for biotech business, provided the business proposals submitted by them are not too risky, based on proper market survey. There are several business concerned with biotechnology, which can be started at reasonable capital. Some of them even don’t require very technical specialties and infrastructure. You can take the help of so many Biotech Business Consultancies.  

Business loans are given by following Banks** and financial sectors:

AbnAmro: www.abnamro.co.in/ProductsnServices/Consumer/Loan_Products/loanproduct-business.html

Bank of Baroda: click http://www.bankofbaroda.com/bbs/index.asp

Canara Bank: click http://www.canbankindia.com/interest/riloansroi-ind.html

Central Bank of India: Click http://www.centralbankofindia.co.in/english/loans.asp

Citibank: http://www.citibank.co.in/.

Corporation Bank: www.corpbank.com/asp/0100text.asp?presentID=113&headID=20.

Oriental Bank of Commerce: http://www.obcindia.com/uniquepage.asp?id_pk=33.

Union bank of India: Click http://www.unionbankofindia.co.in/ln_union_trade.aspx

AXIS (UTI) Bank: http://www.axisbank.com/personal/loans/studypower/Study-Power.asp 

Yes Bank has identified Biotech as the key area for funding support.

Bank of Baroda Rs 10 crore

Punjab National Bank Rs 5 crore

‘Biotechnology Venture Fund’, a public-private partnership between Ventureast Group and Andhra Pradesh Industrial Development Corporation (APIDC).

Andhra  Pradesh  Industrial  Development Corporation (APIDC),

Axis Holdings,

Chrys Capital,

3i, ICICI

Venture,

Kotak Mahindra,

Nadathru Holdings,

UTI Venture Funds, and

Yes Bank.

CANBANK Venture Capital Fund’s third fund CVC-F3 jointly launched in association with the Small Industries Development Bank of India. CVC-F3 which has a corpus of Rs 30 crore is expected to invest about Rs 3 to 3.50 crore in each of the firms which have been identified.

The  Gujarat  Biotech  Venture  Fund  (GBVF)  a  12  year close-ended  fund  managed  by  Gujarat  Venture  Finance Limited (GVFL), has a target corpus of about US$ 122 million. The GBVF has committed itself to invest in start-ups as well as in early-stage companies involved in areas of biopharma, bio-agri,  contract  research,  and  industrial  biotechnology.

GVFL  announced  it s  intention  of  providing  almost US$ 487,000 for early stage biotech funding to Ahmadabad-based Celestial Biologicals in September, 2006.

KPMG Corporate Finance (Banglore) interested in providing financial assistance to some small start-up biotech companies (with sound management capabilities) who may be in bioinformatics, contract research

Reliance Industries Ltd.  is  partaking  in  the  US$  27 billion  venture  financing  space  in  India  through  Reliance Life  Sciences  (RLS).  RLS recently invested between US$ 40 to 50 million in a US$ 650 million biotech venture fund, titled MPM BioVentures IV, floated by US investment management firm MPM Capital. RLS will invest in start-up Indian biotech companies that are into R&D.  RLS expects to gain business from at least two-thirds of the clients who will be associated with the US$ 650 million fund by MPM. RLS expects that its involvement in this fund will enable it to gain access to intellectual capital and the capabilities for the management of life sciences venture fund.

International Investors

Among international investors, the International Finance Corporation (IFC-the private sector arm of the World Bank Group)  committed  equity  of  up  to  US$  4  million  to  the APIDC  Biotechnology  Fund.  The fund was established by APIDC Venture Capital Ltd., the organization that launched India’s first biotech focused VC fund. The final closing of the fund was in April 2005, resulting in total fund amounting to US$ 37 million. Important investors who contributed to the fund include IFC, Washington, APIDC (a State Government institution), Life Insurance Corporation, Andhra Bank, and the Technology Development Board (TDB), a Government technology funding institution.

In August 2006, Avestha Gengraine managed to raise around US$ 24 million from European banks to expand its facilities and product pipeline. Other global entities that are interested in investing into Indian biotech include Bank of America and Citibank.

ICICI,  India’s  largest  private  sector  bank,  announced in  late  2006  that  it  has  allotted  over  US$  243  million  for the  funding  of  small  pharma  and  biotech  companies  and projects  in  the  country.  Of  the  corpus,  ICICI  had  already approved loan applications worth US$ 155 to 170 million. The  bank  has  inducted  people  from  the  biotech  industry in  order  to  ensure  better  understanding  of  the  way  the industry  works,  and  thereby,  service  the  industry  in  the most  optimal  manner.   ICICI has signed a MoU with the Government of Maharashtra to provide banking services in the biotech sector within the state.

The Government of Maharashtra has also signed three other  MoUs  with  leading  banks  in  an  effort  to  provide funding  for  biotech  projects  in  Maharashtra. These MoUs have  been  signed  with  the  Punjab  National  Bank,  State Bank  of  India  (SBI),  and  the  new  private  sector  entity, Yes Bank. The agreement asks that the banks to provide timely and  necessary  credits  and  cater  to  other  financial  needs of  biotech  entrepreneurs.  SBI  will  be  handling  about US$  170  million  of  the  total  US$  1.09  billion,  an  amount that has been set aside for small and medium enterprises and  mid-corporates  in  Maharashtra  and  Goa.  Yes  Bank has  an  exposure  of  about  US$  36  million  for  various biotech  companies  and  the  bank  has  also  decided  on  a US$ 125 million life sciences fund out of which some part will  be  allocated  to  biotech  companies.  The Government of Maharashtra is also planning a biotech fund named Maharashtra Biotech Fund this fund will be created out of budgetary allocation

Other Support

  • Facilitating technology validation and development – Contract Research Scheme (CRS): This scheme was launched in January this year and the first call for projects was closed on February 29.
  • Creating world class quality Incubation space (Bio-incubators) for entrepreneurs and start-ups: Bio-incubator Support Scheme – BISS: In order to foster techno entrepreneurship in biotechnology, BIRAC has initiated a scheme for strengthening and up-gradation of the existing bio-incubators and also to establish new world class bio-incubators in certain strategic locations. These bio incubators will provide the incubation space and other required services to start-up companies for their initial growth. Projects initiated: Seven existing bio-incubators across the country have been strengthened and approximately 55,000 square feet of bio-incubator space has been created to support start ups.
  • Technology Transfer and Acquisition: Mapping of both knowledge and technologies in organisations involved in innovation research is essential. For this BIRAC has initiated technology mapping at national and international level. In order to acquire new important technologies either nationally or globally, BIRAC plans to launch a Technology Acquisition Fund. These would be for public good novel and affordable products. BIRAC has so far facilitated discussions on technology transfer of cardiovascular drugs, infant care systems and formalized technology acquisition from Queensland University Australia for bio-fortification of banana etc. BIRAC intends to work closely with those research organizations which are involved in innovative research and help to create technology transfer capacity.

 

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