Seed Capital Assistance to Grassroots Level Entrepreneurs
I Create India is a not for profit organization involved in Entrepreneurship Development and Training at Grassroots Level. In its journey of last 15 years, it has helped create more than 2700 entrepreneurs in different rural and semi-urban areas of India through the centers it has established. I Create has worked with youth – ranging from the academic Institutions, Polytechnics, Vocational centers to unemployed youth, school drop outs, and anyone interested in starting a business; it has also worked with women from various disadvantaged backgrounds. I Create’s training has helped these people move from below poverty line to above and sustain themselves in the process. To make a significant impact on the unemployment situation in India, and to create awareness that entrepreneurship is a viable option as compared to seeking jobs, efforts are being made to push this concept widely and deeply. For this, I Create conducts program on entrepreneurship through its 19 centers (and growing) for the Youth and Women.
I Create, through its years of experience working at the grassroots level, has concluded that there are three aspects critical to success in Entrepreneurship-
(i) Training in Entrepreneurship Skills,
(ii) Access to Capital and
These are over and above the domain knowledge one must possess or acquire.
Access to capital for grassroots level entrepreneurs is very difficult. Many government schemes do not reach these people due to the apathy and low priority accorded by implementing organizations. Money from MFIs is frightfully expensive. We have experienced the difficulty the budding entrepreneurs face in getting access to capital in spite of having a good business plans.
Having analyzed the situation and lived through this dilemma in many areas ICreate has worked in providing entrepreneurship training, it felt that a financial assistance arrangement like returnable Seed Capital is an alternate innovative model to fill the gap between traditional banking (including MFI model) and grant based donor financing. I Create piloted a study on providing seed capital to those who were trained by I Create and had their own individual business plans. The seed capital provided by I Create helped these selected few make sure that their plans saw the light of the day, thus validating that a low-cost and no-hassle capital impetus goes a long way in entrepreneurship development. While I Create helped a few while testing the idea, there are many more who will be trained but will have nowhere to go for capital.
MAGIC (Mentorand Angel Groupof I Create) Fund, conceived and being implemented by I Create,is intended to supplement the training we provide, by providing access to capital and mentoring. Under MAGIC, at each of the centers a network of mentors, who are willing to spend time in helping budding entrepreneurs (from grassroots level in urban and semi-rural areas, members of SHGs and other groups), is being created. They will help the trained entrepreneurs (who would have been trained by I Create Centers spread across India) in fine tuning their business plans for accessing capital.
MAGIC Fund is being created from grants, donations and other no or low cost sources to provide assistance to entrepreneurs to start their enterprises. This assistance, in the form of bridge finance (6 months) or seed capital (25 months) will be provided through I Create Center and NGO partner (responsible for disbursement and collection). This is a revolving fund and money repaid by entrepreneur will be used to assist other entrepreneurs. Service fee of 1% per month, on declining balance, will be levied and this will be utilized for meeting administrative costs of disbursement and collection by participating NGO and I Create Centers. Success with a pilot program conducted with one of the centers and an NGO has given us the market validation to propose this plan.
Our goal is to create a sizable corpus to disburse the Seed Capital amounts to the small budding entrepreneurs so that their dreams of setting up and running their own enterprises are realized. Median value of the assistance is expected to be Rs.25, 000/- and median period of repayment would be 25 months.
a) Provide Seed` Capital and/or Bridge Finance to those trainees who have undergone the Training on Entrepreneurship from I Create and have a good viable business plan.
b) Reach out to the specified target group of people who are marginalized and economically backward including the youth to take part in I Create program.
c) Mentor them through the process and help sustain their business and livelihood.
Expected Outcome and Impact
· MAGIC fund, through mentoring and providing access to capital (coupled with prior training in entrepreneurship provided by I Create), will boost the creation of viable grassroots entrepreneurs. Magnitude of the impact will depend on the size of the corpus we are able to raise.
· Illustratively, Rs. 5 lac contribution can assist between 60 to 70 entrepreneurs over a 36 month period. Thereafter, the fund will still be intact and an annual impact of 20 new businesses can be foreseen.
I Create is approaching many donors and organizations for grant to support the MAGIC Fund in its endeavor to uplift the target group who have been trained in I Create’s methodology, and have been mentored on their business plans to set up business and hand hold them till they are able to stand by themselves.