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Add venture capital

The National Association of Software and Service Companies
has a new job on its task list - providing venture capital!

Right now, it is talking with financial institutions, the Department of Electronics and the ministry of finance to give the funds a final shape.

T O D A Y

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NASSCOM Executive Director Dewang Mehta has said "We are discussing the setting up of the funds with member companies, financial institutions and officers of the DoE and the MoF. These are required to sustain the Indian software industry's current growth, which is the fastest amongst all industries."

The Indian software industry had recorded a turnover of Rs 39 billion for 1996-97. In the last 18 months, stocks of some of the infotech companies like Infosys Technologies Limited, Tata Infotech Limited, Satyam Computer Services Limited and Mastek Limited have appreciated over 300 per cent in market capitalisation.

But the figures still do not induce banks to fund working capital requirements. To make matters worse, compared to the US, the number of venture capital financed software companies is very low. This is despite India being the preferred country for outsourcing software development.

"The problem regarding financing is the lack of understanding of the software business. Banks still seek collateral for funding working capital requirements. To improve availability of working capital funds, NASSCOM is holding discussions with the Indian Banks Association. We are also in talks with the MoF and the Reserve Bank of India for revising their guidelines to this effect," claimed Mehta.

- Compiled from the Indian media

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