Google.org, Google’s philanthropic arm, is teaming up with the Soros Economic Development Fund (SEDF) and the Omidyar Network to help boost small- and medium-sized businesses in India secure funding.
The joint venture, called the Small to Medium Enterprise Investment Company for India, has initial funding of $17 million and will target the “Missing Middle” between microfinancing and commercial capitalization. The trio will provide investments of between $500,000 and $3.5 million equity investments for small and medium-sized enterprises lacking access to formal funding options.
“With this investment, we will meet the huge demand to serve smaller businesses in India that have little access to finance,” said Neal DeLaurentis, Vice President of Soros Economic Development Fund. “Long
ignored by commercial capital markets, small and medium businesses are an attractive investment opportunity as well as an engine for economic growth for India.”
While a person can get a small personal loan, and a large business can get funding via commercial banks and private equity funding, smaller businesses needing funding beyond personal loans but less than what major companies need are left out in the cold.
“While SMEs in rich countries represent half of GDP, they account for a much lower portion in developing economies like India, partly because SMEs don’t have access to the same type of financing,” said Sonal Shah of Google.org. “Our goal is to increase the flow of capital to SMEs in India. This is an important step in helping to attract commercial capital and reduce dependency on philanthropy or soft capital to fund this industry.”
