Dr. Subhas C. Mohapatra, President, IAFF, 1413 Boxwood Lane, Apex, NC 27502, Ph.(919)362-7653. Web site: http://www.iaff1.org/ , http://mail01.mail.com/scripts/mail/compose.mail?compose=1&.ob=aa9a80361d83d3f10246a80173463ef053681da4&composeto=iaff10@yahoo.com&composecc=&subject=&body=
I have been discussing with many different friends (not Oriyas in particular but my friends in the corporate sector who are involved in developmental issues of North Carolina, especially Eastern North Carolina, the poorest area of the state) to get ideas on what type of mechanism could be developed to accomplish the goals in measurable time. I do not know how much you and others in India know about the concept, mechanism and role of Venture Capital, but most who are in research and corporate sector of USA are familiar with this topic. It was therefore natural that my friends invariably directed me in the direction of venture capital. With this impetus from my friends, I have been talking to some of my Physician friends (these are all Oriyas) about the prospects of setting up a venture capital for rural development of Orissa. Just as I was progressing cautiously and slowly, the article attached hereto came in the news paper today. It heightened my excitement to such a level that I felt it is time for me to come out and talk about it publicly. I hope readers of this forum will enjoy reading the article as much as I did. For those who do not have much time, I have changed to red font those points which stood out most in my mind.
I am not going to go to details here because in this posting it is not my intent to start a discussion or debate on the topic. Rather, it is an invitation to individuals to communicate with me privately or publicly if they have any questions or suggestions and desire to participate. In this context, however, I wish to give a little background that many readers probably do not know because it happened in another medium called Ornet. This background is pertinent because some people will have a natural tendency to question with curiocity my motives. intents, objectives, experience etc.
The venture capital concept I am proposing here is not just a day dream for me or an off the cuff whimisical proposal to pick others' pockets in the name of Orissa's rural development. In fact, I have been toying with the this venture capital concept for the last five years or longer to augment Rural development Orissa. When I started the Agriculture Institute in my village to train farmers and NGOs in new technology, I found that I have quite a bit of assets but no cash at hand because I had just retired and was without a salary. Therefore, I publicly requested the readers through Ornet or MyOdisha (or may be both) to loan me money against the guarantee of my assets in the USA and India. It was hard for me believe that in about two weeks readers (some of them are close friends and some total strangers whom I still have not met) helped me raise aboout $15000 dollars. Those who were kind enough to support me received legal documents to recover their money from my estate if I die before payment or default in doing so. Thus, I used this as a venture capital against myself to start the Agriculture Institute which is now not only a self sustaining entity, but generates about Rs.5000 every year for IAFF projects in Orissa and trains at least 15 people each year in new agricultural technology..I am now ready to return this money to my friends in 2008 with 5% interest. The caveat is that the money will be returned in Rupees. When I pledged the 5% interest in 2003, the bank interest rate on passbooks in India was less than 3% and in USA it was less than 2%. In fact, one of my friends was so concerned about the potential risk/liability I am undertaking (that is why it is called venture capital) that he offered from his side to accept only 3% interest.
One might ask if I did it before why am I not doing it now? Well, reasons are many, but the most important are: 1) I can not undertake new loans before I can pay back the money I already owe. This means the work has to wait until after 2008. In the words of David Murdock, the billionare owner of Dole foods, any decision that takes longer than an hour is late and if takes more than two months it is eternity. By that standard, wating until after 2008 probably amounts to the prospect of not doing it ever. 2) With several health set backs in health set backs, I am not only closer to death now than I was in 2003, but I also have lost quite a bit of mental toughness 3) Family liabilities are such (children in marriage age) that I am afraid to undertake risks that I did when I did not have to worry aobut these factors. 4) While $15000 was enough to start the Agriculture Institute the capital needed to jump start rural development through venture capital will need at least twice that much, if not more. My unusual step of seedking loan through internet-based fund raising has lead to a much bigger effort which resulted in hundreds of thousands of dollars to create a micro-finance bank by BISWA (Sambalpur) for rural development. I do not know whether this effort will be successful, but it has been done and doable. Yet some other people might ask if there is micro finance bank where is the need for venture capital? I do not know the laws in India. But in USA banks are prohibited from giving high risk (that is collateral free) loans wehreas non-bank lenders can do this. Reasons for this are simple. Banks are public institutions in that they hold public funds in trust where as venture capitalists lend their own funds, not public fund. I hope the above back ground and this explanation will answer many preliminary questions interested people might have. I will be happy to answer addtional questions (but not engage in discussion) privately or publicly. But i will not participate in a public debate. The reasons for this are also very simple straightforward: those who believe this is a dumb idea and is can not be done or should not be have many strong points. On the those who believe it should be done are welcome to participate. DOCUMENT ATTACHED
love
NEWS AND OBSERVER
April 26, 2007
A NEW IDEA: FOR-PROFIT FUNDS
David Rainy, Staff Writer
Nonprofit NC IDEA spins off a venture capital fund with a $25 million goal.The executives who run a nonprofit economic development organization in Durham hope to raise up to $25 million for a new venture capital fund that is strictly a money-making venture .
IDEA Fund Partners -- an outgrowth of N.C. Innovative Development for Economic Advancement, better-known as NC IDEA recently closed on an initial round of capital raised from institutional and individual investors. The fund expects to complete its fundraising efforts before the end of this year, partner Merrette Moore said. Moore declined to divulge how much investors have committed, but said: "We are well on our way to $25 million." Venture capitalists invest in young, privately held companies with high-growth potential, which in turn use the money for purposes, including hiring employees and developing products.
The new fund is welcome news for Triangle entrepreneurs, because venture capitalists like to invest in their own backyard so they can keep an eye on their investments. IDEA Fund also plans to invest in start-ups and early-stage companies, which are the riskiest investments and therefore tend to have the most difficulty raising outside funding .
The nonprofit NC IDEA was formed in 2003 as a spin-off from MCNC, a nonprofit founded by the General Assembly that received state funding until the late 1990s. NC IDEA inherited a $25 million fund to invest in early-stage companies; that fund isn't making any new investments, although it has reserves for making follow-up investments in the companies it already has funded.
Although the nonprofit has limited its investments to companies based in North Carolina, the for-profit IDEA Fund will prospect for good investments throughout the Southeast, said Moore. Still, he said, "This new fund will concentrate on North Carolina. We're early-stage [investors] and it's good to have proximity to the companies you invest in." Moore said the IDEA Fund already has invested in two Triangle companies but isn't ready to discuss details.
The fund expects to make initial investments of between $250,000 and $1 million per company. Industries that it is focusing on include information technology, medical device, materials technology and companies that straddle the information technology and biotechnology industries." We don't foresee investing in drug research," Moore said. The management team at NC IDEA also will run IDEA Fund Partners, led by David Rizzo, who is president and CEO of NC IDEA and managing partner of IDEA Fund. The other IDEA Fund partners are Moore, John Cambier and Lister Delgado. Several Triangle venture capital funds have raised money recently, including Southern Capitol Ventures, Hatteras Venture Partners and SJF Ventures.
The flurry of fundraising activity is largely coincidence, but "the market is a little more frothy than it has been in previous years," said Southern Capitol founding partner Ben Brooks. "There is plenty of money out there."
love
NEWS AND OBSERVER
April 26, 2007
A NEW IDEA: FOR-PROFIT FUNDS
David Rainy, Staff Writer
Nonprofit NC IDEA spins off a venture capital fund with a $25 million goal.The executives who run a nonprofit economic development organization in Durham hope to raise up to $25 million for a new venture capital fund that is strictly a money-making venture .
IDEA Fund Partners -- an outgrowth of N.C. Innovative Development for Economic Advancement, better-known as NC IDEA recently closed on an initial round of capital raised from institutional and individual investors. The fund expects to complete its fundraising efforts before the end of this year, partner Merrette Moore said. Moore declined to divulge how much investors have committed, but said: "We are well on our way to $25 million." Venture capitalists invest in young, privately held companies with high-growth potential, which in turn use the money for purposes, including hiring employees and developing products.
The new fund is welcome news for Triangle entrepreneurs, because venture capitalists like to invest in their own backyard so they can keep an eye on their investments. IDEA Fund also plans to invest in start-ups and early-stage companies, which are the riskiest investments and therefore tend to have the most difficulty raising outside funding .
The nonprofit NC IDEA was formed in 2003 as a spin-off from MCNC, a nonprofit founded by the General Assembly that received state funding until the late 1990s. NC IDEA inherited a $25 million fund to invest in early-stage companies; that fund isn't making any new investments, although it has reserves for making follow-up investments in the companies it already has funded.
Although the nonprofit has limited its investments to companies based in North Carolina, the for-profit IDEA Fund will prospect for good investments throughout the Southeast, said Moore. Still, he said, "This new fund will concentrate on North Carolina. We're early-stage [investors] and it's good to have proximity to the companies you invest in." Moore said the IDEA Fund already has invested in two Triangle companies but isn't ready to discuss details.
The fund expects to make initial investments of between $250,000 and $1 million per company. Industries that it is focusing on include information technology, medical device, materials technology and companies that straddle the information technology and biotechnology industries." We don't foresee investing in drug research," Moore said. The management team at NC IDEA also will run IDEA Fund Partners, led by David Rizzo, who is president and CEO of NC IDEA and managing partner of IDEA Fund. The other IDEA Fund partners are Moore, John Cambier and Lister Delgado. Several Triangle venture capital funds have raised money recently, including Southern Capitol Ventures, Hatteras Venture Partners and SJF Ventures.
The flurry of fundraising activity is largely coincidence, but "the market is a little more frothy than it has been in previous years," said Southern Capitol founding partner Ben Brooks. "There is plenty of money out there."
Dr. Subhas C. Mohapatra, President, IAFF, 1413 Boxwood Lane, Apex, NC 27502, Ph.(919)362-7653. Web site: www.iaff1.org
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