Union Communications and IT Minister Ravi Shankar Prasad  launched the Electronics Development Fund(EDF) to support early-stage, angel, venture and private equity funds focusing on electronics, nano-electronics and information technology. The Electronics Development Fund policy was announced by Prime Minister Narendra Modi during the launch of Digital India week in July last year(2015). The government has appointed Canbank Venture Capital Fund to house the Electronic Development Fund in 2015. The fund has an initial corpus of Rs 2,200 crore.

CONTEXT

Electronics permeates in all sectors of economy and has great economic and strategic importance. A major characteristic of the electronics sector is the importance of R&D and innovation due to high velocity of technology change. Intellectual Property is the most critical differentiator and a determinant of success for an electronics company.

The “Digital India” programme of the Government envisions developing Electronics System Design and Manufacturing (ESDM) with the objective of net zero import and setting up of Electronics Development Fund (EDF) as a step in this direction. The National Policy on Electronics (NPE) also envisages setting up of an EDF.

The NPE proposes that EDF will be set up as a “Fund of Funds” to participate in “Daughter Funds”, which in turn will provide risk capital to companies developing new technologies in the area of electronics, nano-electronics and IT. The supported Daughter Funds will promote innovation, R&D and product development within the country in the specified fields of ESDM, nano electronics and IT. They will also support acquisition of foreign companies and technologies for products imported in India in large volume. The core focus of the Daughter Funds would be to develop domestic design capabilities. The Daughter Funds supported will create a resource pool of IP within the country in the specified fields.;creation of an ecosystem for providing risk capital to both industry and academia to undertake research and development in these technology areas. It will, in the process, enrich the intellectual property in the country and encourage more entrepreneurs towards product and technology development. The EDF would take minority participation in Seed Funds, Angel Funds and Venture Funds dedicated in this area. EDF will support both Indian and foreign funds which are registered in India and comply with SEBI and other regulations in this regard.

CROSS REFRANCES

                                                                                 START UP COMPANY

A company that is in the first stage of its operations.

                                                                                          SEED CAPITAL

The initial capital used to start a business. Seed capital often comes from the company founders’ personal assets or from friends and family. The amount of money is usually relatively small because the business is still in the idea or conceptual stage. Such a venture is generally at a pre-revenue stage and seed capital is needed for research & development, to cover initial operating expenses until a product or service can start generating revenue, and to attract the attention of venture capitalists. Capital providers will want to wait until a business is a little more mature before making the larger investments that typify the early stage financing of venture capital funding.

                                                                          VENTURE CAPITALIST
Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.Venture capitalists look for a strong management team, a large potential market and a unique product or service with a strong

competitive advantage. They also look for opportunities in industries that they are familiar with, and the chance to own a large percentage of the company so that they can influence its direction.