Taking cue from the Finance Ministers Budget Speech 2013, of facilitating enabling environment to encourage Startups have better access to risk capital and henceforth SEBI’s (Securities and Exchange Board of India) announcement of regulations for the Startup in October 2013, India’s leading stock exchange, NSE (National Stock Exchange), launched EMERGE-ITP, a unique regulated market platform for India’s Startup ecosystem in December 2013.
“EMERGE-ITP will lead to better portfolio churn and smoother flow of risk capital in the ecosystem. The response from start-ups, the Angel investing community and other early stage investors has been very encouraging”,
Stated Ravi Varanasi,
Chief Business Development, NSE”
EMERGE –ITP facilitates NSE listing of Startups and growing businesses without any Initial Public Offering (IPO) and helps connects them to a pool of informed investors including institutions, angel associations and venture capital funds.
Since there is no public offer (IPO), all that Startups need to do is prepare an Information Memorandum and file it with the exchange. The eligibility criteria require that such companies should have already received funding from either of a given set of investors or financial institutions.
To create awareness, NSE EMERGE-ITP platform is establishing connect with the Startup Ecosystem pan India through various channels such as TiE , India Angel Network, Investor Meets, Entrepreneurial and Startup ecosystems through organization such as Headstart Network Foundation, having the largest early stage Startup Network of India.
Startups and SMES eligible for Enlisting should have:
- Atleast 1 year audited financial statements
- Not been incorporated for more than 10 years
- Revenues < Rs 100 crore
- Paid up capital <Rs 25 crore
EMERGE-ITP, will facilitate Startups and Growing Companies in:
- Enabling visibility and lend credibility, amongst right set of stakeholder
- Help address the struggle for the initial round of risk capital, to a considerable extent
- Possibility of attracting new set of sophisticated investors in the company
- Option to dilute smaller stakes to informed investors on need basis
- Prepare a company for a wider fund raising in future
- ESOPs become a powerful tool to attract & retain talent
Investors and Lenders who will be part of the NSE EMERGE –ITP will be the ones who are already enlisted with organization such as:
- Association of Angels
- Scheduled Banks
- Registered Merchant Banks
- Qualified Institutional Buyer
- AIF, VC, Approved Investor
- Specialized international or domestic multilateral agency or PFI
For Investors and Lenders, the EMERGE-ITP platform will facilitate:
- Exit and Liquidity: Unlocking of shareholder wealth. Exit and Liquidity for VC/PE/Risk Investors
- Better portfolio Churn
- Better Returns: Exit from listed companies attracts only STT (Securities Transaction Tax) instead of Capital Gains tax
- Monitoring of invested portfolio becomes smoother due to benefits of disclosures and compliance requirements of regulated platform
- Enhanced ability to enter and exit investments