Russian Conglomerate Sistema JSFC Sets Aside $50 Mn Asia Fund For Indian Startups

Looking at the progressive growth of Indian startup fraternity, investors, accelerators and incubators from all over the world have shown interest to invest in the sector. After the big ticket size investors from the US and China, now its Russian conglomerate, Sistema Joint Stock Financial Corporation (JSFC), who wants to invest in the Indian startup ecosystem. It has floated a proprietary $50 Mn (INR 340 Cr) Asia Fund to support Indian startups operating in the technology and niche consumer retail segments.

In a conversation with ET, Sistema JSFC’s Group CFO Vsevolod Rozanov said, “The Sistema Asia Fund will start with an initial tranche of $50 Mn, which will be increased significantly in the near future once our startups financing business grows in India.”

The fund would be a Singapore-registered fund advised by Insitel Services, the wholly-owned Indian unit of Sistema JSFC. The corporation has not identified a potential ticket-size for investment yet. However, the sources close to the development said that the financing could be above $1 Mn each.

For managing investments in India, Andrey Terebenin, an ex-Sistema JSFC executive board member, has relocated to India as senior managing partner of Insitel to oversee the advisory services function of Sistema Asia Fund.

Terebenin said that in the first wave, Sistema Asia Fund will provide early-stage financing to startups who already have a revenue stream. “We will typically fund tech startups and others involved in innovative consumer-centric businesses aligned with the ecommerce/online retail model such as furniture leasing, food delivery to payment gateways. We will shortly close a couple of early-stage financing deals with Indian startups operating in its preferred domains soon”, he added.

Sistema that has over $10 Bn of annual revenue owns stakes in predominantly Russian companies from various sectors of the economy, including telecommunications, utilities, retail, high tech, pulp & paper, pharmaceuticals, healthcare, railway transportation, agriculture, finance, mass media, tourism, etc.

Interestingly, Sistema’s decision to diversify into the Indian startup financing scene comes at a time when Anil Ambani-led Reliance Communications is taking over the Russian conglomerate’s Indian mobile telephony venture, Sistema Shyam Teleservices, which operates under the MTS brand.

Rozanov added that Sistema JSFC has an abundance of investible resources and funding startups could be a great way to leverage knowledge about how business works in India by virtue of our presence in the telecom business, and also at a time when the Modi-led government is committed to galvanising the startups ecosystem.”

The Prime Minister Narendra Modi recently unveiled the Startup Action Plan that promised certain tax benefits to the startups. It mentioned that there will be no tax on profits for the first three years, no capital gains tax on assets sold to fund a startup, a self-certification-based compliance system for new firms, no inspection for three years and a single-point interaction hub. The government would also have an INR 10,000 Cr fund for startups to prosper.

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