L&T Capital Company Ltd, the merchant banking arm of the cement and engineering giant Larsen & Toubro Ltd, has entered into a strategic alliance with Emirates Intellectual Embryo, a venture capital fund based in Dubai Internet City.
The alliance will incubate start-ups in the technology, media and telecom (TMT) sectors in India.
As per the arrangement between the two companies, Indian entrepreneurs having project ideas in the TMT sectors and wanting incubation assistance could approach the L&T Capital which will screen the proposals and forward viable ones to the Emirates Intellectual.
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Additionally, L&T Capital will also work closely with reputed technical institutes, research institutions, universities and corporate entities that are engaged in technology research and product development to originate incubation deals.
Emirates Intellectual, on its part, will fine tune the proposals with the help of its in-house technical and valuation analysts before funding (providing seed capital) a project.
Arif Khan, chief executive officer of Emirates Intellectual, said: "We provide venture capital to start-ups and help them in getting a global reach. Typically, we hold 25 to 49 per cent and commit anywhere between $ 150,000 and $ 1 million in any start-up."
Services provided by the Emirates Intellectual at Dubai Internet City during incubation, among others, include physical infrastructure - office space, IT services (high bandwidth Internet access) - mentoring & tutoring, project and human resource management assistance, marketing & distribution and raising capital.
Emirates Intellectual has an investment corpus of $ 5 million and is set to shortly raise $ 15 million by way of third-party funds from banks and high networth individuals in the Middle East to enhance the investible funds.
According to M Pushpangadan, chief executive of L&T Capital, the alliance will focus on deal flow & due diligence for new investments in India, co-funding opportunities, business development advice & co-branding, joint corporate advisory mandates, sales and marketing, and recruitment.
He said, "L&T Capital, or its associates, could either participate in viable start-ups at the first or second round of funding or scout for interested investors in the country." He added that the alliance would also set up an incubation centre in India at later stages.
Emirates Intellectual has been funding start-ups for four years. It is promoted by Viking Investment AMC of South Africa, Net Cradle of the UK and Techsoft Venture Inc.
Khan said the company has been funding solely through equity and holds a venture till the project is capable to run on its own. He added that this structure of financing leads a venture capital firm to strive and also to ensure that a start-up is a success.
Khan said Emirates Intellectual's exit strategy was primarily through the trade-sale route to corporates in the West.
Currently, the company is incubating 8 investments, of which two are Indian -- VK Ware, which has developed the Organisation 2000 to tackle the day-to-day administrative issues in educational institutions, and, Vaman Technologies, which has developed an RDBMS package that allows users to become vendor/tool/platform independent.