'We can gauge an MSME with its GST data,' say investors at Assocham meet

India's apex Chamber of Commerce and Industry, ASSOCHAM, celebrated World Entrepreneurship Day on August 21 by organising an annual conference and awards ceremony in New Delhi.

The event was vivid with discussions and comprised of diverse set of panelists, ranging from academia to investors to businessmen.

In an interactive discussion investors Vikram Gupta of Ivy Cap Ventures Advisors Private Limited, Raman Aggarwal of Srei Equipment Finance Limited, Mahendra Swarup of Venture Gurukool, and Aayush Jain of Unicorn India Ventures, talked about access to capital and how digital can be a gamechanger. If you are an Micro, Small, and Medium Enterprise (MSME), we decode for you everything that investors had to say.

• Look beyond banks for funds: While the issue regarding availability of funds to MSMEs is a genuine concern, we really need to look beyond the banking system. Not everything has to be done through the banks. This mindset needs to change.

• We can gauge an MSME with its GST data: GST, apart from a being a major tax reform, would prove to be of immense help for MSMEs. The moment an MSME is registered under the GST and it starts filing returns, that data in the near future would be made available to financial institutions, which would use it to gauge an enterprise’s potential and subsequently take a call on investment.

• Associate with an industry body or a chamber: It is important for an MSME to be associated with at least one trade body or a chamber so that it is not left out of any important information which gets disseminated to the industry whenever the government takes a decision in which industry is a stakeholder.

• Gone are the days for providing a collateral security: Funds can be raised now using intangible assets like receivables. Gone are the days for providing credit against a collateral. These are the things which are going to be favored, all the more because there is sufficient legislation in place now.

• Yes, software ventures attract more funds than manufacturing: That is because a venture capitalist wants to scale fast on growth, and software businesses can scale way faster than a manufacturing businesses. They can cross boundaries and countries way faster than a manufacturing business.

• Funds allocation in last 10 years: Software v/s manufacturing: In the last 10 years, most of the investments have gone into software and not into manufacturing. This happened because the entire story in these years revolved around platform businesses, connecting consumers to the right vendors. We needed cabs, we needed groceries. Given that India is a huge consumer economy, this had to happen.

• Is the future grim?: Not really. A lot of funds have come up now dedicated to manufacturing in electronics and robotics. For the next 10 years, there will be a lot of investment in developing hardware technology.