The Venture Capital Funds for Scheduled Castes (VCF-SC) is a ministry project of the Ministry of Social Justice and Empowerment, Government of India, which seeks to encourage entrepreneurship amongst Scheduled Castes (SC) communities. The scheme is aimed at facilitating innovation, technology-based businesses, start-ups and scalable businesses by availing access to concessional finance in the form of debt, convertible instruments, and equity involvement.
This fund is key in bridging the existing credit crunch experienced by SC entrepreneurs in many years as it provides low cost capital, flexible tenure and professional investment services.
Objective of the Venture Capital Fund for Scheduled Castes
The main goal of VCF-SC scheme is to:
- Encourage entrepreneurship and self-employment among Scheduled Castes
- Support innovation, technology adoption and asset creation
- Enable SC-owned enterprises to scale sustainably
- Provide long-term concessional finance where conventional lending is difficult
The scheme gives a priority to manufacturing, services, allied sectors, start up and technology-oriented initiatives including those sponsored by established incubation centres.
Implementing Ministry and Authority
- Ministry: Ministry of Social Justice and Empowerment
- Government: Government of India
- Fund Manager: IFCI Venture Capital Funds Limited
The applications through the scheme are welcome online, and therefore transparency and accessibility are guaranteed.
Financial Assistance Under VCF-SC
Size of Financial Assistance
- Minimum funding: ₹10,00,000
- Maximum funding: ₹15,00,00,000
- Aggregate financial assistance must not exceed twice the current net worth of the company
Funding Instruments and Interest Rates
Debt / Convertible Instruments
- Interest rate: 4% per annum
- For SC women entrepreneurs and disabled entrepreneurs: 3.75% per annum
Equity Investment
- Exit return: 8% per annum or valuation-based return, whichever is higher
- Exit routes include buyback, strategic investment or IPO
Funding Tenure
- Maximum tenure: Up to 10 years
- Includes moratorium period for debentures
- Equity exit decisions are taken on a case-to-case basis, within the 10-year limit
Key Benefits of the VCF-SC Scheme
Working Capital Gap Funding
- Up to 20% of total financial assistance may be allocated
- Applicable for a period of up to 10 years
- Approved by the Investment Committee based on project requirements
Technology Business Incubator (TBI) Support
- Innovative projects selected by TBIs are eligible
- Funding up to ₹10,00,000 per year
- Maximum duration: 3 years, subject to satisfactory progress
Moratorium on Principal Repayment
- Applicable for debentures
- Maximum moratorium period: 36 months from date of investment
Documentation Cost Support
- Valuation and legal fees for the first valuation and title search are borne by the fund
- Subsequent changes requested by promoters must be paid by the company
Disbursement Pattern
For Assistance Up to ₹5 Crore
- Fund contribution: Up to 75% of project cost
- Promoters/Government subsidy: Minimum 25%
For Assistance Above ₹5 Crore
- Fund contribution: Up to 50% of project cost
- Promoters/Government subsidy: Minimum 25%
- Remaining 25% can be funded by banks or financial institutions
Disbursement is:
- Made in tranches
- Released post execution of complete legal documentation
- Linked to promoter and bank contribution where applicable
Mandatory Conditions
- Interest payments are made quarterly
- SC entrepreneurs must maintain at least 51% shareholding until the assistance exists
- Working capital support to existing beneficiaries requires a standard account status
- Promoters must contribute at least 15% where Government subsidy is involved
Eligibility Criteria
Eligible Sectors
- Manufacturing
- Services and allied sectors
- Start-ups
- Technology-oriented innovative projects
- Incubated ventures ensuring asset creation
Eligibility Based on Funding Amount
For Assistance Up to ₹50,00,000
Companies must have:
- At least 51% SC shareholding with management control for 6 months, or
- Be a successor entity of an existing business with similar SC ownership history
For Assistance Above ₹50,00,000
Companies must have:
- At least 51% SC shareholding with management control for 12 months, or
- Be a successor entity with at least 12 months of prior operation
Technology-Oriented Innovative Projects
Eligible cases include:
- Projects supported by IITs, NITs, universities, DST incubators or corporates
- Patent or copyright-backed innovations
- Projects sanctioned by Government of India departments
Documentary proof of SC status and innovation support is mandatory.
Exclusions
The following are not eligible:
- Entrepreneurs from Scheduled Tribes, OBCs or General category
- Proprietorships, Partnerships, OPCs and LLPs for direct financing
Application Process (Online)
Step 1: Registration
- Visit the official application portal
- Create an account and verify email/mobile if required
Step 2: Application Submission
- Log in and complete the online application form
- Upload required documents in prescribed format
- Review and submit the application
Note: Applications remain valid for six months.
Post-Application Process
- Screening Committee Review – Preliminary evaluation
- Detailed Appraisal and Due Diligence – Site visit and assessment
- Investment Committee Decision – Final approval or rejection
- Letter of Intent and Legal Documentation
- Valuation and Title Search – Conducted at fund’s cost (first instance)
Disbursement of Funds
- Disbursement occurs post legal documentation
- Released at IFCI Venture Capital Funds Limited, Delhi
- Made in tranches based on compliance with sanctioned terms
Documents Required
- Caste Certificate
- Detailed Project Report
- Incubation or innovation support documents (if applicable)
- Patent or copyright documents (if applicable)
- Government sanction or subsidy letter
E-documents are accepted.
Frequently Asked Questions (FAQs)
Is this fund exclusively for Scheduled Caste entrepreneurs?
Yes, the VCF-SC scheme is not created concerning the Scheduled Castes.
Can a newly incorporated company apply?
Yes, so long as it is a successor entity, with the necessary ownership history of SC.
Is 51% SC shareholding mandatory after funding?
Yes, it should be continued during the period of assistance.
Can LLPs or proprietorships apply directly?
No, direct financing can only be applied by eligible companies.
Is there special support for women and disabled entrepreneurs?
Yes, they are offered a reduced interest on the debt instruments.
Conclusion
The Venture Capital Fund of Scheduled Castes is a revolutionary financial tool, which seeks to empower the SC business persons by providing them with capital at low costs, over-long term assistance and professional management of investments. With innovation, technology and scalable business models, the scheme provides new opportunities to the inclusive economic growth and sustainable enterprise development in India.
VCF-SC offers a great chance to grow, develop, and prosper, to the SC entrepreneurs who want to attract growth oriented financing outside the normal lending channels.
