Grameen Fund is a venture capital fund established in 1994, which is a pioneer in venture financing in Bangladesh. Emphasizes on risky ventures with untested technology/products generally denied credit from more traditional lending institutions.
Despite its highly successful credit program for the rural poor, Grameen Bank has come to realize that its long-term developmental objectives require establishing a mechanism to provide high volume risk capital. The Bank has encountered many ideas, technologies and approaches that can lead to business which are Ceconomically compelling and socially progressive and do not fall within the scope of Grameen Bank's initial objectives of providing micro credit loan to the ultimate poor. These opportunities, however, do not neatly fit in with the regular lending program of the Bank whereby a borrower takes a small loan to enter a time- tested well-established business. Thus a mechanism becomes necessary to back the commercially potential but untested businesses and manufacturing concerns yielding benefits for the destitute. Grameen Fund was established to fill up this risk capital gap for the promising ventures that ensures good retum on equity Investments as well as direct and indirect benefits for the rural poor.
Small-scale industries based on innovative technologies and untested products and markets would be given favorable consideration by GF as long as the projects appear promising from the perspective of social benefits and commercial viability.
The following points play a favorable role in evaluation and decision making process of a project proposal:
Such 'Risky' businesses usually require a prolonged lead period to yield income and substantially large amount of capital. These businesses, that would directly raise the productivity of the rural and urban poor, require financing to manage their untested technologies, products and markets.
Grameen Bank has been engaged in providing funds to the risky ventures in the rural areas in development of small industries, fisheries and agriculture out of its Social Venture Capital Fund (SVCF) and lent Tk.491 million to the young and potential entrepreneurs. The necessity of a formal institution with quintessential in-house capability of sourcing, financing, developing and managing the ventures with innovation and untested technologies culminated in the establishment of the Grameen Fund. Initially it inherited 40 projects worth Tk. 391.2 million from SVCF projects of Grameen Bank. In the brief period of its existence, it has provided equity as well as management support to 12 new companies having innovative products. It has also provided bridge loan to some of these companies to enable them to acquire full operational capacity and consequently attain the capacity to borrow from the commercial banks.
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