KARACHI, April 26: The first SECP-licensed Venture Capital Fund mandated to create start-ups culture and incubate high-tech companies was launched here on Saturday by Finance Minister Shaukat Aziz.
For the finance minister, it was an “exciting day” — a pioneering job in the direction of developing the knowledge industry and the new economy. He advised the private sector to identify new industries and urged the banks to stop investing in treasury bills and to develop new financial products. His focus was on small and medium-sized industries which serve as engine of growth and create jobs in developing economies. These can be funded by Venture Capital.
In an economy poised for growth, he noted that the private sector was responding. The Sialkot industrialists have identified 200 innovative products marketed in Europe that can be produced by them for exports.
Highlighting the significance of the event, the finance minister said it marked the “crowning” of the official efforts to reform and improve the financial system.
Venture Capital is entrepreneurial finance capital for funding new ideas and products and requires sophisticated skills. It is a high risk capital business. The TMT business model has been developed in consultation with gurus in the US like Saifee Qureshi and Atiq Reza. In recent years, the venture capital has been the driver of economic growth in the United States.
The setting up of more early stage venture capital funds like the TMT-PKIC Incubation Fund could open up gainful opportunities for high-tech professionals. “We are here to give the bright and talented professional youth a chance to prove themselves on the global level,” says Ali Ansari, Chairman TMT Ventures.
His claim is backed by the support and confidence that his venture enjoys from major financial institutions and security house that have stakes in the Fund, Habib Bank, Pak-Kuwait Investment Company, SME Bank, NIT and AKD Securities. Four of them are public corporations, whose network in the Middle East and other foreign countries could help attract business for TMT Venture.
And to quote Zaigham Rizvi, MD Pak-Kuwait on the supply side, Pakistan has a strong human talent in the IT field. The focus has to on the demand side, he adds. In a presentation, the Fund officials highlighted the business opportunities in the United States.
With a capital of Rs250 million, TMT-PKIC has already invested Rs63 million in telecom, media and technology sectors.
Specializing in incubating companies, the TMT Venture manages start-ups to turn them into successful companies. It is actively involved in business strategy level for the benefit of portfolio companies. The process starts from providing physical housing, high speed telecommunication connection, power supply and other facilities at the TMT Cyberport located at Clifton. In addition, the TMT Venture also provides a centralized system of accounts, finance, administration, audit, tax and legal services to portfolio companies, thus tasking out the hassles of doing business. The talented youth are left to focus on their core business and the creating minds work on ideas and products. The entire system is automated through an Intranet system.
TMT Ventures has introduced the concept of equity ownership for core management which invests 10-30 per cent in a combination of capital and sweat equity.
To encourage new players, Chairman Securities and Exchange Commission Mr Abdul Rehman Qureshi, in his keynote address, asked the government to extend the tax exemption on venture capital funds and companies currently expiring in 2007, to at least 10 years from the commencement of business.
