GAIL is an innovation and technology driven company operating in the field of Natural Gas and its derivatives. This company showed how start-ups can function properly by remaining viable amidst competition all the while attracting investments.
In order to stay competitive, it is required to keep abreast with the latest technological developments in our core businesses. Investment in Start-Ups in our Core Areas is likely to play an important role in our quest to remain competitive. So here is an insight into how they maintained this.
Company Mission and Investments
GAIL has created a corpus of ₹ 50 Crores to be invested in Start-Ups to support the Government of India (GoI) Start-Up initiative and to generate long-term commercial benefits. GAIL may also infuse further funds in this initiative based upon investment requirements and success of this initiative.
Our Mission for Start-Up Initiative is to Identify, Invest and Nurture Start-Ups that can become successful companies in the long run and provide profitable returns from this diversification.
Our 1st round of Solicitation has been successfully completed. We received 47 Investment Proposals and their evaluation has been completed. GAIL has selected 10 Start-ups for investment. This is the 2nd round of our Solicitation Process and is open from June 1, 2018 to June 20, 2019.
Selection Process for funding Start-Ups
Selection of Start-Up Proposal shall be a 4-Stage Process:
- Eligibility Screening
- The Start-Up Proposal should be in GAIL’s Core Area
- GAIL will consider Proposals for funding only from those entities that are considered as a Start-Up (as per Department of Industrial Policy & Promotion- DIPP). Presently, these conditions are
- Up to seven years (ten years, in case of Start-Ups in Bio-technology Sector) from the date of its incorporation/registration,
- If its turnover for any of the financial years has not exceeded ₹ 25 cores, and
- It is working towards Innovation, Development, Deployment or Commercialization of new Products, Processes or Services driven by Technology or Intellectual Property.
- Provided that any such entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘Start-Up’. A proprietorship or a public limited company is not eligible as Start-Up.
- In addition, the following Eligibility Criteria should also be met: The Start-Up should not have been black-listed by any Government entity or any Incubation Centre. The Promoter(s) shall not have any criminal case pending in any Court of Law in India. A Declaration to this effect shall be required to be submitted in this respect.
The following Criteria is proposed to be used for Shortlisting of Start-Up proposals:
- Technical Feasibility
- Key Team Member’s Profile
- Founder’s Background
- Risks involved and Mitigation Plans
- Financial Returns
- Market Size and Growth Rate
GAIL shall evaluate the top rated shortlisted Proposals through a specially formed Committee for the purpose. The said Committee shall also have outside personnel with the necessary domain expertise.
The Committee shall discuss the Proposals with the Start-Ups for carrying out the evaluation. The Committee shall use the following broad criteria for evaluation:
- Does the idea bring a unique proposition
- Target market identification
- Founder and Team
- Marketing and Distribution
- Significant competitors in similar projects
- Start-up financials
- Future road map of Start-Up
- Primary risks involved in the project
- Plan for use of GAIL’s funds
- Exit scenario from the Start-Up
The Committee will also discuss the Milestones, Payment terms, Financing options etc. Thereafter the Committee shall submit its recommendations to GAIL.
The Start-up shall be required to sign an Agreement before commencement of Funding by GAIL. The draft Clauses of the Agreement shall be provided when the Start-Up is called for discussion with the Committee. These Clauses shall also be finalized during the meeting with the Commit
GAIL shall carry out Valuation of the Start-up entity through a third party at GAIL’s cost before making investments.
Subsequent to approval, GAIL shall send a Letter of Acceptance (LOA) to the Start-Up informing GAIL’s decision. The LOA shall have the salient features of the funding viz. Amount, Milestones etc. and an Investment Agreement.
The Funding shall commence after the Start-Up submits the signed copy of LOA as a token of acceptance along with the Agreement.
Source: GAIL (India) Ltd.