India’s leading private sector bank, HDFC Bank has announced the creation of a $25-30 million fund towards helping startups. This amount might just represent an initial allocation to kick-start the process, more funds may be on tap as and when needed.
HDFC Bank is reported to be already engaged in the funding of around 150 startups at different levels and from diverse segments, but there was no dedicated fund created for the purpose. The bank is as such familiar with the ecosystem and has the experience to back the skills required to make appropriate funding decisions. Unlike certain venture capitalists that focus on specific business verticals, HDFC Bank will not have any such water tight compartments. The proposal has to have the “right fit”, in their assessment.
The bank has chosen 65 specific branches spread across 30 different cities in the country to focus on startups funding. These cities include the regular metros like Bangalore, Delhi, Mumbai and Pune and some odd ones like Patna.
The overall service the startups can avail from HDFC Bank will include, apart from just funds, support on financial and legal advice and even mentoring which will be provided by experts from both within the bank as well as outsourced. The bank is trying to build its own customer relationship efforts and feels if you are associated with a company since its startup, it pays rich dividends later as it grows in stature, something like the marketing strategy adopted by the FMCG companies.
It also makes sense for a modern homegrown banking channel player to be involved in the startups funding space since India is emerging as one of the hotspots for startups occupying the third rank after the US and the UK.