Speaking at the VC for IT'99, S Narain, managing director of SIDBI said the fund would cater to the specific funding needs of small and medium sized companies in the IT sector.

NFSIT is envisaged to be a 10-year closed fund with participation from IDBI and the ministry of information and technology.

This, Narain added, was the second tier of Sidbi's plan. The first tier consisted of 10 regional funds catering to the needs of regional players in the lower end of the IT market. The NFSIT would operate at a national level and its investments would be managed by Sidbi Venture Capital Ltd (SVCL), a subsidiary of Sidbi.

The third tier would be in place by December-end. This would involve setting up of an international fund that would cater to the needs of Indian entrepreneurs in the US. Speaking to The Financial Express, Narain said this fund would be based in the Silicon Valley, it would fund Indian entrepreneurs to set up operations and also acquire firms in the US. Indian entrepreneurs settled and operating out of the US would also be encouraged to invest in India, he added. The total corpus of the fund is envisaged to be $50 million.

Sidbi has an ambitious plan of action in the Venture Capital industry. This includes setting up an Incubator Fund, which would support early stages of enterprises or start ups. It would also be looking at starting a fund to lend to the bio-technology sector. But these plans would come through at later in the next year.

Currently, Sidbi has financed around Rs 17.6 crore to 29 units in the IT sector and also funded around Rs 12.4 crore to various other venture capital funds that invest in the IT sector.