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Efd7f Sme(New)(2)

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  • 1. TECHNOLOGY-BASED SMEs SMEs whose products or services depend largely on the application of scientific or technological knowledge. Or SMEs whose activities embrace a significant technology component as a major source of competitive advantage. Tech-based SMEs are the growth drivers of the economy
  • 2.
    • Characteristics
    • 1.Uniquely positioned as pioneers, strong entry barrier
    • 2.Require substantial capital exceeding the internally generated cash flows.
    • 3.Have long gestation period
    • 4.Growth requires customer adoption, scalability through systems and process standardization.
    • 5.Growth potential linked to value/ difficult to apprise viz. scientific knowledge and intellectual property.
    • 6.Requirement of highly skilled, professional manpower
  • 3.
    • Risk Types in Tech based SMEs
      • Asset Risk
      • Lack of collateralizable assets , intangible assets with a high proportion of human capital, which is difficult to retain and prone to moral hazard. Other assets may be highly specific.
      • Technology Risk
      • Focus as certain set of technologies and processes that are interested in market.
      • Market/Concentration Risk
      • Acceptance/Development of customer market ,focus on small/niche market segment raises vulnerability concerns.
  • 4.
      • Duration Risk
      • Long gestation period raises period for which funding is needed.
      • Operation Risk
      • Operations subject to stringent process controls.
      • FINANCIAL TECH-BASED SMEs
      • Specific financing needs and risks in different phases of SME life cycle.
      • SEED STAGE
      • 1.Modest financial requirements (assessing feasibility,etc)
      • 2.High degree of risk
      • STARTUP STAGE
      • 1.Substantial financial requirements for prototypes
      • 2.Marketing and promotion costs
      • 3.High degree of risk
  • 5.
    • EMERGING GROWTH
    • 1.Sizeable financial requirements
    • 2.Less risk
    • EXPANSION
    • 1.Low financial requirements
    • 2.Less risk
    • Role of Business in Supporting Tech based SME needs
    • Priority sector lending
    • Loan schemes for innovations, follow up finance for VC backed SMEs
    • Provide expertise in evaluating economic benefits of new technology
    • Valuation of intangible assets (R&D expenses , patents , marketing , brand building expenses)
    • Enable formation of supply side linkages (dealers/agents of vendors), long term service contracts.
    • Marketing and promotion for creating a critical user mass for self sustenance.
    • Standards for price transparency & information disclosure to the customer.