Set up bourse for small cos: Knowledge panel

The National Knowledge Commission, chaired by Mr Sam Pitroda, has suggested establishing a stock exchange for small companies, and creating instruments to enable the firms to raise initial capital.

A stock exchange would help such companies in raising additional capital, widen the shareholder base and create a market with a public value for shares, the Commission said in a study. Pointing out that various investors including angel investors, venture capitals and PEs were becoming more active, particularly in knowledge-intensive areas, the Commission noted that they required incentives for greater degree of involvement.

The study ‘Entrepreneurship in India’ has mooted the creation of a secondary market for smaller firms, creating new instruments for start-up funding and providing financial literacy to start-ups. The findings pointed that 63 per cent of entrepreneurs interviewed were self-financed, while others were financed by banks, venture capitals, angel investors amongst others.

The Knowledge Commission would help in establishing a portal focusing on young-generation entrepreneurs for providing information about venture capital and bank funding, he added. According to the study, there is a strong perception among entrepreneurs that start-up funding is very difficult, in the country.