Functions of the SSBC
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- Published: Tuesday, 24 January 2017 06:01
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By function, the SSBC can be divided into four different functional areas: Entrepreneurial Society, Consultancy, Fund Management, and Other Support Initiatives.
i. University Business Consultancy:
This will provide consultancy to the portfolio businesses as essential service. The consultancy will include both management consultancy (such as marketing, accounting, HR, financial management and strategies) and technological consultancy to use the knowledge and scientific/technological base of the University for the New Start-ups. Prominent professors from across the university will be part of the consultancy. The consultancy will not be limited to the portfolio businesses though, and will provide consultancy to the local industry and young entrepreneurs charging reasonable fee. The idea is to promote the entrepreneurship in the region, to link the university with the local business problems and to ultimately shift the focus of the university research and students internship programs to the local industry and community.
ii. Entrepreneurial Society:
SSBC will establish an entrepreneurial society having its own by-laws to be devised by the management committee. It will be part of the awareness program and can generate revenues from donations and membership fee to offset expenses on the awareness of the entrepreneurship. It can have several kinds of membership i.e. for students, faculty, and entrepreneurs and members will be charged annual fee. Members can participate in seminars, conferences, workshops, and other networking opportunities.
iii. Other Entrepreneurship Support activities:
Under this program, the Center will launch activities to promote entrepreneurship in the academic and business circles, both students and local business actors through workshops, seminars, conferences, elevator pitches, as well as providing training to the young entrepreneurs. Under this program the Center will also make sure to launch other networking activities between local entrepreneurs, students, academicians, researchers, investors and government officials.
iv. Fund Management:
The SSBC’s fund management, to be called University Venture Fund (UVF) will be based on venture capital model. Venture capital is a concept very well established in the developed world and some of the developing countries such as China and India and is a successful vehicle to support entrepreneurship and innovation. Recently, universities in the US have started their own Venture funds. Most prominent of them are New York University (Innovation Venture Fund, 2010), University of California, Las Angeles, (UCLA VC Fund), University of Utah (University Venture Fund, 2000). The SSBC’s Venture Fund will finance students start-ups with high growth potential and innovative ideas on equity basis for three to five years and eventually will exit from those investments through market mechanisms while switching the enhanced funds to further students’ start-ups.
1. The SSBC will provide technical support through University Consultancy during its investment or till the port-folio firm’s management is skilled enough to run the business independently.
2. The SSBC will make sure to stabilize and grow the portfolio business to earn profits from regular income of the portfolio business and later from its sale to either a third party or to the current management on market rate.
3. The exit from portfolio businesses will be allowed through any mode including IPO, trade sales, and management buy-ins/outs.
4. The SSBC will attract investment from institutions and individuals to invest in the UVF or to make syndicated investment with other institutions in the portfolio businesses. In the latter case, the SSBC will be a general partner and the other investors as silent partners or in other words the silent partners will not participate in the monitoring and decision making with regard to that business.
5. Investors in the UVF will receive share of profit from the UVF and any syndicated investor (or silent partners) will receive profits from portfolio firm’s regular income and exits according to the agreed terms and conditions of the respective portfolio business.
6. SSBC will get 20% of the total profits after preferred returns at the rate of 13% from portfolio businesses aside from its relative share in the residual profits based on share of investments made. These funds will be put to the General Fund of the SSBC and will be spent on operating expenses as well as upside incentives to the management of the SSBC.d Lerner, 1999).
7. SSBC will also get management fee of 2.5% of the total funds under management and will be allocated to SSBC General Head.
8. Rates can be reviewed by the Board.
9. Initially, UST Bannu will provide salaries to the staff of the SSBC as well as funds to the General Fund to cover operating expenses of the SSBC. However, gradually, the SSBC should generate profits from management fee and carried returns subsequently to cover all operating expenses (including upside incentives but excluding salaries) from own profits and not from university funds.
10. The SSBC funds allocated to the UVF will not be used for any purpose other than seed funding and management fee under any circumstances.
11. The revenue that goes to the UVF shall not be used for operating expenses, and salaries under any circumstances. See the conceptual mapping of how SSBC investments and returns will work in Figure 2 and Figure 4.
12. Operating expenses will include funds spent by SSBC on expenses such as salaries, upside incentives to the management of the SSBC, workshops, conferences, networking, consultancy fee, publications or such other expenses for promotion of the SSBC.
13. The life of the VC will be eight years.