In the last chapter, Gopinath obtained funding for a hangar, and had a company agree to lease him a helicopter. Yet he still has no funding for a helicopter. He goes to banks and VC firms but they won’t lend to him.
What is ironic is that it is also in this chapter that Gopinath is invited to join a highly prestigious MBA program. Despite this recognition he is not able to get funds. This made me think that funding is a problem for all enterprises in India, not just SMEs, or those serving the poor. In fact, Gopinath was able to get a bank loan for his farm, but not for his helicopter business.
Gopinath finally gets a loan/equity investment from a Sindhi (Gopinath describes them as some of the most astute businessmen in the country) and some others. The Sindhi “rate of interest” is usually quite high, although Gopinath says that this particular business charges less. He finds him through his financial advisor.
While loans from Sindhi businessmen may not be an appropriate source of finance for Villgro’s enterprises because of the high rates of interest they charge, it made me wonder whether Villgro should be giving greater emphasis to informal sources of finance in its mentoring of incubates. The Amazing Secrets of Millionaire Inventors talks about giving both debt and equity to your family and friends. However, I know that when I was at Villgro, the capacity building sessions for innovators seemed to downplay those sources of finance in favor of venture capital.
In this chapter Gopinath also sets a date for the launch of his helicopter business when he still has several licenses and clearances to secure. The date is particularly ambitious because he does not allow more than two to three days for the clearances from the Directorate General of Civil Aviation (DGCA), when normally these clearances take two to three months. Gopinath feels compelled to do it because he knows that as soon as the helicopter is transferred to his business, he will have to start paying interest and lease rental. Therefore, it will be suicidal for his business if he does not start earning money the moment the helicopter is transferred to them. The way in which Gopinath pursues this goal shows his ability to be strategic. He invites the chief minister and other ministers to join the civil aviation minister for the inaugural flight, assuming that the DGCA will do their bit and oblige with the necessary clearances because their bosses would be the chief guests.