Start-up in GAIL

‘Start-Up India’ is a flagship initiative of the Government of India. It intends to build a strong eco-system for nurturing Innovation and Start-Ups in the country, to derive sustainable economic growth and generate employment opportunities. Government policies are also encouraging Start-Ups by providing fiscal incentives.

GAIL intends to take-up investment in Start-Ups to give a boost to the Government’s efforts and also to derive long-term benefits.

Our Mission for Start-Up Initiative is to Identify, Invest and Nurture Start-Ups that can become successful companies in the long run and provide profitable returns from this diversification.

GAIL had launched its ambitious Start-Up initiative ‘Pankh’ in July’ 2017 to invest in promising Start-ups. GAIL has made investments in 24 Start-Ups operating in various Areas.

India has vast Biomass resources and the Government is giving special emphasis on its gainful utilization by encouraging setting-up of Compressed Bio Gas (CBG) plants. Further, Oil & Gas Companies are ready to give commitment for offtake of CBG through issue of Letter Of Intent (LOI). Thus, it provides good Business opportunity to Start-Ups operating in this Area.

GAIL plans to invest in Start-Ups operating in this upcoming Area. A new Round has been opened by GAIL for Solicitation of Investment Proposals from Start-Ups operating specifically in the Area of CBG. The Start-Ups that are interested in equity investment from GAIL can apply on our website GAIL’s equity investment will be limited to 20% of the total equity of the Start-Up.

Proposals are now solicited from Start-Ups operating in the following Area of CBG :

  1. Start-Ups that provide Technology,
  2. Start-Ups planning to expand their existing CBG plants
  3. Start-Ups planning to set-up new CBG Plants

GAIL would look at the following criteria while evaluating the Investment Proposals of Start-Ups that are planning to expand their existing CBG plants or are planning to set-up new Plants :

  1. Experience of Founders in CBG or its related business
  2. Details of existing CBG Plants / infrastructure
  3. Plans for expansion / Setting-up new Plants
  4. Plans for arranging BioMass feedstock
  5. Status of Land for expansion / new Plants
  6. Details of LOIs received for offtake of CBG
  7. Technology Identification / Tie-up
  8. Project Feasibility Study for expansion / new Plants
  9. Status of Approval from Government for Grants under Swachh Bharat Mission (SBM) or under any Urban Infrastructure Development Program or Central Finance Assistance (CFA)
  10. Funding from Incubation Centre, if any
  11. Plan for Financial Closure including details of equity contribution by Founder/Other Investor and tie-up for Debt component
  12. Current Valuation of the Company
  13. Investment Amount sought from GAIL and the % Equity stake offered to GAIL

This Solicitation Round is open from July 06, 2020 to Aug 12, 2020..

Selection Process for funding Start-Ups :

Selection of Start-Up Proposal shall be a 4-Stage Process:

  1. Eligibility Screening
  2. Shortlisting
  3. Evaluation
  4. Approval
  1. The Start-Ups should be operating in any of the following Area of CBG :
    1. Start-Ups that provide Technology,
    2. Start-Ups planning to expand their existing CBG plants
    3. Start-Ups planning to set-up new CBG Plants
  2. GAIL will consider Proposals for funding only from those entities that are registered as Start-Up by Department for Promotion of Industrial and Internal Trade (DPIIT) previously named as DIPP. Presently, the eligibility criteria is
    1. Upto a period of ten years from the date of incorporation/ registration, if it is incorporated as a private limited company or registered as a partnership firm or a limited liability partnership in India.
    2. Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore (100) rupees.
    3. Entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.
  3. Provided that any such entity formed by splitting up or reconstruction of a business already in existence shall not be considered a 'Start-Up'. A proprietorship or a public limited company is not eligible as Start-Up.
  4. In addition, the following Eligibility Criteria should also be met: The Start-Up should not have been black-listed by any Government entity or any Incubation Centre. The Promoter(s) shall not have any criminal case pending in any Court of Law in India. A Declaration to this effect shall be required to be submitted in this respect.
    Click here to download Declaration

The following Criteria is proposed to be used for Shortlisting of Start-Up proposals:

  1. Technical Feasibility
  2. Scalability
  3. Key Team Member's Profile
  4. Founder's Background
  5. Risks involved and Mitigation Plans
  6. Financial Returns
  7. Market Size and Growth Rate
  8. Patentability

GAIL shall evaluate the top rated shortlisted Proposals through a specially formed Committee for the purpose. The said Committee shall also have outside experts with the necessary domain expertise.

The Committee shall discuss the Proposals with the Start-Ups for carrying out the evaluation. The Committee shall use the following broad criteria for evaluation:

  1. Does the idea bring a unique proposition
  2. Target market identification
  3. Founder and Team
  4. Marketing and Distribution
  5. Significant competitors in similar projects
  6. Start-up financials
  7. Future road map of Start-Up
  8. Primary risks involved in the project
  9. Plan for use of GAIL's funds
  10. Exit scenario from the Start-Up

The Committee will also discuss the Milestones, Payment terms, Financing options etc. Thereafter the Committee shall submit its recommendations to GAIL.

The Start-up shall be required to sign an Investment Agreement before commencement of Funding by GAIL.

GAIL shall carry out Valuation of the Start-up entity through a third party at GAIL’s cost before making investments.

Subsequent to approval, GAIL shall sign an Investment Agreement with the Start-Up. The Investment Agreement shall have the salient features of the funding viz. Amount, Milestones etc.

The Funding shall commence after the signing of Investment Agreement and submission of Demand letter by the Start-up.

Note:- GAIL shall keep the Information submitted by Start-Ups as strictly confidential.