Lessons from Venture Talk with Prof. Tim Gocher

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The primary roles of private equity funds such as Dolma Impact Fund, founded by Prof. Tim Gocher, is to raise funds often from international investors, used to make investments mainly in  businesses, which are or will later become private companies. Dolma Impact Fund is the first private equity fund dedicated to Nepal, with a 37 million dollar fund. Tim Gocher, its Founder and CEO was the speaker of NEXT Venture Corp’s Venture Talk for a special edition in June. Gocher and his team invest across various sectors in Nepal. The fund’s investors are mostly European banks, development institutions who specialize bringing capital to risky countries such as Nepal, private sectors, growth stage businesses and so on. Over the four years, Dolma Impact Fund has had a great degree of success, and its investors have recently approved for more funds. In his talk, Gocher discussed in detail about various topics requested by the audience--including the telecommunication industry and IT, the public sector, and agriculture.

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Twenty years ago, India, a country very similar to Nepal, was pretty isolated as an economy. But today, the global way of technology has found great foothold there. The reason for this, according to Gocher, is that they opened up to capital. The question is whether it is possible for Nepal to do this, and most of the answers are wrapped around the regulatory environment of Nepal. As he expected, when he first began to make attempts on investing in Nepal, it was not easy. After  period of twelve years in terms of political and economic reforms, Nepal had finally achieved stability and the society was allowed to function. But then, the 2015 earthquake struck and acted as a major obstacle. Now that it’s calmer, it is time to make some major reforms in the public sector, especially in the regulations for foreign investments into Nepal.

Gocher believes that it is important to define and exempt before regulating foreign investments. When there is little international funds in the market to regulate, and yet regulations have been imposed, all it will do is reduce the potential of this market. There are two major changes to regulation that should be done, which will make Nepal see a flood of foreign direct investments, and startups. They are, an automatic route for FDI, and stock market reform.

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For every investment Dolma Impact Fund has to make, they must go to the respective ministry, and get a letter of no objection. For investing in the hydropower project for Sanima Bank, it took them 7 months just to get a license to send money into the country. Although Nepal’s central bank’s concerns about money laundering are valid, there are ways to avoid it without stopping the money coming in. It would be much easier if Nepal followed a model similar to India’s--named automatic route. This allows the money to come in, holds it for 30 days while the central bank checks its source and then you hear from them.

Secondly, most market economies have in common, a procedure called pricing and lock-in, which is preventing people from starting up, and also stopping growth-stage private equity funds, venture capitalists, incubators and so on. A three-year lock-in period, which is a three-year period of time following an IPO where large shareholders are restricted from selling their shares also prevents investors from investing into companies. These reforms will lead to the Nepali economy becoming open to capital, a key factor for economic growth.

This, combined with the lack of competition in Nepal, the prospects of AI, a possibility of a cashless society, and of course, the scope of agriculture, would provide Nepal a remarkable opportunity for huge possibility for efficiency. Although it hasn’t been announced yet, Dolma Impact Fund itself has already gotten approval for investing in an agricultural business, whose model consists of a combination of grain and storage. They also have plans for investing in silos, a structure for storing bulk agricultural produce.

At the end, even though having a robust regulation system and a well-planned business is important, finding a vision and then working towards it with honesty, is what it all comes down to, which is what Gocher emphasized in his talk. He gave an example of his own a team of 14 people, and how they recently talked about what they want out of life, and how they can find a vision in business that aligns with what they want in life, so it can become a mechanism to reach that vision. Having uniform strategies is important, but keeping the vision in sight is equally, if not more important. Gocher also emphasized on taking risks, and how without illogical determination, it was very unlikely to get where he is right now.

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Guest Friday, 20 July 2018