SME Space in India

SONG plans to target the SME (Small- and-Medium-Sized Enterprises) space in India as an initial market, with potential expansion into other developing countries. In the United States, 80% of all jobs are created in the SME sector, while in Switzerland, it’s as high as 90%. There is no reason for India to be different.

We will profitably invest in India’s SME space and validate the viability of SME as an asset class. We will participate in capacity-building efforts, while documenting challenges and solutions to ease replication.

“SMEs are ‘the missing middle’.”

About “The Missing Middle”

SMEs are a historical driver of change and the most powerful engine of inclusive economic growth. They are the largest employment generator within an economy, which is crucial as surplus labor is released from productivity gains in agriculture-labor that will need to be rapidly absorbed into a formal economy.

While the microfinance movement has had a significant impact on making capital available to entrepreneurs, and while large businesses have been able to access bank-based credit, SMEs remain underserved; unable to find the tools and finance necessary for growth and expansion. They are “the missing middle.”

Unlike the microfinance movement, which rewards entrepreneurs and households in underserved populations, SME investing provides opportunity for both the entrepreneur and the labor pool necessary to run their business. SME investments create a two-pronged benefit: job creation and products/services delivered to customers. At the macro-economic level, there is a positive relationship between the size of the formal SME sector and economic development. At the micro-economic level, case studies reveal that investments in SME can realize financial returns and a substantial “ripple effect” to other stakeholders.