Twenty-eight-year old C. Raja began his career in 1998 by helping out at a tailoring shop in Chennai while going to school. Today, with support from IFC and local organizations, he runs a successful clothing business.
Raja picked up skills like stitching and cutting and learned about patterns, on the job. By 1999, he started stitching clothes for his friends and acquaintances.
"A program on national TV about Bharatiya Yuva Shakti Trust pushed me to contact their office," he recalls. With a BYST loan of $500, the seeds for his retail venture were sown. "It seemed like a dream come true!" Raja says.
BYST, a local organization, helps disadvantaged rural and urban Indian youth turn ideas into viable businesses with the help of a mentor.
Not long after taking out a loan, Raja set up RexMiller Garments India Private Limited. His business took off. By 2000, he was supplying uniforms to Indian automotive companies like Hero Honda and Bajaj.
A Fund to Help Small Businesses Grow
Soon the company was able to service the Tamil Nadu state and the town of Pondicherry in India. Business kept coming, but to grow further Raja needed to scale up. He had difficulty getting the right type of capital. Raja realized that his business was regarded as "high risk" and getting affordable loans from banks wasn't easy, despite a good business plan.
Help came in the form of the BYST Growth Fund, which was started by IFC, the Bharatiya Yuva Shakti Trust, and fund manager VentureEast. IFC contributed $500,000 in funding and $200,000 in advisory services, and helped structure the fund, which offers small businesses such as Raja's up to $200,000 in financing.
The fund extended almost $100,000 to RexMiller Garments, enabling Raja to expand. Raja also established a finance function in his company and received strategic and operational support from the fund.
IFC's support helped attract other investors too. VenturEast was able to raise an additional $2 million from institutions such as Small Industries and Development Bank of India and leading individual investors. The Fund hopes to raise $5 million – and help at least 40 small businesses.
