Prime Minister Narendra Modi’s ambitious Rs 10,000-crore Fund of Funds for Startups (FFS) beneath the Startup India initiative, launched in January 2016, has enabled Rs 5,089.55 crore funding into 391 government-recognised startups as of January 31, 2021, according to the information from the Commerce Ministry. However, the jump in the quantity of funded startups has been only 22 per cent from 320 startups backed beneath the programme as of February 18, 2020, as per the earlier accessible government information. On the other hand, the development in the quantity deployed was 50.6 per cent from Rs 3,378.47 crore as of February 18, 2020. The most recent information on the quantity of funded startups was shared by Commerce Ministry MoS Som Parkash in a written reply to a query in the Lok Sabha. Dunzo, CureFit, FreshToHome, Jumbotail, Unacademy, Uniphore, Vedantu, Vogo, Zostel, and so forth., have been some of the notable startups funded by means of FFS.
Managed by SIDBI, FFS will be deployed more than the 14th and 15th Finance Commission cycles corresponding to FY16-FY20 and FY21-FY25 periods respectively. FFS contributes to the capital of SEBI-registered Alternative Investment Funds (AIF) as an alternative of investing straight into startups registered beneath the Department for Promotion of Industry and Internal Trade (DPPIT). SIDBI had committed Rs 4376.95 crore to 62 AIFs as of January 31, 2021, up from Rs 3123.20 crore committed to 47 AIFs as of February 18, 2020. Among the prominent AIFs of major startup investment firms registered with FFS have been Chiratae Ventures, India Quotient, Blume Ventures, India Angel Network Fund, Kalaari Capital, Fireside Ventures, and more.
Also study: Koo cofounder refutes French hacker’s information leak claim says Chinese investor Shunwei to exit company soon
Currently, other than angel funds, no AIFs can have more than 1,000 investors. AIFs are of 3 categories: AIF I backs early-stage startups, social ventures, compact enterprises, and sectors deemed by the government as socially or economically desirable. AIF I funds include things like venture capital funds, SME Funds, social venture funds, infrastructure funds, according to Care Ratings. Under AIF II, true estate funds, PE funds, funds for distressed assets, and so forth., are categorised and such funds can not leverage or borrow capital other than to meet day-to-day operational needs. Importantly, debt funds investing mostly in debt or debt securities of listed or unlisted investee firms are registered beneath AIF II. AIF III funds involve hedge funds, PIPE Funds, and so forth.
In order to have a committed fund focusing on investment needs of startups at the seed stage of their enterprises, PM Modi had announced the Startup India Seed Fund with the target corpus of Rs 945 crore in January. The fund will be disbursed more than the 5-year period to assistance about 3,600 entrepreneurs by means of 300 incubators. The investment will be produced in eligible startups in order to assistance their proof of notion, prototype improvement, item trials, industry-entry, and commercialization.