On Monday, the commerce and industry ministry said that as of September 24, Rs 7,385 crore have been committed to 88 alternative investment funds (AIFs) by the Fund of Funds for startups.
It said that these AIFs in turn have invested Rs 11,206 crore in 720 startups.
When it comes to the Indian startup ecosystem, then the Fund of Funds (FFS) initiative has been playing a major role in mobilising domestic capital.
FFS Corpus of Rs 10,000 crore
The Fund of Funds was announced with a corpus of Rs 10,000 crore. The corpus is to be built up over the 14th and 15th Finance Commission Cycles (2016-2020 and FY 2021-2025) through budgetary support by the Department for Promotion of Industry and Internal Trade (DPIIT), under the ministry.
Under this, support is extended to SEBI-registered AIFs, which in turn invest in start-ups.
It said that “FFS has not only made capital available for startups at early stage, seed stage and growth stage but also played a catalytic role in facilitating raising of domestic capital, reducing dependence on foreign capital and encouraging home-grown and new venture capital funds,”
It said that “Performing startups supported through FFS are showing valuation increase by more than 10 times with a number of them even achieving unicorn status (valuation of over USD 1 billion). Dunzo, CureFit, FreshToHome, Jumbotail, Unacademy, Uniphore, Vogo, Zostel, Zetwerk etc., are some of the notable startups funded through FFS”. The AIFs supported by FFS have a target corpus of over Rs 48,000 crore.
Chiratae Ventures, India Quotient, Blume Ventures, IvyCap, Waterbridge, Omnivore, Aavishkaar, JM Financial, and Fireside Ventures are one of the prominent AIFs of leading startup investment firms supported under FFS. Since the launch of the scheme, there has been a CAGR of over 21 per cent when it comes to the amount committed under FFS.
Series of Reforms Undertaken by SIDBI
Recently, in order to enable AIFs assisted under FFS to avail accelerated drawdowns, a series of reforms are been undertaken by the Small Industries Development Bank of India (SIDBI), which is responsible for operationalizing the scheme. The ministry said that “This has created a positive impact and has resulted in a year-on-year (Q1 FY 2021-22 vis–vis Q1 FY 2022-23) surge of 100 per cent in the amount of drawdowns”.
It said that FFS has helped anchor 67 AIFs out of 88 AIFs supported and 38 of these are first time fund managers, which is in line with FFS’s core objective of anchoring venture capital investments for Indian startups.
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