AIFs Can Now Apply Online For Funds From SIDBI Under Fund of Funds

SUMMARY

The system has been introduced for contribution from AIFs under Fund of Funds for Startups

The AIFs can fill up a form online and track the status of their application

Launched in 2016, the Fund Of Funds for Startups aims to spend a staggering fund of $1.35 Bn

The Small Industries Development Bank of India (SIDBI) has introduced web-based application for Alternative Investment Funds (AIFs).

The system has been introduced for contribution from AIFs under Fund of Funds for Startups (FFS). With the online portal, now available on SIDBI website, the AIFs can fill up a form online and track the status of their application.

For the uninitiated, launched in 2016, the Fund-of-Funds for Startups aims to spend a staggering fund of $1.35 Bn and to support and catalyse 10,000 startups in course of the next 12 years. This aims to create 18 lakh jobs in the country.

The investment in startups is through a long chain process. The Department for Promotion of Industry and Internal Trade (DPIIT) disburses the funds to SIDBI. In turn, SIDBI gives them to venture capital funds/AIFs who create a corpus fund which has participation from other investors and the money raised is then used to invest in startups.

To begin with the online application process, the AIF should create an account, fill in the details and submit the application form online along with the required supporting documents.

Mohammad Mustafa, chairman and managing director of SIDBI, said, “With this introduction, a lot of administrative work is expected to be reduced and it will smoothen the entire process.”

SIDBI has sanctioned INR 2,265.70 Cr to 40 venture capital funds for financial year 2019 under the Fund of Funds scheme of Startup India. These 40 funds have invested in 218 startups through the fund of funds investment. Union Minister for Commerce and Industry, Piyush Goyal told parliament recently that SIDBI has committed INR 3123.20 Cr to 49 SEBI registered Alternative Investment Funds.

Last year in May 2018, reports surfaced that DPIIT is not impressed by the low disbursement of funds and has undertaken before a Parliamentary panel that it will not make any releases to fund manager SIDBI during FY18 and FY19. Further, SIDBI was working on an internal model to rate the venture capital firms before investing in them via its flagship FFS.

Only 163 startups had benefited from the Fund of Funds in the last three years till December 31, 2018, and the fund allocation and distribution is coming down further.