Fund Of Funds For Startups Committed INR 7,980 Cr To 99 AIFs Till Dec 31: Govt

The Centre’s Fund of Funds for Startups (FFS) committed INR 7,980 Cr to 99 alternative investment funds (AIFs) till December 31, 2022, the government informed the Parliament.

Of the total amount committed, INR 3,400 Cr was disbursed to 72 AIFs, which in turn made investments worth INR 14,077 Cr in 791 startups, Minister of State for Commerce and Industry Som Parkash said in a written reply in the Rajya Sabha.

The FFS was founded in 2016 with a corpus of INR 10,000 Cr to boost the country’s startup ecosystem and provide capital to startups. The FFS does not directly invest in startups, but provides capital to SEBI-registered AIFs which invest in Indian startups through equity and equity-linked instruments.  AIFs supported under the FFS need to invest at least 2 times of the amount committed under FFS in startups. 

The Small Industries Development Bank of India (SIDBI) operates the FFS. It selects the AIFs for investing in startups and also oversees the disbursal of the committed capital.

“As reported by SIDBI, FFS has played an important role in wealth creation, employment generation, inclusive growth and recognition for startups,” the minister said.

Karnataka, Maharashtra, Delhi, Haryana and Tamil Nadu are the top five states in terms of investments received under the FFS scheme. Karnataka secured INR 4,687 Cr for 240 startups, Maharashtra bagged INR 3,426 Cr for 176 startups, Delhi received INR 2,254 Cr for 138 startups, Haryana bagged INR 1,148 Cr for 60 startups, and Tamil Nadu received INR 826 Cr investments for 29 startups. 

The Centre has been promoting startups in the country through the Startup India initiative launched in 2016.

“The flagship schemes viz FFS, Startup India Seed Fund Scheme (SISFS) and Credit Guarantee Scheme for Startups (CGSS) are supporting startups at various stages of their business cycle to enable them to graduate to a level where they will be able to raise investments…..”, Parkash said. 

Under the SISFS, INR 477.25 Cr was approved to 133 incubators, of which INR 211.63 Cr was disbursed as on December 31, 2022, the minister said in a separate reply in the Upper House.

Incubators are provided funding under the SISFS for supporting startups.

The statement comes at a time when the Centre has made a slew of announcements for startups in Union Budget 2023, including extending the tax holiday for startups till March 2024. 

Further, in the budget 2023, Finance Minister Nirmala Sitharaman shared the plans to roll out  DigiLocker storage and sharing services for MSMEs as well as startups.

Earlier, the Centre’s Economic Survey shared that more than 84,000 startups are currently recognised by the Department for Promotion of Industry and Internal Trade (DPIIT). These startups cumulatively created more than 9 Lakh direct job opportunities since 2017.  

Of the above-cited startups, about 48% hail from Tier-2, 3 cities of the country, as per the Economic Survey.