SUMMARY
The Fund of Funds for Startups (FFS), being operated by SIDBI, committed to invest INR 4,857 Cr in startups since 2020
According to DPIIT, AIFs working with the FFS scheme invested INR 5,992 Cr in 251 startups in 2022
The Startup India Seed Fund Scheme (SISFS) saw the government invest INR 267.5 Cr in 2022 in incubators
Responding to a question in the Lok Sabha, the Department for Promotion of Industry and Internal Trade (DPIIT) said that the government committed INR 1,711 Cr investment for startups via the Fund of Funds for Startups (FFS) scheme.
The DPIIT further informed that the government has put another INR 267.50 Cr for incubators across the country via the Startup India Seed Fund Scheme (SISFS).
The FFS, being operated by the Small Industries Development Bank of India (SIDBI), has committed INR 4,857 Cr to invest in startups since 2020, DPIIT said in the Lok Sabha.
The FFS scheme, introduced by the government in 2016 with a corpus of INR 10,000 Cr, works with Alternative Investment Funds (AIFs) registered with the Securities and Exchange Board of India (SEBI).
SIDBI provides funding to these AIFs, or daughter funds, who then invest in startups across the country. Under the FFS scheme, the AIFs have to invest at least twice the amount committed by the SIDBI to them in a given year.
According to the DPIIT, these AIFs invested INR 5,992 Cr in 251 startups in 2022. Since 2020, the FFS scheme has invested INR 11,197 Cr across 503 startups.
A state-wise breakdown of the investments made under this scheme since 2020 showed that Karnataka received the lion’s share of investments, with 152 startups in the state picking up INR 3,755 Cr in investments.
The state was followed by Maharashtra, where 98 startups raised INR 2,566 Cr, and Delhi, where 84 startups raised INR 1,726 Cr under the FFS scheme.
On the other hand, the SISFS, which was launched in 2021-22 as a four-year initiative to invest in incubators across the country, invested INR 267.5 Cr in various incubators last year. These incubators, in turn, invested INR 99.44 Cr in 569 selected startups in 2022.
The SISFS has a corpus of INR 945 Cr, starting in FY21.
Under the SISFS, the government appoints the Experts Advisory Committee (EAC) which is responsible for the overall execution and monitoring of the SISFS. The EAC evaluates and selects incubators for the allocation of funds under the Scheme.
In the Lok Sabha response, the DPIIT also talked about the various schemes undertaken by the government to bolster India’s startup ecosystem.
These include Startup India Action Plan, Credit Guarantee Scheme for Startups (CGSS), National Startup Advisory Council, income tax exemption from three months and self-certification, among others.
The DPIIT response comes at a time when the Indian startup ecosystem has been reeling under an extended funding winter. In February 2023, startup investment in India fell to $693 Mn, down 81% year-on-year compared to February 2022.
