Small Industries Development Bank of India (SIDBI) has cleared $140 Mn (INR 930 Cr) from the $302 Mn (INR 2,000 Cr) fund-of-funds, that it launched in August to support venture capital funds.
Finance minister Arun Jaitley had announced the $305 Mn corpus as India Aspiration Fund (IAF), under SIDBI. It was supposed to be set up as “fund of funds” to catalyse equity investment into startups and MSMEs. The fund is to operate in a co-investing model, whereby VC funds will have to put in 70-90% of the investment and take 20-30% from the nodal bank.
The IAF has screened 30 venture capital funds since its launch and has already issued sanction letters to more than half of them.
Chairman and managing director, SIDBI, Shivaji Kshatrapati said, “Proposals from 24 venture capital funds for an aggregate commitment of INR 930 Cr have been cleared in principle by the venture capital investment committee (VCIC). Out of which sanction letters have already been issued to 16 VCFs with an aggregate commitment of INR 482 Cr, where documentation is in progress.”
VCIC is a panel of experts in various fields who are advising SIDBI in screening the venture funds. Its panel members include Harkesh Mittal, Secretary, Technology Development Board, Manipal Global Education Chairman TV Mohandas Pai, Info Edge founder Sanjeev Bhikchandani, former Nasscom chairman Kiran Karnik and Indian Angel Network co-founder, Saurabh Srivastava. Shivaji added that among the venture funds SIDBI has supported through IAF are Blume Ventures, Orios, Yournest, Ivy cap and Infuse Ventures.
ET had earlier reported that IvyCap Ventures had been committed up to $9 Mn (INR 60 Cr), Blume Ventures has been committed $4.5 Mn (INR 30 Cr) and up to $3 Mn (INR 20 Cr) has been allotted to Carpediem Capital Partners
This fund-of-funds has the ability to create a huge impact in the future, given that it is supporting early-stage and seed funding for startups, Mohandas Pai said. “If INR 10,000 crore is given as seed capital, it can enable at least 30,000-35,000 startups with the multiplier effect in the next five years, with a total impact of INR 60,000-70,000 Cr on the economy.”
SIDBI still has a dozen proposals for a potential commitment of around INR 500 crore, which is lined up for the consideration of VCIC. Apart from the INR 2000 Cr fund-of-funds, Reserve Bank of India has allocated INR 10,000 Cr to SIDBI in order to set up a VC fund to attract private capital for startups. However, there is no information about the actual implementation of this fund.
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