₹7K cr committed under Fund of Funds for Startup India Investment

NEW DELHI: The Central government on Monday said that the Fund of Funds for Startups (FFS), launched under the Startup India initiative in 2016 by Prime Minister Narendra Modi has committed Rs 7,385 crore to 88 Alternative Investment Funds (AIFs) as of September 24, 2022.

According to the Ministry of Commerce and Industry, these AIFs in turn have invested Rs 11,206 crore in 720 startups.

FFS which was announced with a corpus of Rs 10,000 crore has been playing a monumental role in mobilizing domestic capital in the Indian startup ecosystem.

"The corpus is to be built up over the 14th and 15th Finance Commission Cycles (FY 2016-2020 and FY 2021-2025) through budgetary support by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry. Under FFS, support is extended to SEBI registered Alternative Investment Funds (AIFs), which in turn invest in startups.FFS has not only made capital available for startups at the early stage, seed stage and growth stage but also played a catalytic role in terms of facilitating the raising of domestic capital, reducing dependence on foreign capital and encouraging home grown and new venture capital funds.

Dunzo, CureFit, FreshToHome, Jumbotail, Unacademy, Uniphore, Vogo, Zostel, Zetwerk etc., are some of the notable startups funded through FFS, the ministry said.

"Collectively, the AIFs supported by FFS have a target corpus of over Rs 48,000 crore," the ministry said adding that Chiratae Ventures, India Quotient, Blume Ventures, IvyCap, Waterbridge, Omnivore, Aavishkaar, JM Financial, and Fireside Ventures, are among the prominent AIFs of leading startup investment firms supported under FFS.

The amount committed under FFS has seen notable growth over the years recording a CAGR of over 21 per cent in since the launch of the Scheme.

Furthermore, the Small Industries Development Bank of India (SIDBI) which is responsible for operationalising the Scheme has undertaken a series of reforms recently to expedite the drawdowns to enable AIFs assisted under FFS to avail accelerated drawdowns.

This has created a positive impact and have resulted in year on year (Q1 FY 2021-22 vis-a-vis Q1 FY 2022-23) surge of 100 per cent in the amount of drawdowns.

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.

Investments into eligible startups are approximately 3.7 times of FFS disbursements which are well above the minimum stipulated 2 times under the Scheme. Performing startups supported through FFS are showing a valuation increase by more than 10 times with a number of them even achieving unicorn status (valuation of over USD 1 billion).

The returns generated from the success of these startups and the innovation created will remain within the country and facilitate the generation of employment and the creation of wealth.