According to the Startup India Action Plan status report, Rs 500 crore out of Rs 10,000 corpus has been released to SIDBI (the fund manager of ‘Fund of Funds for Startups’) in FY 2015-16 and an additional Rs 100 crore will be released in FY 2016-17.
Since the government announced the approval of the Rs 10,000-crore ‘Fund of Funds for Startups’ in June 2016, the Small Industries Development Bank of India (SIDBI) has sanctioned Rs 129 crore for venture funds. Of the sanctioned amount, Rs 114 crore has been released to five venture funds, said the status report of the Startup India Action Plan.
At the time of its announcement (i.e. last year), the fund was expected to generate employment for 18 lakh persons and catalyse Rs 60,000 crore of equity investment. The Cabinet had approved the establishment of the ‘Fund of Funds for Startups’ (FFS) at SIDBI for the purpose of contribution to various alternative investment funds (AIF) registered with SEBI which will be further channelised to startups.
The total corpus of Rs 10,000 crore will be released by 2025, that is, by the end of the 15th Finance Commission cycle. SIDBI has been appointed as the fund manager. FFS will invest in SEBI-registered AIFs, which, in turn, will invest in startups. Thus, FFS does not fund startups directly, but through selected AIFs. According to the Startup India Action Plan status report, Rs 500 crore has been released to SIDBI in FY 2015-16. Additionally, Rs 100 crore will be released in FY 2016-17.
Restrictive clauses of Fund of Funds
According to present guidelines, FFS will fund the AIFs which, in turn, will raise counterpart funds from other sources. The corpus so pooled in will entirely be invested in startups. Further,…