SUMMARY
According to a CRISIL report, fund of funds has pumped capital to the tune of INR 1,590 Cr in 129 startups beyond Tier-I cities
Under the scheme, commitments have been sanctioned for 129 alternative investment funds (AIFs) across segments such as deeptech, agritech, healthtech, and sustainability
Founded in 2016 with a corpus of INR 10,000 Cr, fund of funds has been envisaged to boost the country’s startup ecosystem and provide capital to startups
A third-party assessment of the fund of funds (FoFs) scheme for startups has revealed interesting insights about the Centre’s ambitious scheme.
Undertaken by analytics company CRISIL, the report (called Prabhaav) noted that the government has invested INR 17,534 Cr in 938 unique Indian startups via the FoFs since the plan’s inception in 2016 until November 2023. It also said that the initiative has spurred investments to the tune of nearly 4X of the amount drawn.
Additionally, the report highlighted that FoFs pumped capital to the tune of INR 1,590 Cr in 129 startups beyond Tier-I cities. Under the scheme, commitments have been sanctioned for 129 alternative investment funds (AIFs) across segments.
“The scheme has already catalysed investments to the tune of ~4x of the amount drawn with INR 17,534 Cr invested in 938 unique startups. Thus, the scheme resulted in (a) significant multiplier effect, promoting enhanced capital flow into this segment,” Small Industries Development Bank of India (SIDBI), which manages the fund, said.
The report also highlighted that 18 startups in the FoFs’ portfolio have become unicorns. In a statement, SIDBI added that the scheme has invested in startups from emerging sectors such as deeptech, agritech, healthtech, fintech and sustainability.
“Another heartening outcome was the increasing support to women-led startups as well as women-led fund managers,” SIDBI added.
The report was released on Friday (February 9) and was presented by SIDBI chairman and MD S Ramann to financial services secretary Vivek Josh and other senior officials.
“The report reveals heartening all-round outcomes of this initiative of GoI on aspects encompassing multiplied flow of capital, innovative solutions, inclusiveness & diversity in coverage of startups, deepening of startup funding ecosystem in the hinterlands of the country, strengthening of governance as well as wealth creation,” SIDBI added.
Founded in 2016 with a corpus of INR 10,000 Cr, FFS has been envisaged to boost the country’s startup ecosystem and provide capital to startups. The scheme does not directly invest in startups but rather provides capital to SEBI-registered AIFs, which then invest in homegrown players via equity and equity-linked instruments.
SIDBI operates the fund of funds and selects the AIFs for investing in startups. It also oversees the disbursal of the committed capital. It is pertinent to note that AIFs supported under the FFS have to invest at least double the amount committed under the FFS in startups.
