July 18, 2018
The FFS programme is monitored by the Department of Industrial Policy and Promotion (DIPP)
The Small Industries Development Bank of India (SIDBI) is be the operating agency for the Fund
Launched in 2016, the FFS has a funding corpus of US$1.5 billion to support startups till 2025
FFS contributes to the corpus of the SEBI registered Alternative Investment Funds (AIFs)
Government of India in 2016 had established Fund of Funds for Startups (FFS), a comprehensive platform to meet the funding needs of up-and-coming entrepreneurs and enterprises. And as of June 30 2018, as many as 142 startups have received financial assistance from the Fund. The FFS programme is monitored by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, while the Small Industries Development Bank of India (SIDBI) is be the operating agency for the Fund. This is a critical move as direct funding support to startups is not envisaged under Startup India Programme. Since its launch, the FFS has been granted funding corpus of US$1.5 billion to support startups till 2025.
According to the operating guidelines issued by DIPP, FFS contributes to the corpus of the Securities and Exchange Board of India (SEBI) registered Alternative Investment Funds (AIFs). These AIFs in turn have to invest at least twice the contribution under FFS scheme in startups. Each AIF sets up its own investment committee and each Fund takes a decision on its investment activity. A formal mechanism has been put in place in the form of a monitoring committee to review progress of the Startup India programme. The committee comprises representatives from DIPP, NITI Aayog, Department of Revenue, Ministry of Micro, Small and Medium Enterprises, Department of Science and Technology, Department of Bio-Technology, Ministry of Electronics and Information Technology, Department of Higher Education and SIDBI.
The Monitoring Committee continuously reviews progress and implementation of various measures for growth of startup ecosystem. India is among the top five countries in the world in terms of the number of startups it houses, and ranks third in the category of technology focussed startups. This has created a space for innovation and skill development that has attracted interests of technology developers and investors worldwide. Since funding is key to the nurturing of startups, last year the Government announced a series of relaxations to the rules for investing in AIFs. AIFs have become very popular with high-net worth investors and data by market regulator SEBI shows that total funds raised by the funds increased to around US$75 billion as on June 30, 2017 from around US$40 billion a year earlier.