Govt’s Fund of Funds for Startups scheme: Rs 17,534 crore invested in 938 startups, says Crisil-SIDBI report – SME News

The Fund of Funds for Startups (FFS) scheme under the Startup India programme launched by Prime Minister Narendra Modi in January 2016 has enabled investments to the tune of around 4x of the amount drawn with Rs 17,534 crore invested in 938 startups, according to a Crisil assessment called Prabhaav launched by SIDBI on Friday. 

The report noted that as of November 30, 2023, 129 AIFs (alternative investment funds) were sanctioned commitment out of FFS across segments. 

While FFS, managed by SIDBI, largely focuses on early-stage funding in young companies, as many as 18 of its startups have already become unicorns, the report noted. 

Importantly, the scheme doesn’t invest directly in startups. The capital is provided to SEBI-registered AIFs, known as daughter funds, who in turn invest money in growing Indian startups through equity and equity-linked instruments. 

According to the report, 129 startups based in cities beyond Tier 1 locations have received investments aggregating Rs 1,590 crore. 

In addition to the report, a survey was also conducted by CRISIL as part of the assessment highlighting that 89 per cent of respondents confirmed that support under FFS was instrumental in anchoring their fund raise.  

Further, out of the AIFs supported, 35 per cent are managed by first-time fund managers, which will help deepen and enhance the reach of the AIF/VC funding ecosystem, the assessment noted. 

Meanwhile, under the Startup India programme, the Department for Promotion of Industry and Internal Trade (DPIIT) has recognised over 1.20 lakh startups as of February 9, 2024, as per data from the programme’s portal. 

Under the Startup India initiative, startups registered with the Commerce Ministry’s DPIIT get access to a host of tax benefits, easier compliance, IPR fast-tracking and more. So far, 2,978 startups have received tax exemptions under the programme. 

Among other benefits, startups can self-certify compliance with six labour laws and three environmental laws.