Funds of funds for startups: DIPP seeks Rs 1600 cr from Finance Ministry this fiscal – Economy News
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Surbhi Prasad
The Department of Industrial, Policy and Promotion (DIPP) has sought Rs 1,600 crore from the finance ministry in the supplementary demand for grants for the fund-of-funds for start-ups in the current financial year. “We have sought Rs 1,600 crore from finance ministry… Around Rs 500 crore is backlog and we have also sought an additional Rs 1,100 crore for the fund-of-funds,” a senior official said.
In the Union Budget for 2017-18, the central government had allocated just Rs 1 lakh for the fund-of-funds. Prime Minister Narendra Modi
“It’s important to note that the fund-of-funds will be covered in two finance commission cycles (through 2025). So roughly, it comes to around Rs 1,100 crore per year. In the first year (2016-17), Rs 600 crore was given to SIDBI,” the official said. The fund-of-funds saw limited takers since its launch in January 2016, mostly due to the slow and fairly complicated procedure of raising and deploying funds by venture capital funds.
In March, the government approved long-sought-after changes to the conditions for sanctions from the fund-of-funds, which are likely to encourage more investors to tap government funding. The fund-of-funds was sanctioned for contribution to various alternative investment funds (AIFs) registered with the Securities and Exchange Board of India (Sebi
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In the year ended March, as many as 17 venture capital funds were sanctioned Rs 623.50 crore from the fund-of-funds corpus. These funds in turn invested in 62 start-ups, according to the data from the DIPP. The 62 start-ups, which were backed by VC funds where Small Industries Development Bank of India
Meanwhile, 1,006 start-up applications have been recognised as start-ups by DIPP as of May 15, of which 23 start-ups have benefited from the government’s decision to give income tax