According to a statement from the Ministry of Commerce & Industry, the Fund of Funds for Startups (FFS), which Prime Minister Narendra Modi established in 2016 as part of the Startup India program, has committed Rs. 7,385 crores to 88 Alternative Investment Funds (AIFs) as of September 24.
According to a statement from the Ministry of Commerce & Industry, the Fund of Funds for Startups (FFS), which Prime Minister Narendra Modi announced as part of the Startup India program in 2016, has committed Rs. 7,385 crores to 88 Alternative Investment Funds (AIFs).
In turn, these AIFs contributed Rs. 11,206 crores to 720 startups. Regarding raising domestic financing for the Indian startup sector, FFS has been essential.
An Rs. 10,000 crore corpus for FFS was announced. The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry, will provide budgetary assistance for the corpus development for the course of the 14th and 15th Finance Commission Cycles (FY 2016-2020 and FY 2021-2025).
Support is provided under FFS to Alternative Investment Funds (AIFs), registered with SEBI and invested in start-up companies.
The ministry claims that FFS has not only provided funding for entrepreneurs in their early, seed, and growth stages, but has also acted as a catalyst for domestic capital raising, reduced reliance on foreign money, and the development of new venture capital firms.
The target corpus of the AIFs sponsored by FFS as a whole exceeds Rs. 48,000 crores. Chiratae Ventures, India Quotient, Blume Ventures, IvyCap, Waterbridge, Omnivore, Aavishkaar, JM Financial, Fireside Ventures, and others are notable AIFs of top startup investment companies backed by FFS.
Since the introduction of the Scheme, the amount pledged under FFS has increased significantly, achieving a CAGR of over 21%.
Additionally, the Small Industries Development Bank of India (SIDBI), which is in charge of making the Scheme effective, has implemented several modifications to speed up the drawdowns and allow AIFs supported by the FFS to take advantage of expedited drawdowns.
This had a favorable effect and increased the number of drawdowns year over year by 100% (Q1 FY 2021–22 compared to Q1 FY 2022-23).
According to the ministry, out of the 88 AIFs sponsored by FFS, 67 have been assisted in becoming anchored, and 38 of them have first-time fund managers, which is consistent with FFS’s primary goal of facilitating venture capital investments for Indian businesses.
Investments in qualifying companies are around 3.7 times FFS payments, which is much more than the minimum requirement of 2 times under the Scheme. According to the report, successful firms sponsored by FFS are experiencing valuation increases of more than ten times, with some even reaching unicorn status.
Some well-known firms sponsored by FFS include Dunzo, CureFit, FreshToHome, Jumbotail, Unacademy, Uniphore, Vogo, Zostel, and, others. The profits from these firms’ success and the innovations they produce will stay in the nation, facilitating the creation of wealth and jobs.
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