The Indian government has announced a new Fund of Funds Scheme (FFS) with a corpus of Rs 10,000 crore to support the growth of startups in the country. The scheme, operationalized by the Small Industries Development Bank of India (SIDBI), provides capital to registered alternative investment funds (AIFs) that in turn invest in startups. With commitments of over Rs 91,000 crore from AIFs, the government plans to further expand the scheme with an additional contribution of Rs 10,000 crore. The AIFs supported by the scheme include prominent names such as Chiratae Ventures, India Quotient, Blume Ventures, and JM Financial.
Indian Government's Fund of Funds Scheme for Startups: A Comprehensive Overview
Background
In recent years, India has emerged as a global hub for startups. To foster the growth and development of these innovative ventures, the Indian government has launched several initiatives, including the Fund of Funds Scheme (FFS).
About the Fund of Funds Scheme
The FFS was announced in 2016 with an initial corpus of Rs 10,000 crore. The scheme is managed by the Small Industries Development Bank of India (SIDBI), which provides capital to registered alternative investment funds (AIFs). These AIFs, in turn, invest in eligible startups that meet specific criteria.
As of date, the FFS has received commitments of over Rs 91,000 crore from AIFs. The government plans to further expand the scheme with an additional contribution of Rs 10,000 crore.
Objective of the Scheme
The primary objective of the FFS is to provide growth capital to startups that have the potential to scale and create jobs. The scheme aims to address the funding gap faced by early-stage ventures, which often struggle to secure traditional funding sources.
Eligibility Criteria
To be eligible for FFS funding, startups must meet the following criteria:
Top 5 FAQs
1. What is the corpus of the Fund of Funds Scheme? The initial corpus was Rs 10,000 crore, which will be expanded to Rs 20,000 crore with an additional contribution.
2. Who manages the Fund of Funds Scheme? The Small Industries Development Bank of India (SIDBI) is responsible for managing the scheme.
3. What is the investment strategy of the AIFs? AIFs invest in a diversified portfolio of startups across various sectors and stages of development. They typically focus on early-stage ventures with high growth potential.
4. What are the criteria for startups to access FFS funding? Startups must meet requirements related to company structure, innovation, revenue, and scalability.
5. What are some of the AIFs supported by the Fund of Funds Scheme? Prominent AIFs include Chiratae Ventures, India Quotient, Blume Ventures, and JM Financial.
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