88% of ₹14,000 cr AIF funding goes to startups in 5 states – Karnataka tops the list

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Nearly 88 percent of Alternative Investment Funds’ investments (AIFs) under Startups FFS (Fund for Funds) Scheme have gone to five states. Karnataka tops the list of states with an investment of Rs 4,687 crore out of the total investment of Rs 14,077 crore spread across the country.

The Fund of Funds for Startups (FFS) scheme was approved and established in 2016 with a corpus of Rs 10,000 crore, with contributions spread across the 14th and 15th Finance Commission cycle based on the progress of implementation, to provide a provide much-needed boost to the Indian startup ecosystem and enable access to domestic capital.

As of 31 December 2022, under FFS Rs 7,980 crore has been committed to 99 AIFs and Rs 3,400 crore has been disbursed to 72 AIFs who in turn have invested Rs 14,077 crore in 791 startups.

According to the government data, Karnataka got investment of Rs 4687 crore for 240 startups under the scheme, Maharashtra’s 176 startups received investment of Rs 3,426 crore and Delhi’s 138 startups got Rs 2,254 crore.

Similarly, 60 startups in Haryana received an investment of Rs 1,148 crore and in Tamilnadu29 startups got an investment of Rs 826 crore.

Under FFS, the scheme does not invest directly in startups, but provides capital to SEBI-registered Alternative Investment Funds (AIFs), also known as subsidiary funds, which in turn invest money in growing Indian startups through equity and equity-linked instruments .

The Small Industries Development Bank of India (SIDBI) has been mandated to manage this fund by selecting appropriate subsidiary funds and overseeing the disbursement of committed capital. AIFs supported under FFS are required to invest at least twice the amount pledged under FFS in startups.

The government, aiming to build a strong ecosystem for nurturing innovation, startups and encouraging private investment in the country’s startup ecosystem, launched the Startup India initiative on January 16, 2016.

The flagship schemes, including Fund of Funds for Startups (FFS), Startup India Seed Fund Scheme (SISFS) and Credit Guarantee Scheme for Startups (CGSS) support startups at various stages of their business cycle to enable startups to graduate to a level where they can attract investment from UK investors or venture capitalists or seek loans from commercial banks or financial institutions. institutions.

Officials said the government has made more than 50 regulatory reforms since 2016 to make business easier, raise capital and reduce the compliance burden on the startup ecosystem.

In addition, central ministries and departments have been instructed to relax the terms of previous turnover and previous public procurement experience for all DPIIT-approved startups, provided they meet the quality and technical specifications. Furthermore, the Government e-Marketplace (GeM) Startup Runway has been developed, a special corner for startups to sell products and services directly to the government.

The government also conducts annual flagship exercises and programs, including the States’ Startup Ranking, National Startup Awards, and Innovation Week, which play an important role in the holistic development of the startup ecosystem. The government is also facilitating the participation and engagement of the Indian startup ecosystem on international platforms.

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