September 8, 2021 11:54 AM
Startups get only one-fifth of the amount from govt’s Rs 10,000-cr ‘Fund of Funds’, The government has released a meagre one-fifth of the amount from the Rs 10,000-crore corpus promised for promoting Indian startups about five years ago.
Under the ‘Fund of Funds for Startups’ scheme, the Department for Promotion of Industry and Internal Trade was tasked by the government to provide funding support to the Small Industries Development Bank of India (SIDBI) which, in turn, had the task of further lending to venture capital fund industry to support startup communities.
Alteria’s group-level portfolio companies include some of the big names like BharatPe, Lendingkart, Toppr, and Zest. The other beneficiaries of SIDBI’s scheme are the debt funds of Trifecta Venture, JM Financial, IAN Fund and Chiratae Trust.
Startups get only one-fifth of the amount from govt’s Rs 10,000-cr ‘Fund of Funds’, The Fund of Funds for Startups scheme was started with an initial corpus of Rs 10,000 crore for encouraging Indian startups at a time when startups were globally creating a disruption in the market.
Unlike the US and China, there was not much support to Indian startups from domestic financial institutions. Startups like Byju’s, Paytm, Zomato, Swiggy, PhonePe and others have become unicorns by getting funding support from foreign private equity and venture fund players.
The government’s scheme also offers new learnings for SIDBI, which is the principal financial institution dealing with the Micro, Small, and Medium Enterprise (MSME) sector. While it has expertise in assessing traditional MSMEs, the space of venture capital funds or alternative investment funds (AIFs), which deal with startups, is new for it.
However, the financial institution has set certain conditions for private funds under the Fund of Funds scheme. These funds are required to invest a minimum of twice the amount received from SIDBI under the scheme.