Fund of Funds (FFS) scheme for startups has given a big boost to the Indian startup ecosystem. Sanctioned in 2016 with a corpus of Rs 10,000 crore, the scheme is designed to provide domestic capital to growing startups in the country. Minister of State for Commerce & Industry, Shri Som Prakash recently informed that by 31st December 2022 Rs. 7,980 crores has been committed to ninety-nine Alternative Investment Funds (AIFs) and Rs. 3,400 crores has been disbursed to 72 AIFs, resulting in an investment of Rs. 14,077 crores in 791 Startups.
The FFS Scheme does not directly invest in startups, instead, it provides capital to SEBI-registered AIFs, also known as daughter funds. The Small Industries Development Bank of India (SIDBI) operates the Fund, selecting suitable daughter funds and overseeing the disbursal of committed capital. The AIFs supported under FFS are required to invest at least 2 times the amount committed under FFS in startups.
Under the Startup India initiative, the government is constantly undertaking efforts to develop and grow the startup ecosystem in the country. In addition to the FFS Scheme, the Startup India Seed Fund Scheme (SISFS) and Credit Guarantee Scheme for Startups (CGSS) support startups at various stages of their business cycle, enabling them to raise investments or loans from various sources.
The government also conducts flagship annual 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 also seeks regulatory and policy-related recommendations through stakeholder consultations to enhance the ease of doing business and reduce the compliance burden for the startup ecosystem. Additionally, the government facilitates the participation and engagement of the Indian startup ecosystem on international platforms.
TThe FFS Scheme has played an important role in wealth creation, employment generation, inclusive growth, and recognition for startups, as reported by SIDBI. The government’s efforts to support and grow the Indian startup ecosystem will continue to play a critical role in the country’s economic development.
