In news: Govt commits Rs. 7,385 crores under Fund of Funds for Start-up India Investment scheme for 88 Alternative Investment Funds (AIFs) and 720 start-ups supported by AIFs.
- CAGR of over 21% since launch
- Valuation increases by more than 10 times
- Year on year surge of 100% in amount of drawdowns
- Investments into eligible start-ups is approximately 3.7 times of FFS disbursements; well above minimum stipulated 2 times under the Scheme
- Fund of Funds for Start-ups (FFS) was launched under Start-up India initiative in 2016.
- Small Industries Development Bank of India (SIDBI) is responsible for operationalising the scheme. It has undertaken a series of reforms to expedite the drawdowns.
- Corpus of funds: FFS was announced with a corpus of Rs. 10,000 cr., to be built up
through budgetary support by DPIIT, Ministry of Commerce & Industry
- Methodology: FFS supports SEBI registered AIFs, which in turn invest in start-ups.
- FFS has been playing a monumental role in mobilizing domestic capital in Indian start-up ecosystem.
- It has also played a catalytic role in terms of reducing dependence on foreign capital and encouraging home grown and new venture capital funds.
- Innovation created will remain within the country and facilitate generation of employment and creation of wealth.
- Unicorn status (valuation of over USD 1 billion) has been achieved by start-ups funded through FFS like Dunzo, CureFit, FreshToHome, Jumbotail, Unacademy, Uniphore, Vogo, Zostel,Zetwerk etc.,
About Alternative Investment Fund (AIF):
- It means any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors.
- Applicants can seek registration as an AIF in one of the following categories,
- Category I AIF: Venture capital funds (Including Angel Funds), SME Funds, Social Venture Funds, Infrastructure funds
- Category II AIF
- Category III AIF
- Fund of Funds is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. In the context of AIFs, a Fund of Fund is an AIF which invest in another AIF.
Previous Year Question
Q.1) What does venture capital mean? (2014)
- A short-term capital provided to industries
- A long-term start-up capital provided to new entrepreneurs
- Funds provided to industries at times of incurring losses
- Funds provided for replacement and renovation of industries