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
About:
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.
Significance:
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.
