Fund of Funds for startups commits Rs 7,385 crore to 88 AIFs

The Fund of Funds for startups, launched in 2016, has committed Rs 7,385 crore to 88 alternative investment funds (AIFs) as of September 24 this year, the commerce and industry ministry said.

The Fund of Funds (FFS) initiative has been playing a major role in mobilising domestic capital in the Indian startup ecosystem., it added. FFS was announced with a corpus of Rs 10,000 crore. The corpus is to be built up over the 14th and 15th Finance Commission Cycles (2016-2020 and FY 2021-2025) through budgetary support by the Department for Promotion of Industry and Internal Trade (DPIIT), under the ministry.

Under FFS, support is extended to SEBI-registered AIFs, which in turn invest in startups. "FFS has not only made capital available for startups at early stage, seed stage and growth stage but also played a catalytic role in facilitating raising of domestic capital, reducing dependence on foreign capital and encouraging home-grown and new venture capital funds," it added.

Collectively, the AIFs supported by FFS have a target corpus of over Rs 48,000 crore. "Performing startups supported through FFS are showing valuation increase by more than 10 times with a number of them even achieving unicorn status (valuation of over USD 1 billion). Dunzo, CureFit, FreshToHome, Jumbotail, Unacademy, Uniphore, Vogo, Zostel, Zetwerk etc., are some of the notable startups funded through FFS," it said.

Among the prominent AIFs of leading startup investment firms supported under FFS are Chiratae Ventures, India Quotient, Blume Ventures, IvyCap, Waterbridge, Omnivore, Aavishkaar, JM Financial, and Fireside Ventures. It added that the amount committed under FFS has seen a notable growth over the years, recording a CAGR of over 21 per cent since the launch of the scheme.

Further, the Small Industries Development Bank of India (SIDBI), which is responsible for operationalising the scheme, has undertaken a series of reforms recently to enable AIFs assisted under FFS to avail accelerated drawdowns. "This has created a positive impact and has resulted in a year-on-year (Q1 FY 2021-22 vis--vis Q1 FY 2022-23) surge of 100 per cent in the amount of drawdowns," the ministry said.

FFS has helped anchor 67 AIFs out of 88 AIFs supported and 38 of these are first time fund managers, which is in line with FFS's core objective of anchoring venture capital investments for Indian startups, it said.