Investment for 88 Alternative Investment Funds totaling Rs. 7,385 crore has been pledged by the government as part of the Fund of Funds for Startup India.

As of the 24th of September 2022, the Prime Minister of India, Shri Narendra Modi, committed a total of Rs. 7,385 crore to 88 alternative investment funds (AIFs) through the Fund of Funds for Startups (FFS), which was established in 2016 as part of the Startup India initiative. In turn, these AIFs have invested a total of 11,206 crore in 720 different startups. The role that FFS has been playing in the Indian startup ecosystem to mobilise domestic capital has been nothing short of monumental.

It was announced that the FFS would have a corpus of 10,000 billion rupees. The corpus is going to be built up over the 14th and 15th Finance Commission Cycles (FY 2016-2020 and FY 2021-2025), and it will do so with the support of budgetary funds from the Department for the Promotion of Industry and Internal Trade (DPIIT), which is part of the Ministry of Commerce and Industry for the Indian government. Support is provided, under the auspices of FFS, to SEBI-registered alternative investment funds (AIFs), which then invest that money in new businesses.

Not only has FFS made early-stage, seed-stage, and growth-stage funding available for startups, but it has also played a catalytic role in terms of facilitating the raising of domestic capital, reducing dependence on foreign capital, and encouraging home-grown and new venture capital funds. The total target corpus of the Alternative Investment Funds (AIFs) that are supported by FFS is greater than Rs. 48,000 crore. Chiratae Ventures, India Quotient, Blume Ventures, IvyCap, Waterbridge, Omnivore, Aavishkaar, JM Financial, Fireside Ventures, and many more are examples of some of the prominent alternative investment funds (AIFs) of leading startup investment firms that are supported by FFS.

Since the beginning of the Scheme, the total amount of money that has been committed to the FFS has increased at a compound annual growth rate (CAGR) that is greater than 21%. In addition, the Small Industries Development Bank of India (SIDBI), which is accountable for the operationalization of the Scheme and has recently implemented a series of reforms to expedite the drawdowns in order to make it possible for AIFs that have been assisted under FFS to take advantage of accelerated drawdowns, has been working to improve the process. This has resulted in a positive impact and has led to a surge of 100% in the amount of drawdowns year on year (comparing the first quarter of fiscal year 2021-22 to the first quarter of fiscal year 2022-23)

FFS has assisted in anchoring 67 out of a total of 88 AIFs that it has supported, and of those 67, 38 are first-time fund managers. This is in keeping with the primary objective of FFS, which is to anchor venture capital investments for Indian startups.

The ratio of investments into eligible startups to FFS disbursements is approximately 3.7 times, which is significantly higher than the minimum ratio of 2 times that is stipulated by the Scheme. Startups that are performing well and are supported by the FFS are experiencing a valuation increase of more than 10 times, and some of them have even achieved the status of unicorn (valuation of over USD 1 billion). A number of noteworthy startups have received funding from FFS, including Dunzo, CureFit, FreshToHome, Jumbotail, Unacademy, Uniphore, Vogo, Zostel, and Zetwerk, amongst others. The profits that are made as a result of the achievements of these new businesses and the innovations that are developed will be kept within the borders of the nation, which will encourage the production of jobs and the accumulation of wealth.