AIF Fund for Startups Under FFS Scheme in 5 States

Five states have received nearly 88% of the investments made by Alternative Investment Funds known as AIF. AIF Fund for Startups under the Startups FFS (Fund for Funds) Scheme. Out of the overall investment of Rs 14,077 crore distributed across the nation in which Karnataka topped the list of states with an investment of Rs 4,687 crore.

With a corpus of Rs 10,000 crore and contributions spread over the 14th and 15th Finance Commission cycles based on implementation progress, the Fund of Funds for Startups (FFS) Scheme was approved and established in 2016 with the goal of giving the Indian startup ecosystem a much-needed boost and facilitating access to domestic capital.

As of December 31, 2022, 99 AIFs had received commitments totaling Rs. 7,980 billion and 72 AIFs had received payments totaling Rs. 3,400 billion. These 72 AIFs had in turn invested Rs. 14,077 billion in 791 startups.

According to government data, Karnataka received an investment of Rs 4,687 crore for 240 companies under the programme, Maharashtra received an investment of Rs 3,426 crore for 176 businesses and Delhi received an investment of Rs 2,254 crore for 138 firms.

Similar investments were made in Tamil Nadu for 29 firms and in Haryana for 60 startups totaling Rs 1,148 crore. The Alternative Investment Funds (AIFs) also known as daughter funds that are registered with SEBI and participate in the FFS Program provide funding to developing Indian startups through stock and equity-linked instruments rather than investing directly in them.

It is the responsibility of the Small Industries Development Bank of India (SIDBI) to manage the operation of this Fund by choosing appropriate daughter funds and approving the distribution of committed resources. AIFs backed by FFS must invest at least twice as much in startups as was committed by FFS.

The Startup India programme was established by the government on January 16, 2016, with the goal of creating a robust ecosystem for fostering innovation, entrepreneurship, and encouraging private investments in the nation’s startup ecosystem.

The flagship programmes such as Fund of Funds for Startups (FFS), Startup India Seed Fund Scheme (SISFS) and Credit Guarantee Scheme for Startups (CGSS) provide support to startups at different points in their development so they can advance to the point where they can attract angel or venture capital funding or apply for loans from commercial banks or other financial institutions.

According to officials, the government has implemented more than 50 regulatory reforms since 2016 to improve the ease of doing business, the convenience of raising money and the cost of compliance on the startup ecosystem.

Additionally, under the condition that all DPIIT-recognized startups meet quality and technical requirements, Central Ministries and Departments have been instructed to waive the requirements for prior turnover and prior experience in public procurement. Additionally, a section of the Government e-Marketplace (GeM) called Startup Runway has been created specifically for businesses to market their goods and services to the government.

The government also runs prestigious annual initiatives and events like Innovation Week, the National Startup Awards and States’ Startup Ranking which are crucial to the overall growth of the startup ecosystem. The government also makes it easier for the Indian startup ecosystem to participate in and engage with foreign platforms.