The Commerce and Industry Ministry of India has officially announced that the Fund of Funds for Startups (FFS), launched in 2016, has committed INR 7,385 crore to 88 alternative investment funds (AIFs) as of September 24 this year.
According to the Union Ministry of Commerce and Industry statement, these AIFs have invested INR 11,206 crore in 720 startups.
The FFS initiative, launched with a corpus of INR 10,000 crore, has played a pivotal role in mobilizing domestic capital in the Indian startup ecosystem. The corpus will be built over the 14th and 15th Finance Commission Cycles (2016-2020 and FY 2021-2025), with budgetary support from the ministry’s Department for Promotion of Industry and Internal Trade (DPIIT).
The FFS initiative provides assistance to AIFs that are registered with the Securities and Exchange Board of India. These AIFs fund domestic startups.
“FFS has not only made capital available for startups at an early stage, seed stage and growth stage but also played a catalytic role in facilitating the raising of domestic capital, reducing dependence on foreign capital and encouraging home-grown and new venture capital funds,” said the official press release.
Chiratae Ventures, India Quotient, Blume Ventures, IvyCap, Waterbridge, Omnivore, Aavishkaar, JM Financial, Fireside Ventures, and others are among the prominent AIFs of leading startup investment firms supported by FFS.
The AIFs supported by FFS has a total target corpus of over INR 48,000 crore. Performing startups supported by FFS have seen their valuations more than tenfold increase, with a number of them even achieving unicorn status (valuation of over US$ 1 billion).
“Dunzo, CureFit, FreshToHome, Jumbotail, Unacademy, Uniphore, Vogo, Zostel, Zetwerk etc., are some of the notable startups funded through FFS,” the release said. The amount committed under FFS has seen a notable growth over the years recording a CAGR of over 21 percent since the launch of the Scheme.
Furthermore, the Small Industries Development Bank of India (SIDBI), in charge of implementing the scheme, has recently implemented a series of reforms to allow AIFs assisted under FFS to take advantage of 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 percent in the number of drawdowns,” the ministry said.
FFS has assisted in anchoring 67 AIFs out of 88 AIFs supported, with 38 being first-time fund managers, which is consistent with FFS’s core objective of anchoring venture capital investments for Indian startups.