Govt keen on more funding for startups, to meet AIFs to explore avenues

Ahead of the 9th anniversary of the Startup India program on 16th January, Secretary with the Department for Promotion of Industry and Internal Trade (DPIIT) Amardeep Singh Bhatia is slated to meet 75 Alternate Investment Funds (AIFs) today evening to explore possibilities to promote funding for the startup ecosystem, especially in Tier-2 and Tier-3 cities. Government officials have said that work is underway to increase capital mobilisation apart from collaboration with several big companies to mentor startups. Efforts include sprucing up the MAARG (Mentorship, Advisory, Assistance, Resilience and Growth) portal which facilitates mentorship across sectors.

The government is in process of seeking a response from startups on what more can be done to promote the ecosystem, even as it is pitching for more funds under the Seed Fund scheme and Credit Guarantee scheme to provide credit to startups. Stating that removal of angel tax and expeditious action by the Ministry of Corporate Affairs has prompted many startups to return to India, government officials said that the equity market is also reflecting the impact of reverse flipping of startups. The government has also reached out to top 100 NSE listed cos to create a momentum for manufacturing incubators.

India had instituted a fund of ₹10,000 crores to increase capital availability and catalyse private investments to accelerate the growth of the startup ecosystem. The Fund was set up as a Fund of Funds for Startups (FFS) established by the DPIIT in June 2016. FFS does not invest in startups directly but provides capital to SEBI-registered AIFs, known as daughter funds, who in turn invest money in high-potential Indian startups. SIDBI has been given the mandate of managing the FFS through the selection of daughter funds and overseeing the disbursal of committed capital. The fund of funds makes downstream investments in venture capital and AIFs that in turn invest in startups. Funding is provided to startups across different life cycles. AIFs have already committed to invest ₹80,000 crores in startups and have already pumped in ₹20,000 crores till now.