How startups can get access to Govt's Fund of Funds
ET Bureau|
Updated: Jan 17, 2018, 08.48 AM IST
Seeker
Raj Neravati, Founder, Hug Innovations
Government has created a large pool of funds for helping startups. However, no one seems to know the process for startups to get access to these funds. What is the way to go about and apply/access it?
Guru
Murali Talasila, Partner and Innovation Leader, PWC India
The first step before jumping into the fray for funding from the Fund of Funds for Startups (FFS) is to get yourself registered/certified by Startup India via the process listed on the website.
Once you pass the hurdle, then they can get access to funds should the startup fit the focus/metrics of the fund. While the FFS will not directly invest in startups, it would participate in the capital of Sebi-registered Alternative Investment Funds (AIFs).
Sebi has laid down specific guidelines for AIFs to raise funds through the FFS route.
A fund raise involves two stages. In stage 1, the eligible AIF is required to make a formal presentation to Sidbi-appointed Venture Capital Investment Committee (VCIC). In stage 2, basis the recommendations of the VCIC, AIFs are required to submit an application to Sidbi which would be referred to the executive committee of the board of Sidbi for sanction.
Upon sanction of the executive committee, a letter of intent is issued and a contribution agreement is signed with the AIF. The government has already provided to the corpus Rs 500 crore in 2015-16 and Rs 600 crore in 2016-17 and further provisions are likely to be made as grant assistance through gross budgetary support.
According to data publicly available, 75 startups have been funded by 17 AIFs through the FFS scheme. According to Sebi, there are 346 registered AIFs as on date. As more AIFs are able to successfully raise capital through the FFS and create large corpuses, and as the startup up ecosystem continues to mature, there is no reason why the vision of creating a Rs 1,00,000-crore corpus for the sector cannot be realised much before its intended timeframe.
Raj Neravati, Founder, Hug Innovations
Government has created a large pool of funds for helping startups. However, no one seems to know the process for startups to get access to these funds. What is the way to go about and apply/access it?
Guru
Murali Talasila, Partner and Innovation Leader, PWC India
The first step before jumping into the fray for funding from the Fund of Funds for Startups (FFS) is to get yourself registered/certified by Startup India via the process listed on the website.
Once you pass the hurdle, then they can get access to funds should the startup fit the focus/metrics of the fund. While the FFS will not directly invest in startups, it would participate in the capital of Sebi-registered Alternative Investment Funds (AIFs).
Sebi has laid down specific guidelines for AIFs to raise funds through the FFS route.
A fund raise involves two stages. In stage 1, the eligible AIF is required to make a formal presentation to Sidbi-appointed Venture Capital Investment Committee (VCIC). In stage 2, basis the recommendations of the VCIC, AIFs are required to submit an application to Sidbi which would be referred to the executive committee of the board of Sidbi for sanction.
Upon sanction of the executive committee, a letter of intent is issued and a contribution agreement is signed with the AIF. The government has already provided to the corpus Rs 500 crore in 2015-16 and Rs 600 crore in 2016-17 and further provisions are likely to be made as grant assistance through gross budgetary support.
According to data publicly available, 75 startups have been funded by 17 AIFs through the FFS scheme. According to Sebi, there are 346 registered AIFs as on date. As more AIFs are able to successfully raise capital through the FFS and create large corpuses, and as the startup up ecosystem continues to mature, there is no reason why the vision of creating a Rs 1,00,000-crore corpus for the sector cannot be realised much before its intended timeframe.
