Start-Up India’s Fund of Funds for Startups (FFS) Scheme Accelerates Investments

Start-Up India’s Fund of Funds for Startups (FFS) Scheme Accelerates Investments The FFS scheme largely focuses on early-stage funding in young companies, as many as 18 of its start-ups have already become unicorns and the scheme facilitated worth Rs 17,534 Crore in 938 Start-ups
The Fund of Funds for Startups (FFS) scheme under the Startup India programme, launched by Prime Minister NarendraModi in January 2016, has facilitated investments amounting to around four times the amount drawn, with Rs 17,534 crore invested in 938 start-ups, according to a Crisil assessment called Prabhaav launched by SIDBI this february.

The report highlights the following benefit that came with FFS scheme:

•The report highlighted that as of November 30, 2023, 129 Alternative Investment Funds (AIFs) were sanctioned commitments out of FFS across segments.
•While FFS, managed by SIDBI, primarily focuses on early-stage funding in young companies, the report noted that 18 of its startups have already become unicorns.
•The scheme does not invest directly in startups.
•Instead, the capital is provided to SEBI-registered AIFs, known as daughter funds, which then invest in growing Indian startups through equity and equity-linked instruments.
•According to the report, 129 startups based in cities beyond Tier 1 locations have received investments aggregating Rs 1,590 crore. Additionally, a survey conducted by CRISIL as part of the assessment highlighted that 89% of respondents confirmed that support under FFS was instrumental in anchoring their fund raise.
•Furthermore, out of the AIFs supported, 35% are managed by first-time fund managers, which is expected to deepen and enhance the reach of the AIF/VC funding ecosystem, the assessment noted.
•Under the Startup India programme, the Department for Promotion of Industry and Internal Trade (DPIIT) has recognized over 1.20 lakh startups as of February 9, 2024, according to data from the programme’s portal.
•Startups registered with DPIIT under the initiative have access to various benefits, including tax benefits, easier compliance, fast-tracking of Intellectual Property Rights (IPR), and more. So far, 2,978 startups have received tax exemptions under the programme.
•Among other benefits, startups can self-certify compliance with six labour laws and three environmental laws.