Fund of Funds i.e. FoF, an investment strategy developed by the government for providing the funds to startups, needs a fresh infusion of money.
DIPP, Department of Industrial Policy and Promotion, nodal department for dealing with the funds, has approached the finance ministry for a fund of Rs 1600 crore in this fiscal year.
Funds allocated this year to FoF
Only Rs 1 Lakh has been allocated to the FoF in this year and DIPP hopes for extra allocation in the special demands for grants. Narendra Modi declared that an aggregate corpus of Rs 10000 crore will be release till 2025 to FOF.
Official hopes additional funds for FoF
A senior government official said that, “Considering the fund has to be spent over the next nine years, per year, the allocation should be Rs 1,100 crore…We are hoping to receive funds in the supplementary budget”.
Resources put in AIFs
The FoF has submitted Rs 623 crore to 17 AIFs (Alternative investment funds) which is set up under it and additionally these will put resources into 62 new startups as on March 2017. The Cabinet endorsed the foundation of FoF on June 22 a year ago.
Government has supplied Rs 600 crore to FoF in this fiscal year of 2017 which is established by technology driven startup and managed by #Sidbi (Small Industries Development Bank of India).
AIFs are waiting for investment in startups
The government official also said that, “As of now, we have committed all funds available to us to AIFs that are waiting for a ripe time to invest in startups… It is therefore important for us to ensure a steady fund flow now”.
Perception behind creation of FOFs
FOF has been created with the perception to contribute in AIFs registered SEBI, capital market regulator, and this will invest in various stages (early, seed, and growth stages) of startups’ equity and equity linked instruments.
Norms and standards of FOF
All norms and standards for contribution in startups by FoF have been defined under Government’s Startup India Action Plan.
Almost 798 applications have been accepted for startups till now by the DIPP.
Government has loosened its criteria for venture subsidizing and now allows investment of a part of corpus in firms apart from startups.