Govt’s Rs 10,000cr startup fund invested Rs 623.5cr in 17 VC firms last year

By : |April 24, 2017 0

Back in January 2016, the Indian government set up a Rs 1o,000 crore ‘Fund of Funds’ to boost the startup ecosystem. Apparently, till few months back, not much was known regarding the agency/body disbursing the funds or its beneficiaries. However,  as per the data released by the Small Industries Development Bank of India (Sidbi) and Department of Industrial Policy and Promotion (DIPP), nearly 17 venture capital funds were sanctioned Rs 623.50 crore from the fund last year. These funds in turn invested in 62 start-ups.

According to the data, all of the 62 start-ups—backed by VC funds where Sidbi acted as a limited partner—cumulatively raised Rs186.84 crore in FY17.

These funds included VC firms such as Mumbai-based VC firms Kae Capital and Orios Venture Partners, Unicorn India Ventures, Ideaspring Capital, Pi Ventures and Stellaris Venture Partners. The beneficiaries included used cars marketplace Truebil, shopping portal Fynd, lending platform Loanzen, second-hand products marketplace ListUp and others.

With Sidbi acting as a limited partner to the VCs, these 62 start-ups managed to raise around Rs 186.84 crore in FY17. Notably, only up to 30 percent of a VC’s corpus can be raised from the fund-of-funds and can be drawn from the Sidbi only when an investment opportunity arises. So, until March end, the 17 VCs had drawn only Rs 33.63 crore of the Rs 623.50 crore committed.

The government has also updated the regulations for the Fund-of-Funds programme. Under the new scheme, VCs are free to invest only double the amount raised from the state. However, initially, VCs were required to spend 100 percent of the corpus in startups.

So we can expect more investors to exhibit an interest in the same and more startup to benefit from it.

Also, VCs can now make follow-on investment in portfolio companies — even after the business no longer has the startup tag associated with it.

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