The department for promotion of industry and internal trade (DPIIT) has reportedly, reached out to the finance ministry to increase the corpus of the Fund of Funds for Startups, reported Inc42, citing a report published by ET.
According to the ET report, the DPIIT officials recently met executives of the Small Industrial Development Bank of India (SIDBI).
The DPIIT officials said that the demands from SIDBI were to double the FFS corpus and to allocate a higher amount of INR 1,300 Cr-INR 1,400 Cr, as against INR 600 Cr-INR 700 Cr now.
The DPIIT is the monitoring agency and SIDBI is the operating agency for the Funds of Funds for Startups.
Importantly, the SIDBI has committed INR 3,123.2 Cr to 49 Alternative Investment Funds registered with the Securities and Exchange Board of India.
The Startup India initiative was launched by the government in January 2016. The initiative had a 19-point action plan. It envisaged several incubation centres, easier patent filing, tax exemptions, ease of setting-up of business, an INR 10,000 Cr ($1.45 Bn) corpus Fund of Funds and a faster exit mechanism, among other things.
DPIIT disburses the funds to SIDBI which in turn gives them to venture capital funds (also called Alternate Investment Funds or AIFs). The AIFs create a corpus fund which has participation from other investors. The money raised is then used to invest in startups.