SIDBI Unveils Impact Study of Fund of Funds for Startups: CRISIL Report Highlights Transformational Effects

In a landmark move showcasing the transformative impact of the Fund of Funds for Startups (FFS), the Small Industries Development Bank of India (SIDBI) unveiled the CRISIL impact assessment report titled “Prabhaav” on 9th February 2024. The FFS, a pivotal component of the Startup India Action Plan initiated by Hon’ble Prime Minister Shri Narendra Modi ji in 2016, has emerged as a flagship program of the Department for Promotion of Industry and Internal Trade (DPIIT), Government of India, revolutionizing the country’s startup ecosystem.

Managed by SIDBI on behalf of DPIIT, the FFS contributes to the corpus of category I & II Alternative Investment Funds (AIFs), with a primary mandate to fuel investments in startups. The CRISIL report, unveiled by Shri S. Ramann, Chairman & Managing Director of SIDBI, alongside other key dignitaries, underscores the profound impact of FFS on various facets of the startup landscape.

Catalyzing Capital Flow and Nurturing Innovation

According to the report, the FFS has catalyzed investments amounting to approximately four times the initial commitment, with a staggering ₹17,534 crore invested in 938 unique startups by November 30, 2023. This infusion of capital has not only fostered innovation but has also positioned India as the third-largest startup ecosystem globally. Impressively, 18 startups supported by FFS have achieved unicorn status, illustrating the scheme’s efficacy in nurturing high-growth ventures.

Inclusivity and Diversity in Startup Funding

The FFS has played a pivotal role in fostering inclusivity and diversity within the startup ecosystem. By extending support to startups beyond Tier 1 cities, the scheme has facilitated investments totaling ₹1,590 crore in 129 startups, thus amplifying opportunities in previously underserved regions. Furthermore, the report highlights the increasing support for women-led startups and fund managers, signaling a progressive shift towards gender diversity in the startup landscape.

Empowering Venture Capital Space

The FFS has emerged as a hallmark of approval for fund managers, with 89% of respondents affirming its instrumental role in anchoring their fundraising efforts. Moreover, over 75% of respondents reported a positive impact on raising non-institutional domestic capital post-commitment by SIDBI under the scheme. Notably, 35% of supported AIFs are managed by first-time fund managers, indicating a burgeoning ecosystem ripe for expansion and innovation in venture capital financing.

Government Appreciation and Future Endeavors

The Secretary of the Department of Financial Services (DFS) and the Secretary of DPIIT commended SIDBI for its exemplary management of the scheme and the tangible outcomes it has delivered. Since its inception in 1990, SIDBI has been at the forefront of fostering innovation and entrepreneurship, catalyzing the growth of the startup ecosystem through various initiatives, including the FFS. Apart from FFS, SIDBI manages other key funds, such as the ASPIRE Fund of Funds, focusing on agro and rural enterprises, and state-specific funds for Uttar Pradesh and Odisha.

In conclusion, the CRISIL impact assessment report “Prabhaav” underscores the profound impact of the Fund of Funds for Startups, managed by SIDBI, in fueling innovation, fostering inclusivity, and empowering the venture capital landscape in India. As the country continues its journey towards becoming a global startup powerhouse, initiatives like the FFS will remain instrumental in driving sustained growth and prosperity in the startup ecosystem.