Sidbi commits $29m to four funds to support startup financing

Photo: Reuters

The Small Industries Development Bank of India (Sidbi) on Friday tweeted that it has committed Rs 200 crore under the Fund of Funds Scheme (FFS) to four alternative investment funds (AIFs) namely Omnivore Partners India Fund 2, TVS Shriram Growth Fund 3, IQ Alpha III, and Capaleph Indian Millennium SME Fund.

In January 2016, the government of India’s Startup Action Plan announced establishment of FFS with a corpus of Rs.10,000 crore to be managed by Sidbi. The Startup India plan is a scheme by the government to encourage entrepreneurship in the country.

As per the guidelines, FFS shall contribute to AIFs registered with SEBI. AIFs, in turn, would invest in equity and equity linked instruments of various Startups at early stage, seed stage and growth stages. AIFs, with corpus upto Rs.500 crore, shall invest at least 50 per cent of the corpus in MSMEs (as defined under MSMED Act).

The government has already provided to the corpus Rs 500 crore in 2015-16 and Rs 600 crore in 2016-17.

According to October 2017 status report by DIPP on the Startup India website, about $92 million (Rs 605.7 crore) from the fund has already been released to Sidbi, and 75 startups have received funding from 17 AIFs so far. The entire money will be released spread over two finance commission cycles (14th and 15th till 2025) based on the scheme’s progress.

In January Indian Prime Minister Narendra Modi had said that the Rs 10,000 crore fund has helped venture capital funds provide assistance of Rs 7,000 crore to startups. This fund, he said, in the long run will ensure funding of Rs 1 lakh crore to startups in the country.

Sidbi had also committed Rs 200 crore under the scheme to three AIFs namely Bharat Innovation Fund, JM Financial Fund II and North Eastern Venture Fund in January this year. Earlier, Sidbi had backed funds such as Pi Ventures, Unicorn India Ventures Fund I, Ankur Capital Stellaris Fund, Menterra Social Impact Fund I and Endiya Seed Co-Creation Fund besides others.

Sidbi is also operating various other fund of funds programmes by investing in MSMEs and start-ups – India Aspiration Fund (IAF) launched formally by Finance Minister Arun Jaitley in August 2015, ASPIRE Fund focused on agri and rural enterprises launched by Jaitley for MSME in 2016, and Rs 200 crore on behalf of LIC.

Omnivore Partners had hit the first close of its second fund, Omnivore Partners India Fund 2, at $46 million with investments from KfW, Sidbi, the Dutch Good Growth Fund, The Rockefeller Foundation, Ceniarth, RBL Bank and the Sorenson Impact Foundation. Omnivore targets to raise a total of $75 million in the second fund and hopes to complete the fund raising by August, it announced on February.

Meanwhile, Chennai-based private equity firm TVS Capital Funds Ltd is targeting a corpus of Rs1,000 crore for its TVS Shriram Growth Fund 3.