Startup India’s Fund of Funds Scheme Facilitates Investments of Rs 17,534 Crore in 938 Startups

Startup India’s Fund of Funds Scheme Facilitates Investments of Rs 17,534 Crore in 938 Startups

Launch and Objectives

  • Launch: Prime Minister Narendra Modi launched the FFS scheme under the Startup India programme in January 2016.
  • Objective: Enable investments in startups, particularly focusing on early-stage funding in young companies.

Investments and Performance

  • Investments: Rs 17,534 crore invested in 938 startups, resulting in around 4x returns of the amount drawn.
  • Unicorns: 18 startups supported by FFS have achieved unicorn status.
  • Investment Approach: FFS doesn’t invest directly in startups; instead, it provides capital to SEBI-registered AIFs, which then invest in growing Indian startups through equity and equity-linked instruments.

Regional Distribution

  • Investments Beyond Tier 1 Cities: 129 startups located in cities beyond Tier 1 locations have received investments totaling Rs 1,590 crore.

Impact Assessment

  • CRISIL Assessment (Prabhaav): Indicates that support under FFS has been instrumental in facilitating fund raises for startups.
  • Survey Findings: 89% of respondents confirmed the importance of FFS support in their fundraising endeavors.
  • First-Time Fund Managers: 35% of supported AIFs are managed by first-time fund managers, contributing to the expansion and deepening of the AIF/VC funding ecosystem.

Recognition and Benefits

  • Recognition: Over 1.20 lakh startups have been recognized under the Startup India programme as of February 9, 2024.
  • Benefits: Startups registered with DPIIT gain access to tax benefits, streamlined compliance processes, fast-tracking of Intellectual Property Rights (IPR), among other advantages.
  • Tax Exemptions: 2,978 startups have received tax exemptions under the Startup India programme.
  • Labour and Environmental Laws: Startups can self-certify compliance with six labour laws and three environmental laws, simplifying regulatory burdens.

Multiple Choice Questions (MCQs):

  1. When was the Fund of Funds for Startups (FFS) scheme launched?
    • A) January 2015
    • B) January 2016
    • C) January 2017
    • D) January 2018
    • Answer: B) January 2016
  2. How does the FFS scheme primarily invest in startups?
    • A) Direct investment in startups
    • B) Providing loans to startups
    • C) Investing in SEBI-registered AIFs
    • D) Purchasing shares of established companies
    • Answer: C) Investing in SEBI-registered AIFs
  3. What percentage of startups supported by FFS have become unicorns?
    • A) 5%
    • B) 10%
    • C) 15%
    • D) 18%
    • Answer: D) 18%
  4. How many startups, located beyond Tier 1 cities, received investments under FFS according to the report?
    • A) 90
    • B) 110
    • C) 129
    • D) 150
    • Answer: C) 129
  5. What is the primary advantage offered to startups registered under the Startup India programme?
    • A) Access to free marketing services
    • B) Expedited visa processing for international expansion
    • C) Tax benefits and streamlined compliance
    • D) Unlimited funding support from the government
    • Answer: C) Tax benefits and streamlined compliance