1000 crore startup fund


Yesterday, Prime Minister Narendra Modi announced a credit line of 1 billion US dollars to Mongolia to expand its economic capacity and infrastructure and before that, in August 2014 Nepal too got $1 billion as concessional line of credit during PM Mod’s visit and thereafter in August only, $1 billion loan was granted to Bhutan for infrastructure and energy projects. Well that’s not enough yet, Modi has offered $500 million concessional line of credit to Mauritius as well, in March this year.

“Charity Starts From Home”, but not for PM MOdi as a total of more than $3.5 billion has been thrown to other countries by newly elected PM Modi which will complete his tenure of one year in the office on 26th May 2015.

PM Modi has enviable knack of throwing billions to other countries when as a matter of fact India is still a “developing nation”. If there was one group looking forward to Narendra Modi’s leadership, it was the entrepreneurs and startup ecosystem of India. And Modi-led govt. did supported them when in July last year modi-led govt. prsented financial budge.

In July last year, Finance minister Arun Jaitley announced the setting up of an INR 100 billion (US$1.6 billion) fund for startups. The financial support was supposed to come in the form of equity as well as soft loans however how exactly the funds will be administered and disbursed is stil not clear even after almost one year.

This $1.6 billion (RS. 10,000 crore) start-up fund remains elusive. What happened to it and which companies have benefitted? Sources say little has moved and no word or announcement from the government is making the situation dense around this otherwise attractive proposition. Today, India’s startups are funded by private investors or individuals which are mostly from foregin countries but this government funding opportunity could be instrumental as a new avenue.

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As per the sources, this $1.6 billion start-up fund has no clarity as of yet and the Ministry of Skill Development and Entrepreneurship (MSDE) is still figuring out (looking into it at the moment).

So the conclusion is that the $1.6 billion start-up fund has remain nothing more than an atrratctive announcement and no concrete plan or action was ever persued by the government in last one year.

A lot of preperatons are pending and layout plans & untold confusions need to be clarified by the govt. with respect to this startup fund such as – the mechanics of operations of the fund, including the term, the composition between debt and equity, the manner in which proposals will be solicited and vetted etc. Also what would be the role for existing players such as Incubators, Accelerators, Angel Associations, VCFs etc. in this framework? and many more other things which are puzzling the community of entrepreneurs and startups in India with respect to promised startups fund.

Although, a number of organizations have eagerly come forward since the startups funds was announced to help the government manage the fund and invest the money. But the Ministry of Micro, Small, and Medium Enterprises (MSDE), which is supposed to implement the budget proposal, has yet to come out with a plan of action.

Almost one yaear is already past we have yet to see that promise made by Modi-led government will come to its course and help startups in India get funded by its own government in spite of looking at foreign investors.

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