The Small Industries Development Bank of India, more famously known as the Sidbi, is gearing up to review a total of ten proposals from alternative investment funds that are looking for funds worth Rs 675 crore from the Prime Minister Narendra Modi announced Startup India Action Plan's Fund of Funds for Startups (FFS).

Earlier in December last year, Sidbi cleared Rs 900 Crore fund-of-funds from the Rs 2,000 crore fund-of-funds it launched in August to support venture capital funds.

According to recent advancements, Sidbi's Venture Capital Investment Committee, which includes illustrative names like Indian Angel Network founder Saurabh Srivastava and former Infosys CFO Mohandas Pai, has made its recommendations for the ten proposals before the Sidbi board.

Besides Pai and Srivastava, the Sidbi Venture Capital Investment Committee has esteemed names like founder Sanjiv Bikchandani, IIM Bangalore professor R Vaidyanathan, former Nasscom chief Kiran Karnik and National Science & Technology Entrepreneurship Development Board head Harkesh Mittal.

Earlier this year, the Startup industry saw Prime Minister Modi launching the Startup India Action Plan and announcing a Rs 10,000 crore Fund for the same. Out of this total Rs 10,000 crore amount, Rs 500 crore has already been released during the financial year 2016 and another sum of Rs 600 crore is slated to be released soon for financial year 2017

So far, the SIDBI has made commitments for a sum of Rs 168 crore to 6 alternative investment funds from the Rs 500 crore sun allotted for the FY 2015-16z

According to a statement given by Sidbi chairman Kshatrapati Shivaji to a national daily, "We are taking 10 proposals, seeking commitment from Sidbi for Rs 675 crore with a total corpus of approximately Rs 4,200 crore, for in-principle clearance from the Venture Capital Investment Committee."

As on May 31, 2016, Sidbi has pledged its support to a total of 95 funds. Out of these 95, 47 are focused exclusively on the startup sector, while others are for looking after the startups and growth stage companies, which includes the MSMEs.

A corpus of Rs 7,522 crore has been dedicated to these 47 funds focusing on startups. Out of this Rs 7,522 crore sum, the Sidbi has taken upon the responsibility for Rs 895 crore. In order for an Alternative Investment Fund (AIF) to receive funds under the fund of fund operations, they are required to be registered with Sebi under the 2012 AIF regulations. In addition to this, they should also have a fund term of at least up to 10 years as and a commitment of up to 5 years.

The other criteria dictates that Alternative Investment Funds which have a corpus of up to Rs 500 crore up their ante should invest at least fifty percent of the sum or double the Sidbi contribution sum, whichever comes out to be more, in MSMEs. On the other hand, the AIFs having a corpus of more than Rs 500 crore are required to invest a total of Rs 250 crore or double its Sidbi contribution sum, in MSMEs, whichever comes out to be more after calculation.

[Top Image - Shutterstock]

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