The Tamil Nadu government will set up a startup fund of funds (FoF) with a corpus of Rs 250 crore for investments in startup ventures, said the new Tamil Nadu Startup and Innovation policy 2018-2023 unveiled yesterday by the state Chief Minister K. Palaniswami.

Called as Tamil Nadu Startup Fund of Funds, the first tranche of Rs 25 crore will be allotted in the financial year 2019-2020 and the FoF will be managed by a professional financial agency like the Small Industries Development Bank of India (SIDBI), said the policy, which aims to provide an enabling, innovative ecosystem in the state and hopes to support emergence of at least 5,000 technology startups.

According to the policy, "It will be registered as an Alternative Investment Fund (AIF) under Securities and Exchange Board of India (SEBI) regulation, 2012. The fund will be invested in other SEBI registered AIFs for investment in Startups and MSMEs established in Tamil Nadu. Government of Tamil Nadu will invest Rs 75 crore in the fund."

In addition, a Tamil Nadu Startup Seed Grant Fund (TNSSGF) of Rs 50 crore with an allotment of Rs 5 crore in the first year shall be created in partnership with financial institutions and universities for supporting early stage financing requirements of the start-ups in the form of grants to fill the gap in fund requirement for research and innovations.

The TNSSGF would also provide funding for Idea-to-PoC (Proof of Concept) stages which are pre-startup activities.

According to the new policy, the state and central public sector undertakings (PSU) shall be encouraged to adopt incubators and channelize their corporate social responsibility (CSR) funds.

These incubators shall also serve as an innovation sandbox to solve problems faced by the state/central PSUs which, in turn, shall support start-ups with access to platform, test bed, data, hand-holdings and others.

Notably, Tamil Nadu has recently tied with Ministry of Electronics & Information Technology (MeitY) to set up a Centre of Excellence (CoE) for FinTech startups at Software Technology Parks of India (STPI), Chennai.

According to the policy, the following entities would not fall under the startup category -

  1. Entities formed by splitting up or reconstruction of a business already in existence,

  2. A subsidiary of a firm in the State, except subsidiary of a start-up itself which also qualifies as start-up and the combined entity also satisfies the start-up criteria,

  3. A franchisee of an existing business in the state, (d) entities promoted or sponsored by or related to an industrial group in the state whose group turnover exceeds Rs 300 crore.

The policy also hopes to extend a dedicated support to at least 10 global high growth start-ups developing innovative technology solution for high social impact in sectors like sanitation, food, clean energy, healthcare, education and others.

Last month, Tamil Nadu's e-governance agency TNeGA collaborated with IIT-Madras to to contribute towards various aspects of governance, including (but not limited to) education, healthcare, and agriculture, says a press release from IIT-Madras. With this collaboration, the Tamil Nadu is aiming to tap the power of AI, Internet of Things (IoT), Blockchain and drones in addressing the needs of their citizens.

Source - Business Standard (~ IANS)

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