SIDBI launches Official Website Exclusively for its Fund of Funds operations

Small Industries Development Bank of India (“SIDBI”), the apex financial institution engaged in the promotion, financing and development of Micro, Small & Medium Enterprises (MSMEs), is pleased to announce the official launch of the website http://www.sidbivcf.in/ exclusively for its Fund of Funds operations.

The website provides detailed overview of activities under its various Fund of Funds managed by SIDBI. New and existing investors can contact SIDBI officials through this website. In a move to digitize various activities undertaken, investors can now submit new applications online and existing investors can update their portfolio and undertake drawdown for funds as well. Additionally, website provides information on commitments made to various funds and aggregate amount invested in startups through those funds. This initiative will help improve transparency, ease of access to required information and better management of activities with all the stakeholders involved. 

Shri Mohammad Mustafa, IAS, Chairman and Managing Director of SIDBI said, “We are looking at transforming our business operations through technology and incorporate industry best practices in the way we interact and work with various stakeholders in the ecosystem. This website will be a compendium of all our Fund of Funds activities and will help reduce paperwork tremendously going forward”.

Since its formation in 1990, SIDBI has been impacting the lives of citizens across various strata of the society through its integrated, innovative and inclusive approach. Be it traditional, domestic small entrepreneurs, bottom-of-the-pyramid entrepreneurs, to high-end knowledge-based entrepreneurs, SIDBI has directly or indirectly touched the lives of Micro and Small Enterprises (MSEs) through various credit and developmental engagements. 

About SIDBI Fund of Funds:

SIDBI has been an active stakeholder in supporting the industry and has been operating various Fund of Funds programs, namely, All India Funds, Regional Funds, MSME-RCF, India Aspiration Fund (IAF), Fund of Funds for Start-ups (FFS) and ASPIRE Fund (AF) in which contributions are made to Alternative Investment Funds (AIFs) for investments in companies at different stages of business cycles such as seed, Series A, Series B, and so on. Currently, new applications for contributions to Funds are being considered under the FFS grogramme. Till date, SIDBI has committed Rs 3,123 crores under FFS to 47 AlFs registered with SEBI. For more information on SIDBI’s Fund of Fund operations, please visit:  http://www.sidbivcf.in/

SIDBI Commits ₹200 Crore Under Fund of Funds To 4 AIFs to Help Startup Funding

The Small Industries Development Bank of India (SIDBI) has committed Rs 200 crore under the Government of India's Fund of Funds Scheme (FFS) to four alternative investment funds (AIFs) -- Omnivore Partners India Fund 2, TVS Shriram Growth Fund 3, IQ Alpha III, and Capaleph Indian Millennium SME Fund, according to a tweet by SIDBI's official twitter handle, made on Friday.

#SIDBI Commits Rs 200 crore under #FundOfFunds Scheme of #GovtOfIndia to 4 AIFs (i) Omnivore Partners India Fund 2 (ii) TVS Shriram Growth Fund 3 (iii) IQ Alpha III (iv) Capaleph Indian Millennium SME Fund #FundOfFunds #StartupIndia @DIPPGOI @rabhishek1982 @startupindia

— Small Industries Development Bank of India (@sidbiofficial) July 6, 2018

No further information has been dispelled by SIDBI; not even any official press release from either SIDBI or the Department of Industrial Policy and Promotion (DIPP).

In January 2016, The Government of India estabilished Fund of Funds Scheme (FFS) when in January 2016 the govt. announced it ambitious Startup Action Plan. The FFS was established with a corpus of Rs.10,000 crore, which is to be managed by SIDBI for contribution to various Alternative Investment Funds (AIFs).

This year in April, in an internal mismanage DIPP has blamed its fund manager SIDBI for slow pace of disbursement to startups. Thereafter in following month, DIPP has undertaken before a Parliamentary panel that it will not make any releases to fund manager SIDBI during FY-2018 and FY-2019, due to unspent balances and poor offtake under FFS scheme.

DIPP itself was criticized when a report by a Parliamentary Standing Committee on Commerce said that the DIPP could utilize only 0.4% of Rs 10 crore that were allocated to it for the promotion of 'Start-Up India' scheme in 2017-18.

SIDBI has so far committed about Rs 1,135 crore to 27 local venture capital funds (leaving the four recent ones) under the FFS scheme, of which Rs 141 crore —only about 11 per cent — has been disbursed to these funds till April 2018.
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.

In May of this year, Bangalore-based retail technology startup Mobisy received funding of Rs 24 crores led by SIDBI Venture Capital Limited (SVCL), a venture capital arm of SIDBI specializing direct and fund of funds.

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.

References - DealStreetAsia | SIDBI FFS

SIDBI Commits ₹200 Crore Under Fund of Funds To 4 AIFs to Help Startup Funding

The Small Industries Development Bank of India (SIDBI) has committed Rs 200 crore under the Government of India's Fund of Funds Scheme (FFS) to four alternative investment funds (AIFs) -- Omnivore Partners India Fund 2, TVS Shriram Growth Fund 3, IQ Alpha III, and Capaleph Indian Millennium SME Fund, according to a tweet by SIDBI's official twitter handle, made on Friday.

#SIDBI Commits Rs 200 crore under #FundOfFunds Scheme of #GovtOfIndia to 4 AIFs (i) Omnivore Partners India Fund 2 (ii) TVS Shriram Growth Fund 3 (iii) IQ Alpha III (iv) Capaleph Indian Millennium SME Fund #FundOfFunds #StartupIndia @DIPPGOI @rabhishek1982 @startupindia

— Small Industries Development Bank of India (@sidbiofficial) July 6, 2018

No further information has been dispelled by SIDBI; not even any official press release from either SIDBI or the Department of Industrial Policy and Promotion (DIPP).

In January 2016, The Government of India estabilished Fund of Funds Scheme (FFS) when in January 2016 the govt. announced it ambitious Startup Action Plan. The FFS was established with a corpus of Rs.10,000 crore, which is to be managed by SIDBI for contribution to various Alternative Investment Funds (AIFs).

This year in April, in an internal mismanage DIPP has blamed its fund manager SIDBI for slow pace of disbursement to startups. Thereafter in following month, DIPP has undertaken before a Parliamentary panel that it will not make any releases to fund manager SIDBI during FY-2018 and FY-2019, due to unspent balances and poor offtake under FFS scheme.

DIPP itself was criticized when a report by a Parliamentary Standing Committee on Commerce said that the DIPP could utilize only 0.4% of Rs 10 crore that were allocated to it for the promotion of 'Start-Up India' scheme in 2017-18.

SIDBI has so far committed about Rs 1,135 crore to 27 local venture capital funds (leaving the four recent ones) under the FFS scheme, of which Rs 141 crore —only about 11 per cent — has been disbursed to these funds till April 2018.
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.

In May of this year, Bangalore-based retail technology startup Mobisy received funding of Rs 24 crores led by SIDBI Venture Capital Limited (SVCL), a venture capital arm of SIDBI specializing direct and fund of funds.

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.

References - DealStreetAsia | SIDBI FFS

Amid Slow Startup Funding, DIPP Stops Fund Releases To SIDBI Till FY19

Indian government’s Rs 10,000-crore Fund-of-Funds for Start-ups (FFS) -- launched 28 months ago as part of the 'Start-up India' Action Plan to boost startups in the country -- is struggling to perform any better with poor offtake of funds, which are supposed to routed to startups in the country. The Department of Industrial Policy and Promotion (DIPP) has already blamed its fund manager Small Industries Development Bank of India (SIDBI) for slow pace of disbursement to startups.

To recall, last month, a report by a Parliamentary Standing Committee on Commerce said that the Department of Industrial Policy and Promotion (DIPP) could utilize only 0.4% of Rs 10 crore that were allocated to it for the promotion of 'Start-Up India' scheme in 2017-18. Prior to this, it was reported that on Feb 6, only 99 startups have been funded as compared with a total of 6,981 startups recognised by the DIPP.

SIDBI has so far committed Rs 1,285 crore to 27 local venture capital funds under the FFS scheme, of which Rs 141 crore —only about 11 per cent — has been disbursed to these funds till April 2018.

In the consequence of poor offtake under FFS scheme, DIPP is learnt to have undertaken before a Parliamentary panel that it will not make any releases to fund manager SIDBI during FY18 and FY19, due to unspent balances. The decision to impose restriction of funding to the state-owned SIDBI, which manages the FFS and acts as a limited partner in these venture capital funds (also called Alternate Investment Funds or AIFs) that draw capital from the FFS, has been taken by DIPP citing “unspent balance”.

So far, Rs 600 crore has been released by the DIPP to SIDBI, of which Rs 500 crore was released in FY'16 and Rs 100 crore in FY'17.

Under the FFS scheme, the money is routed to startup entities via participating AIFs. SIDBI makes contributions to AIFs that vary between 10 and 20 percent of the target corpus of each AIF while the balance 80-90 percent funds are raised from other contributors for investing in equity and equity-linked instruments of startups. Of the Rs 141 crore disbursed to early-stage ventures till end-April, some 124 start-ups have been reported as beneficiaries.

In a response to DIPP’s undertaking before the House panel that “no releases” of funds is expected during 2017-18 and 2018-19, SIDBI said that alongside the Rs 600 crore that it has received from DIPP so far, it has also got an assurance letter authorizing it “to make further commitments of Rs 1,600 crore to AIFs”.

On the actual withdrawls of funds by AIFs, SIDBI said, "The decisions are entirely on the investment managers of the Funds and SIDBI has little say in their decisions. The disbursements to the AIFs are based on their request for investment in investee companies".

On the slow disbursement of funds (via DIPP) to startups, SIDBI has clarified to Indian Express, saying that, “the funding dynamics of venture capital industry.. is very much different from the normal lending. Under FFS of Rs 10,000 crore, which is a 10-year programme (2 financial cycles of 5 years each) funds are routed to startup entities through AIFs (venture capital funds). SIDBI makes contributions to AIFs which generally vary from 10 – 20 per cent of target corpus of each AIF. Balance 80-90 per cent funds are raised from other contributors (Limited Partners) and an AIF normally takes 1-2 years to raise the targeted corpus of the Fund. After raising the funds AIFs have a window of 4-5 years to find support-worthy start-up deals and to make investment commitments to them. Therefore, actual flow of funds from AIFs to start-up entities may take up to 3-5 years from the time they start raising funds and it is entirely up to the investment managers of these AIFs to select suitable deals and release funds to their selected start-ups which are normally milestone based without any influence of contributors to fund."

The 27 AIFs that have received funds from SIDBI include Mumbai-based early-stage investor Kae Capital and Saha Fund, a venture capital fund focused on women entrepreneurs.

Kae Capital has investments in about 16 startups, including Truebil, a used-car marketplace owned by Paix Technology; peer-to-peer business loan marketplace startup Loanzen; second-hand products marketplace ListUp promoted by Gijutsu Solutions and shopping portal Fynd run by Shopsense Retail Technologies.

Saha Fund’s investment targets include including fitness application Fitternity, online food platform InnerChef and women’s garment venture Kaaryah. Some of the other AIFs are Mumbai-based Orios Venture Partners, early-stage investor Unicorn India Ventures, Ideaspring Capital, Pi Ventures and Stellaris Venture Partners.

SIDBI however said that it expects actual disbursement of another Rs 400-450 crore out of the committed amount to AIFs during the balance period of FY19.

Via - Indian Express | Top Image - PxHere.com

Startup Fund of Funds: DIPP Unhappy with SIDBI For Slow Pace of Disbursement

Earlier this month, a report by a Parliamentary Standing Committee on Commerce said that the Department of Industrial Policy and Promotion (DIPP) could utilize only 0.4% of Rs 10 crore that were allocated to it for the promotion of StartUp India scheme in 2017-18. Prior to this, it was reported that on Feb 6, only 99 startups have been funded as compared with a total of 6,981 startups recognised by the DIPP.

Now, as the committee's report questioned DIPP for this poor utilization of funds, DIPP in turn is now blaming Small Industries Development Bank of India (SIDBI) for slow pace of disbursement to startups.

According to Indian Express report -- citing a government official, DIPP has been repeatedly asking SIDBI for the past one year to consider steps imperative to increase off-take of funds. DIPP has asked SIDBI to take necessary actions such as change in the manner funds are disbursed so that the funds are disbursed at much faster pace.

According to a senior government official cited in the report, "For the past one year, in all the meetings of the monitoring committee for the Startup India scheme, we have been asking SIDBI to consider taking steps that can increase offtake of funds. The previous monitoring committee meeting took place on December 4 last year where it was suggested that SIDBI should consider changing the manner and methods in which they are disbursing the amount under the scheme, so that a greater offtake can take place."

At first -- it was reported on March 31 2017 that only Rs 33.63 crore was disbursed to 62 startups. DIPP then expressed that there's an improvement in the allocation and disbursement, and on April this year, it said that this year SIDBI has committed Rs 1,136 crore to 25 venture capital (VC) funds, who, in turn, have invested Rs 569 crore in 120 startups.

"A significant amount of disbursement to startups has been done in the past couple of months after feedback was taken from VC funds on lower offtake. The DIPP has set targets to facilitate and support 1000 startups by March 2019", added the official.

However, last month, the Parliamentary Standing Committee on Commerce expressed concerns about the “huge gap” that exists between the number of startups that have received funding and tax exemptions and the number of startups that have been officially recognised.

Asking the DIPP to furnish reasons for the lag in funding recognised startups, the committee suggested DIPP to “take concerted measures to ensure genuine entrepreneurs are provided all the support to flourish and create jobs”.

Moreover, a meeting held in December last year by Startup India scheme's monitoring committee stated that DIPP expressed concern at the under-utilisation and slow pace of disbursement of funds. The committee also suggested that SIDBI should consider changing the manner and methods in which they are disbursing the amount under the scheme, so that a greater offtake can take place.

The minutes of meeting of the monitoring committee also mentioned that, “DIPP asked SIDBI to highlight challenges and consider steps (change in the manner of utilization) that could be taken to allow greater offtake of funds.”

Notably, this is not the first time when inefficacy of StartUp India scheme has been revealed, where it was again observed that the much hyped initiative is not yielding the desired outcome as promised three years back when it was announced by Prime Minister Narendra Modi in August 2015 to develop an ecosystem to galvanize entrepreneurship across the country, through income tax benefits, easy bank financing and lesser compliance burden.

The Start-Up India campaign has recently completed 2 years of its launch on January 16, 2018. According to the latest report, (till 28 February 2018) some 5,350 startups have been recognized in the country with over 40,000 employees working in these startups. Surprisingly, the report said that th worst is that the agency that was designated by the Centre to disburse funds to startups has released only Rs 337 crore out of Rs 600 crore to only 75 start-ups in 2 years.

[Top Image - Source]

Startup Fund of Funds: DIPP Unhappy with SIDBI For Slow Pace of Disbursement

Earlier this month, a report by a Parliamentary Standing Committee on Commerce said that the Department of Industrial Policy and Promotion (DIPP) could utilize only 0.4% of Rs 10 crore that were allocated to it for the promotion of StartUp India scheme in 2017-18. Prior to this, it was reported that on Feb 6, only 99 startups have been funded as compared with a total of 6,981 startups recognised by the DIPP.

Now, as the committee's report questioned DIPP for this poor utilization of funds, DIPP in turn is now blaming Small Industries Development Bank of India (SIDBI) for slow pace of disbursement to startups.

According to Indian Express report -- citing a government official, DIPP has been repeatedly asking SIDBI for the past one year to consider steps imperative to increase off-take of funds. DIPP has asked SIDBI to take necessary actions such as change in the manner funds are disbursed so that the funds are disbursed at much faster pace.

According to a senior government official cited in the report, "For the past one year, in all the meetings of the monitoring committee for the Startup India scheme, we have been asking SIDBI to consider taking steps that can increase offtake of funds. The previous monitoring committee meeting took place on December 4 last year where it was suggested that SIDBI should consider changing the manner and methods in which they are disbursing the amount under the scheme, so that a greater offtake can take place."

At first -- it was reported on March 31 2017 that only Rs 33.63 crore was disbursed to 62 startups. DIPP then expressed that there's an improvement in the allocation and disbursement, and on April this year, it said that this year SIDBI has committed Rs 1,136 crore to 25 venture capital (VC) funds, who, in turn, have invested Rs 569 crore in 120 startups.

"A significant amount of disbursement to startups has been done in the past couple of months after feedback was taken from VC funds on lower offtake. The DIPP has set targets to facilitate and support 1000 startups by March 2019", added the official.

However, last month, the Parliamentary Standing Committee on Commerce expressed concerns about the “huge gap” that exists between the number of startups that have received funding and tax exemptions and the number of startups that have been officially recognised.

Asking the DIPP to furnish reasons for the lag in funding recognised startups, the committee suggested DIPP to “take concerted measures to ensure genuine entrepreneurs are provided all the support to flourish and create jobs”.

Moreover, a meeting held in December last year by Startup India scheme's monitoring committee stated that DIPP expressed concern at the under-utilisation and slow pace of disbursement of funds. The committee also suggested that SIDBI should consider changing the manner and methods in which they are disbursing the amount under the scheme, so that a greater offtake can take place.

The minutes of meeting of the monitoring committee also mentioned that, “DIPP asked SIDBI to highlight challenges and consider steps (change in the manner of utilization) that could be taken to allow greater offtake of funds.”

Notably, this is not the first time when inefficacy of StartUp India scheme has been revealed, where it was again observed that the much hyped initiative is not yielding the desired outcome as promised three years back when it was announced by Prime Minister Narendra Modi in August 2015 to develop an ecosystem to galvanize entrepreneurship across the country, through income tax benefits, easy bank financing and lesser compliance burden.

The Start-Up India campaign has recently completed 2 years of its launch on January 16, 2018. According to the latest report, (till 28 February 2018) some 5,350 startups have been recognized in the country with over 40,000 employees working in these startups. Surprisingly, the report said that th worst is that the agency that was designated by the Centre to disburse funds to startups has released only Rs 337 crore out of Rs 600 crore to only 75 start-ups in 2 years.

[Top Image - Source]

Govt Invested Rs 623.5 Crores in 17 VC Firms Resulting 62 Startups Getting Funded Last Year

From the government of India's ambitious 10,000 crore Fund-of-Funds announced in 2014, almost 17 venture capital funds were sanctioned Rs 623.50 crore in FY 2016-17.

However, it must be noted that only up to 30 percent of a VC’s corpus can be raised from the fund-of-funds and can be drawn from the Sidbi only when an investment opportunity arises. So, until March end, the 17 VCs had drawn only Rs 33.63 crore of the Rs 623.50 crore committed.

The data released by the Department of Industrial Policy and Promotion (DIPP) and Small Industries Development Bank of India (Sidbi), portrays that the first full year analysis of the fund-of-fund reveals that the VCs that managed to grab a share of the fund, eventually invested in nearly 62 start-ups during the year

Since its launch in January 2016, the fund-of-funds mostly due to the slow and fairly complicated procedure of raising and deploying funds by VCs, saw limited takers.

According a report prepared by ‘Dalal Street Investment Journal', the 62 start-ups managed to garner roughly Rs 186.84 crore in FY17, with Sidbi acting as a limited partner to the VCs. Unicorn India Ventures, Kae Capital, Orios Venture Partners, Pi Ventures, Stellaris Venture Partners and Ideaspring Capital, are among others that have invested in these 62 start-ups.

The fund-of-funds saw limited takers since its launch in January 2016, mostly due to the slow and fairly complicated procedure of raising and deploying funds by VCs.