Waterfield Advisors Raising $250 Mn Fund of Funds

Waterfield Advisors, an independent SEBI-registered multi-family office and wealth-advisory firm, is raising a $250 million Fund-of-Funds and looking for the first close of this fund in the next 4-6 weeks, said the Founder & CEO of Waterfield Advisors, Soumya Rajan, in an interview to The BusinessLine.

Waterfield helps its clients plan, structure and manage their family wealth, working exclusively on their behalf as their dedicated family office. The firm advises over 100 family offices in India, overseeing financial assets surpassing $4 billion.

Waterfield Advisors is also aiming to open an office in Dubai by the first half of 2024, in order to establish itself as a global wealth management player,said Soumya Rajan.

Established in 2011, the Mumbai headquartered firm also has a presence in Gujarat’s GIFT City and intends to expand its global footprint into newer markets such as Singapore and London.

With offices across India in New Delhi, Mumbai, Chennai, Pune, Goa, Kochi, and Bangalore, Waterfield wants Gujarat’s GIFT City to be a hub for operating all its global businesses.

The firm intents to serve its domestic clients' offshore needs and intents to partner global investors, including NRIs, looking at India.

Last month, Waterfield launched its own philanthropic foundation to act as a platform for testing innovative philanthropic models creating impact, and potentially leading to groundbreaking strategies.

In March this year, the Advisory firm launched Heritage – a wealth advisory platform for high-net-worth women.

As an advisory firm on the Investment side, Waterfield has an open architecture platform working with all the leading product manufacturers across AMCs, PMS and AIF providers.

It is expected that the family offices in India will account for 30% of the total $100 billion of startup funding by 2025.

Currently the number of family offices in India is over 300, registering a growth rate of about 284% since 2018. It is to noted that there were only 45 formal family office structures in India in 2018 out of 5,300 globally.

Startup Odisha Launches ₹100 Crore Odisha Startup Growth Fund (Fund of Funds) With SIDBI As Fund Manager

Startup Odisha and SIDBI sign MOU to manage 100 Crore Odisha Startup Growth Fund (OSGF)

Aimed at transforming the state into a startup destination by creating a conducive environment for startups to flourish

Startup Odisha, an initiative of the MSME Department of the Government of Odisha has today launched a one-of-its-kind ₹100 Crore Odisha Startup Growth Fund (Fund of Funds) with Small Industries Development Bank of India (SIDBI) as the fund manager. This fund is truly unique due to its perpetual nature. When the initial corpus of ₹100 Crore gets exhausted, the state government would consistently replenish the fund, ensuring continuous, long-term support for startups.

SIDBI will serve as the fund manager for the Odisha Startup Growth Fund (Fund of Funds), responsible for shaping its investment strategy and managing its portfolio. Established by the Government of Odisha as part of its Fund of Funds initiative, the OSGF is dedicated to investing Rs. 100 Crores over five years through Alternative Investment Funds (AIF) in Odisha-based startups. This collaboration is set to play a crucial role in bolstering the MSME sector, which contributes 33% to India's GDP and generates over 120 million jobs.

Smt. Anu Garg, IAS Development Commissioner cum Additional Chief Secretary, said, “Our endeavour through the launch of Odisha Startup Growth Fund is to make Odisha the preferred destination for entrepreneurs. Odisha is at the cusp of transformational change and the Government of Odisha aims to extend its support to initiatives like this that help the citizens of this state to grow. Together, we are paving the way for innovation to flourish, startups to thrive, and the MSME ecosystem to grow even stronger. In this dynamic environment, Startup Odisha is adding to the inclusiveness of the Odisha growth story.”

Dr. Omkar Rai, Executive Chairman, Startup Odisha, said, "The Launch of Odisha Startup Growth Fund marks a pivotal moment in our mission to foster a vibrant startup ecosystem in Odisha. We are dedicated to providing our state's startups with the essential financial backing required for their growth. This fund symbolizes our unwavering commitment to nurturing innovation, catalysing job creation, and propelling our startups to succeed both at the national and global levels. We are crafting a future where Odisha would be recognized as a beacon of entrepreneurial excellence.”

Shri S. Ramann, Chairman & Managing Director, SIDBI said, "We are extremely glad to be working with Startup Odisha and support the growth of Odisha's startup ecosystem. Through financial support and guidance, we will empower startups to thrive as well as make significant contributions to Odisha's economic landscape. This partnership will add another layer to our efforts, setting the stage for the state to become a startup funding hotspot in the next 5-10 years. SIDBI is aiming to continue to act as a catalyst to mobilise domestic capital for country’s startup ecosystem.”

Shri Saswat Mishra, IAS, Principal Secretary, MSME Department, said, “The launch of Odisha Startup Growth Fund will support the development of the entrepreneurial ecosystem in the state. We are committed to financially enable startups in Odisha with conducive policies and funds. Startup Odisha along with SIDBI will be working towards disbursing the funds to high-potential startups.”

Odisha Startup Growth Fund (OSGF) operates as a Fund-of-Funds Vehicle, designed to offer co-investment assistance along with a centralized tracking and implementation mechanism. The predominant financial instruments utilized by OSGF prioritize equity or quasi-equity investments, reflecting its commitment to nurturing long-term growth and sustainability within the startup ecosystem.

Odisha boasts a flourishing startup landscape, home to over 1700+ dynamic startups, including 600+ women-led enterprises. This thriving ecosystem is supported by 15 nodal agencies, 27 incubators, and a centralized incubator ‘O-Hub’ that provides an impressive 4 lakh sqft of incubation space.

About Startup Odisha

Startup Odisha under the MSME Dept. Govt. of Odisha as the Nodal agency for building the startup and innovation ecosystem in the state, came into existence in 2016 with Odisha Startup Policy-2016. The vision is to introduce a holistic and inclusive ecosystem for the existing and aspiring startups, establish itself as one of the top startup hubs in the country, and enable the youth of Odisha to become Job-Creators and support the state in employment generation. With the unique support system under the Odisha Startup Policy 2016, Startup Odisha has supported Women/SC/ST/PH/Transgenders-led startups/ entrepreneurs by providing them with financial grants, subsidized incubation and exposure in participating in various national and international events. Since its inception, Startup Odisha has been home to the best entrepreneurial minds & has already supported and facilitated more than 1700+ Startups, with 600+ startups led by women directors, founders and co-founders. It houses the facilities and services ranging from a world-class infrastructure with state of an art facility called O Hub to the best Incubation facility supported by a proactive team, the aim is to take a leap for registering a minimum of another 5000 startups with recognition by 2025. Startup Odisha has been continuously evolving in its Policy measures, always ensuring to have a responsive policy framework. We have been the top performing Startup Hubs for three consecutive years in the country.

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Anicut Capital Gets Over $6 Mn from SIDBI Startup Fund of Funds

Chennai headquartered Anicut Capital, an alternative investment firm, has raised Rs 50 crore (about $6 million) for its equity investments fund "Grand Anicut Fund–3" (GAF-3) from the Small Industries Development Bank of India (SIDBI) Fund of Funds for Startups (FFS).

Anicut Equity Fund launched its Grand Anicut Fund 3 in June 2022 with a total targeted corpus of ₹500 crore, with an additional ₹250-crore green shoe option. It has so far closed two-thirds of the fund and also received a commitment of Rs 75 crore (about $9 million) from the Self Reliant India Fund (SRI).

Anicut Capital is a multi-asset financial institution with offerings in debt and equity.

GAF-3 is focused on the consumer and technology sectors, and aims to invest in 12-14 early growth-stage companies in the Series A and B stages across the Anicut and non-Anicut portfolios, over the next 18-24 months.

Since its launch, the fund has invested in 6 startups, that are — Earth Rhythm and The Ayurveda Experience, Neemans, Wheelocity, Blue Tokai Coffee, and mens apparel brand XYXX.

The latest fundraise comes through the Fund of Funds for Startups, launched under the Startup India Initiative by the Government of India. SIDBI is an existing investor in Anicut Capital and has invested in both of its debt funds. The bank had invested Rs 140 crore (about $16.9 million) in Anicut's second debt fund.

Prior to Grand Anicut Fund – 3 (GAF-3), Anicut had earlier launched two debt funds (GAF-1 and GAF-2), Anicut Angel Fund and Anicut Opportunities VC Fund. Cumulatively, Anicut managed an AUM of INR 1600 crores with investments in early and growth stage start-ups. Anicut's portfolio companies include brands like Wow! Momo, Bira, Sugar cosmetics, Earth rhythm, Wingreens, Blue Tokai, Sharechat, Mcaffeine, Milkymist, XYXX, Curatio Healthcare, Agnikul, Grip Invest, to name a few.

Self Reliant India Fund backs Anicut Capital with its Commitment of Rs.75 Cr for Equity Fund

The Commitment has come across for Grand Anicut Fund 3

Anicut Capital also onboards Arun Thathachari as Executive Director

Anicut Capital, an Indian investment firm managing alternative assets, today announced that they have received a commitment of Rs 75 Crores from Self Reliant India Fund (SRI), for their equity fund. SRI Fund is a SEBI-registered Category II Alternative Investment Fund anchored by NSIC Venture Capital Fund Limited, a wholly-owned subsidiary of The National Small Industries Corporation Limited (NSIC) and managed by SBICAP Ventures Ltd (SVL), a step-down subsidiary of State Bank of India. The corpus received shall be deployed through Grand Anicut Fund 3 which was launched recently in June 2022.

Self Reliant India (SRI) Fund is a Rs. 10,000 crores Fund of Funds (FoF) launched by the Government of India in October 2021 to make equity investments in Micro, Small and Medium Enterprises (MSMEs) and to catalyse the flow of capital to the MSME sector. The anchor investor of SRI Fund is the Government of India.

“Anicut has made a number of equity investments in leading companies that are doing well in the market today. We firmly believe that our investment portfolio companies will be leaders of tomorrow and grow multifold with persistent support and commitment. The commitment from SRI Fund furthers our agenda of strengthening small and medium enterprises across India. Additionally, we are also excited to welcome Arun Thathachari to our leadership team. Arun’s induction is a strategic move to propel our continued focus to scale the business and fuel our growth in the market.”, said Dhruv Kapoor, Partner, Anicut Capital.

Anicut launched their Grand Anicut Fund 3 (also called Anicut Opportunities Fund) worth Rs. 500 crores in June 2022, which has an additional Rs. 250 crore green shoe option. The investment firm is aiming to deploy the raised funding across 10-15 growth-stage companies across Anicut and non-Anicut portfolios over a span of two years. It is a sector-agnostic fund with a focus on Technology, Consumer and B2B brands. Within 6 months of launching the Grand Anicut Fund 3, Anicut has already made 5 investments and 2 other deals are in active discussion, to be closed by next quarter.

To further strengthen its standing, Anicut Capital also announced the onboarding of Arun Thathachari as Executive Director operating on the equity side. Arun joins Anicut with 15+ years of diverse international experience across investment banking, management consulting and corporate development.

“I'm excited to be a part of such a future-ready and forward-looking enterprise. I look forward to enriching my experience and harnessing my expertise to further the mission and vision of Anicut Capital”, said Arun Thathachari, Executive Director, Anicut Capital.

Prior to Anicut, Arun was part of the senior leadership team at Sulekha.com based in Chennai. He spent 7+ years in investment banking in India and London with global firms including DC Advisory, Arma Partners and Bank of America Merrill Lynch. He led the advisory for 10+ capital raise and M&A transactions across consumer, internet and technology. He started his career with the Strategy & Operations practice of Deloitte Consulting in New York. Arun holds a BE in Electrical & Electronics Engineering from the University of Madras, an MS in Industrial & Operations Engineering from the University of Michigan (Ann Arbor) and an MBA from NYU Stern School of Business.

About Anicut Capital:

Anicut Capital is a multi-asset financial institution with offerings in debt and equity. Anicut currently manages two debt funds (GAF-1 and GAF-2), Anicut Angel Fund and Grand Anicut Fund 3. Cumulatively, Anicut manages an AUM of Rs 1,600 crores with investments in early and growth-stage start-ups. Anicut's portfolio companies include brands like Wow! Momo, Bira, Sugar cosmetics, Earth rhythm, Wingreens, Blue Tokai, Sharechat, Mcaffeine, Milkymist, XYXX, Curatio Healthcare, Agnikul, and Grip Invest, to name a few.

KSUM Invites Proposals to Partner With Fund of Funds Scheme To Finance Startup Ventures

Kerala Startup Mission (KSUM) has invited proposals from SEBI-accredited funds to become partners in the Fund of Funds scheme, set up by the Kerala Government to financially support startup ventures.

The request for proposal (RFP) aims to consider proposals from interested bidders for receiving a corpus fund from the government which will be channelized to emerging startups in the state through venture investments. According to the RFP, the government will be a limited partner in these funds.

The Fund of Funds scheme is for helping startups obtain investments and attracting venture capital funds to the state. Currently, the government is partnering with four funds under this scheme. Around Rs 750 crore worth corpus fund has been made available for the startup ventures in the state through these four funds.

Moreover, investments of over Rs 75 crore have been received by various start-ups through this scheme.

More details about the scheme can be obtained by visiting https://www.etenders.kerala.gov.in/ Tender ID: 2022_T TBI_471602_1.

Last date for submitting proposals is April 30 till 6pm.

KSUM is the nodal agency of the Kerala government for entrepreneurship development and incubation activities in the state.

Tamil Nadu to Set Up ₹250 Crore Startup Fund of Funds

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)

Kerala Invites Proposal from AIF for its Fund-of-Funds Scheme for Startups

Kerala state government's nodal agency for entrepreneurship development and startup activities, Kerala Startup Mission (KSUM), has invited request for proposal (RFP) from SEBI-accredited alternative investment funds (AIFs) under its ‘Fund-of-Fund’ (FoF) scheme.

Selected AIFs will receive funds from the State Government to invest in the startups from Kerala and thus meet the fund requirements of fledgling technology enterprises.

KSUM has invited the RFP online and the details are available at - startupmission.kerala.gov.in/programs/fof/. Interested AIFs who meet the pre-qualification criteria can submit their expression of interest on or before November 30. After completing the bid process, the final selections will be announced on December 29.

The State Government had launched the Kerala Startup Corpus Fund, a first-of-its-kind initiative in India. A total corpus fund of ₹25 crore was then created with the support of two SEBI-registered AIFs -- Unicorn Ventures India, and SEA Fund. Out of this ₹25 crore, an amount of ₹12.5 crore was contributed by the State Government, and the other half by the two AIFs.

So far, seven investments have been made into startups based out of Kerala, using the Kerala Startup Corpus Fund. One of the startups funded (by Unicorn India Ventures) was Genrobotics, which developed Bandicoot, a robotic system to clean sewers/manholes instead of manual scavenging. Besides, Unicorn India Ventures also made two more investment in Kerala-based startups -- SectorQube and Perfectfit Fashion. The Fund has been actively exploring investment in Kerala post partnering with KSUM.

The objective of the present RFP is to make additional investment into eligible AIFs for supporting exclusively the emerging startups in the State through venture investments, said Saji Gopinath, CEO, KSUM.

More than 200 startups are presently working from KSUM’s five incubation facilities at Thiruvananthapuram, Kochi, Kozhikode and Kasargod.

In September last year, chief executive of the KSUM, Saji Gopinath, had announced that it is targeting a corpus of Rs 500 crore under its FoF scheme over the next three years, which will be for Kerala-based startups.


Source - Business Line

Govt Proposes Rs 2000 Cr Credit Guarantee Scheme For Startups

In order to help startups to access funds, the Ministry of Commerce and Industry has proposed a credit guarantee scheme. Keeping in the challenges faced by the Indian startups to raise funds, Government has proposed a corpus contribution of Rs 2,000 crore.

According to Nirmala Sitharaman, Commerce and Industry Minister, the proposed scheme will provide credit guarantee of up to Rs 500 lakh per case. It will be inclusive of the term loan, working capital or any other instrument of assistance extended by member lending institutions to finance an eligible startup recognized by the Department of Industrial Policy and Promotion (DIPP).

This is not the first time when DIPP had  announced the Credit Guarantee Fund. Earlier in October 2016, the government had announced the Credit Guarantee Fund with a corpus of Rs.2000 crores to support startups and their risk taking abilities.

The government is continuously helping entrepreneurs to set up their ventures with ease in order to achieve their dreams and goals. Recently, in June 2017 DIPP, under the commerce and industry ministry, has formed six different groups with members including academicians, representatives of professional firms and government officials to come together and work towards preparing India’s new industrial policy that includes startups, innovation, taxation, MSME (micro, small and medium enterprises), among many other things.

Fresh Rs 1600 Cr Fund of Funds for Startups Underway

Govt. of India's Department of Industrial, Policy and Promotion (DIPP) has sought Rs 1,600 crore from the finance ministry in the supplementary demand for grants for the Fund-of-Funds (FFS) for start-ups in the current financial year.

Notably, around Rs 500 crore fund of funds is backlog and now DIPP has sought an additional Rs 1,100 crore for the fund-of-funds making it a total of Rs. 1600 crore.

In June 2016, the Union Cabinet has approved setting up of Fund of Funds for Startups (FFS) under Small Industries Development Bank of India (SIDBI) for extending support to Startups.

In the Union Budget for 2017-18, the central government had allocated just Rs 1 lakh crore for the fund-of-funds and had already announced the Rs 10,000-crore ‘Fund of Funds for Startups’ in June 2016. According to the Startup India Action Plan status report March 2017, Rs 500 crore out of Rs 10,000 corpus has been released to SIDBI, who is the fund manager of 'Fund of Funds for Startups'. The government has so far released Rs 600 crore to SIDBI while the remainder of Rs 10,000 crore will be received in tranches till 2025.

"It’s important to note that the fund-of-funds will be covered in two finance commission cycles (through 2025). So roughly, it comes to around Rs 1,100 crore per year," a senior official said to Financial Express.

In March, the government approved long-sought-after changes to the conditions for sanctions from the fund-of-funds, which are likely to encourage more investors to tap government funding. The fund-of-funds was sanctioned for contribution to various alternative investment funds (AIFs) registered with the Securities and Exchange Board of India (Sebi). These AIFs were to extend funding support to start-ups and the move was in line with the Startup India Action Plan unveiled by the central government.

Meanwhile, 1,835 start-up applications have been recognized as start-ups by DIPP as of March 9, of which only 10 start-ups have benefited from the government’s decision to give income tax benefits since the launch of the scheme in January 2016.

Related Reading - A Shocking Revelation About The Success Of ‘Startup India’ Programme

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.

Modi's Startup Jumla: Only One Startup Got Funded Via Rs 10k Startup Fund

It was on January 16, 2016 that the Indian Prime Minister announced the Start-Up India programme that got the entire startup world gushing with hope. The Rs 10,000 crore Fund of Funds (FoF) was the centrepiece of the announcement. Allocated to the Small Industries Development Bank of India (SIDBI) by the Reserve Bank of India, the capital had to be invested in Indian startups through a way of providing them soft loans, equity and other risk capital.

The SIDBI set a goal to sanction the Rs 10,000 crore capital till 2025. But, unfortunately, till date, only Rs 600 crore of these Rs 10,000 crore have been sanctioned this year and a even a meagre sum of Rs 5.66 crore has reached just one new venture. According to industry experts, two of the major reasons for the poor performance of the fund is poorly drafted policies and the evergreen bureaucratic delays.

A recent Right To Information (RTI) filed by Business Standard newspaper has revealed, that so far Kae Capital is the only venture that has actually invested in a startup under the FoF.

Last month, we had reported how the SIDBI had finally pledged Rs 110 crore from the 2016 announced Rs 10,000-crore ‘fund of funds’ for startups, to four venture capital funds, namely Orios Venture Partners Fund II, Kae Capital, and two little known funds, Saha Trust and Kitven Fund III. Out of the 110 crores committed by SIDBI, 50 crore have been given to Orios Venture Partners Fund II, 45 crore to Kae Capital, 10 crore to Saha Trust and 5 crore to Kitven Fund III. Till date, Kae Capital is the only venture that has got Rs 5.66 crore of the Rs 45 crore committed to them.

It is important to note here that the Rs.10,000 crore ‘fund of funds’ is just a reiteration, rather a repackaging of the July 2014 budget proposal by Finance minister Arun Jaitley where he set aside Rs.10,000 crore for startups. The FoF just provides a little clarity on how it will be structured and managed. Earlier, we had reported that the much ambitious Rs 10,000 crore startup fund announced by the Modi government in financial budget of year 2014 was still lying unused as no one is clear which government department is responsible for managing the scheme. Later the responsibility was given to SIDBI by the RBI.

What is Funds of Funds?

Fund of Funds scheme was announced by the Indian Prime Minister Narendra Modi when he unveiled the Start-Up India action plan more than a year ago in the Indian Capital. Under the scheme, the government pledged that it would not be investing directly into Indian startups but instead contribute a part of the money an investor or Venture Capitalist raises to invest in the startups.

What Is SIDBI's Responsibility With FoF?

1) SIDBI has been bestowed upon the responsibility to operate the fund.

2) The organisation has to contribute up to 35 percent in a fund that aims to invest in startups in India.

3) This means, if a VC is aiming to raise a Rs. 100 crore fund, SIDBI will have to pump up Rs. 35 crore and the rest will have to raised from some other external sources.

4) An amount of Rs 500 crore was provided to the corpus in the financial year 2015-16 and then another Rs. 600 crore in the financial year 2016-17.

5) According to the government, the Rs. 10,000 crore corpus has the potential of catalysing Rs. 60,000 crore of equity investment and almost twice as much debt investment.

Why the Delay?

1) According to feedback received from several investors, SIDBI is too repetitive and bureaucratic.

2) Investors are only allowed to invest in DIPP certified startups.

3) Investors aren't allowed to take part in the follow-up rounds of a startup, which at the end of the day results in diluting their stake.

4) While SIDBI said that it will be contributing 35 percent to a fund raised by a VC, in reality, it is only shelling out about 15-20 percent.

5) SIDBI isn't willing to handover a formal letter of commitment so that funds can go to the market and raise the remaining amount of money they need.

Startups find it hard to get past the red tape

According to feedback received, the process between the request and the approval involves repetition of some procedures which results in unnecessary delays. But SIDBI is firm that the process is all necessary and natural.

According to a statement given by SIDBI Deputy Managing Director Ajay Kumar Kapur to ET, "When VCIC recommends a fund generally it could be at a very preliminary stage and the Funds go to the market with a comfort that in principle approval from SIDBI is available and often even the Private Placement Memorandum [PPM] may not be there. Since it takes considerable time to complete the documentation, thereafter, including filing PPM with SEBI, getting their approval, and securing at least 25% of the corpus of the Fund, based on past experience it is seen that New Funds could take around 9 months time from putting together the Fund Idea to complete the above steps and start investing."

However, the DIPP, which is the nodal agency for the Startup India Action Plan, has recently said that based on the feedback received, the procedure is now being shortened as much as possible.

Regulations delay the money supply

The Indian government is infamous for its non-punctual ways, but with the new government at centre, people were hopeful that this will change. But, Alas, they were wrong.

The Modi government has till date only sanctioned Rs. 600 crore to SIDBI. Out of this, only Rs. 100 crore has been verbally conveyed till now. And SIDBI has given a go-ahead to a meagre Rs 129 crore to various Alternate Investment Funds (AIFs).

The money disbursal has been halted because the investors have a raised a demand for a regulatory change. According to a particular guideline in the FoF, the money which is raised as part of the fund will only be invested in DIPP-certified startups. This particular condition makes investors prone to more risk than they're used to. In fact, several VCs too aren't particularly happy with this condition.

Further, investors are only allowed to invest in startups that haven't been in business for more than five years and have a turnover of not more than Rs 25 crore. This means, if a particular startup does incredibly well for itself and churns out a turnover of more than Rs. 25 crore, the VC will not be allowed to invest further in a follow-up round.

Investors aren't really happy with all the restrictions as they think investing in startups approved by the government is hugely limiting.

SIDBI is keeping its purse strings tight

As the funding crunch continues its run from 2016 to 2017, investors feel that it is high time that SIDBI fulfills its commitment of contributing 35 percent of the share. Currently, SIDBI is only contributing 15 percent of the fund requirement but the upper limit for government's participation is set at 35 percent.

Approval without backing

The funding environment present in India currently can be considered a particular harsh one. Thus, when an investor receives a final approval from SIDBI after undergoing a rigorous vetting process, it expects the SIDBI to give them a letter that will help them in raising the remaining money faster. However, here's the catch. An investor, who has been given a commitment letter from SIDBI, isn't allowed to parade to the market and tell fellow investors that SIDBI has decided to invest in the fund.

However, SIDBI has rubbished these claims and said that it has already issued commitment letters to some of the investors and only a few are left as of date. However, it has also added that SIDBI isn't responsible for helping the investors raise funds from other sources.

DIPP has set March 2017 as the deadline for disbursal of the approved Rs 600 crore funds. It aims to increase this figure by up to Rs 1,000 crore next year. Let's see if the DIPP is able to meet this deadline.

Modi's Startup Jumla: Only One Startup Got Funded Via Rs 10k Startup Fund

It was on January 16, 2016 that the Indian Prime Minister announced the Start-Up India programme that got the entire startup world gushing with hope. The Rs 10,000 crore Fund of Funds (FoF) was the centrepiece of the announcement. Allocated to the Small Industries Development Bank of India (SIDBI) by the Reserve Bank of India, the capital had to be invested in Indian startups through a way of providing them soft loans, equity and other risk capital.

The SIDBI set a goal to sanction the Rs 10,000 crore capital till 2025. But, unfortunately, till date, only Rs 600 crore of these Rs 10,000 crore have been sanctioned this year and a even a meagre sum of Rs 5.66 crore has reached just one new venture. According to industry experts, two of the major reasons for the poor performance of the fund is poorly drafted policies and the evergreen bureaucratic delays.

A recent Right To Information (RTI) filed by Business Standard newspaper has revealed, that so far Kae Capital is the only venture that has actually invested in a startup under the FoF.

Last month, we had reported how the SIDBI had finally pledged Rs 110 crore from the 2016 announced Rs 10,000-crore ‘fund of funds’ for startups, to four venture capital funds, namely Orios Venture Partners Fund II, Kae Capital, and two little known funds, Saha Trust and Kitven Fund III. Out of the 110 crores committed by SIDBI, 50 crore have been given to Orios Venture Partners Fund II, 45 crore to Kae Capital, 10 crore to Saha Trust and 5 crore to Kitven Fund III. Till date, Kae Capital is the only venture that has got Rs 5.66 crore of the Rs 45 crore committed to them.

It is important to note here that the Rs.10,000 crore ‘fund of funds’ is just a reiteration, rather a repackaging of the July 2014 budget proposal by Finance minister Arun Jaitley where he set aside Rs.10,000 crore for startups. The FoF just provides a little clarity on how it will be structured and managed. Earlier, we had reported that the much ambitious Rs 10,000 crore startup fund announced by the Modi government in financial budget of year 2014 was still lying unused as no one is clear which government department is responsible for managing the scheme. Later the responsibility was given to SIDBI by the RBI.

What is Funds of Funds?

Fund of Funds scheme was announced by the Indian Prime Minister Narendra Modi when he unveiled the Start-Up India action plan more than a year ago in the Indian Capital. Under the scheme, the government pledged that it would not be investing directly into Indian startups but instead contribute a part of the money an investor or Venture Capitalist raises to invest in the startups.

What Is SIDBI's Responsibility With FoF?

1) SIDBI has been bestowed upon the responsibility to operate the fund.

2) The organisation has to contribute up to 35 percent in a fund that aims to invest in startups in India.

3) This means, if a VC is aiming to raise a Rs. 100 crore fund, SIDBI will have to pump up Rs. 35 crore and the rest will have to raised from some other external sources.

4) An amount of Rs 500 crore was provided to the corpus in the financial year 2015-16 and then another Rs. 600 crore in the financial year 2016-17.

5) According to the government, the Rs. 10,000 crore corpus has the potential of catalysing Rs. 60,000 crore of equity investment and almost twice as much debt investment.

Why the Delay?

1) According to feedback received from several investors, SIDBI is too repetitive and bureaucratic.

2) Investors are only allowed to invest in DIPP certified startups.

3) Investors aren't allowed to take part in the follow-up rounds of a startup, which at the end of the day results in diluting their stake.

4) While SIDBI said that it will be contributing 35 percent to a fund raised by a VC, in reality, it is only shelling out about 15-20 percent.

5) SIDBI isn't willing to handover a formal letter of commitment so that funds can go to the market and raise the remaining amount of money they need.

Startups find it hard to get past the red tape

According to feedback received, the process between the request and the approval involves repetition of some procedures which results in unnecessary delays. But SIDBI is firm that the process is all necessary and natural.

According to a statement given by SIDBI Deputy Managing Director Ajay Kumar Kapur to ET, "When VCIC recommends a fund generally it could be at a very preliminary stage and the Funds go to the market with a comfort that in principle approval from SIDBI is available and often even the Private Placement Memorandum [PPM] may not be there. Since it takes considerable time to complete the documentation, thereafter, including filing PPM with SEBI, getting their approval, and securing at least 25% of the corpus of the Fund, based on past experience it is seen that New Funds could take around 9 months time from putting together the Fund Idea to complete the above steps and start investing."

However, the DIPP, which is the nodal agency for the Startup India Action Plan, has recently said that based on the feedback received, the procedure is now being shortened as much as possible.

Regulations delay the money supply

The Indian government is infamous for its non-punctual ways, but with the new government at centre, people were hopeful that this will change. But, Alas, they were wrong.

The Modi government has till date only sanctioned Rs. 600 crore to SIDBI. Out of this, only Rs. 100 crore has been verbally conveyed till now. And SIDBI has given a go-ahead to a meagre Rs 129 crore to various Alternate Investment Funds (AIFs).

The money disbursal has been halted because the investors have a raised a demand for a regulatory change. According to a particular guideline in the FoF, the money which is raised as part of the fund will only be invested in DIPP-certified startups. This particular condition makes investors prone to more risk than they're used to. In fact, several VCs too aren't particularly happy with this condition.

Further, investors are only allowed to invest in startups that haven't been in business for more than five years and have a turnover of not more than Rs 25 crore. This means, if a particular startup does incredibly well for itself and churns out a turnover of more than Rs. 25 crore, the VC will not be allowed to invest further in a follow-up round.

Investors aren't really happy with all the restrictions as they think investing in startups approved by the government is hugely limiting.

SIDBI is keeping its purse strings tight

As the funding crunch continues its run from 2016 to 2017, investors feel that it is high time that SIDBI fulfills its commitment of contributing 35 percent of the share. Currently, SIDBI is only contributing 15 percent of the fund requirement but the upper limit for government's participation is set at 35 percent.

Approval without backing

The funding environment present in India currently can be considered a particular harsh one. Thus, when an investor receives a final approval from SIDBI after undergoing a rigorous vetting process, it expects the SIDBI to give them a letter that will help them in raising the remaining money faster. However, here's the catch. An investor, who has been given a commitment letter from SIDBI, isn't allowed to parade to the market and tell fellow investors that SIDBI has decided to invest in the fund.

However, SIDBI has rubbished these claims and said that it has already issued commitment letters to some of the investors and only a few are left as of date. However, it has also added that SIDBI isn't responsible for helping the investors raise funds from other sources.

DIPP has set March 2017 as the deadline for disbursal of the approved Rs 600 crore funds. It aims to increase this figure by up to Rs 1,000 crore next year. Let's see if the DIPP is able to meet this deadline.

Sidbi Readies Another Rs 675 Crore Fund For Startups

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 Naukri.com 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.

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