Fund of Funds 2.0 worth Rs 10,000 crore for startups to focus on four segments: DPIIT
The Rs 10,000 crore Fund of Funds 2.0 for startups will have an expanded scope, with the corpus divided into four segments, including dedicated support for deep-tech and manufacturing startups, according to a DPIIT notification.
The second tranche of Fund of Funds was approved by the Cabinet in February. It is aimed at mobilising venture capital (VC) and support deep tech, tech-driven innovative manufacturing startups, and early-growth stage enterprises.
The FoF 2.0 has been designed to continue the momentum of investments in startups, with an expanded scope over Fund of Funds Scheme (FFS 1.0).
"Startup India Fund of Funds 2.0 will have an expanded scope with segmented approach to target key segments for real innovation," the notification by Department for Promotion of Industry and Internal Trade (DPIIT) said.
The scheme will contribute to the corpus of SEBI-registered Alternative Investment Funds (AIFs) for investing in equity and equity-linked instruments of entities recognised as startups by the central government.
The first segment will focus on AIFs supporting deep tech, that is, startups engaged in developing novel solutions addressing complex problems that involve longer R&D cycles, and higher costs.
The second segment will provide capital to smaller AIFs ( micro VCs) supporting early growth stage startups, that is enterprises which are in the early phases of developing a technology, product or service.
On the other hand, the third segment will support tech-driven innovative manufacturing startups, while the fourth will cater to AIFs supporting sector/stage agnostic startups, it said.
It added that operational flexibilities will be incorporated in the guidelines to address the unique requirements of the segments.
This will include supporting AIFs with larger corpuses to increase the availability of funds required for capital intensive segments such as deep tech and manufacturing; and supporting longer duration AIFs to cater to startups having longer R&D cycles and gestation periods.
The guidelines will be issued by the department. It will also include other aspects important to realise the expanded scope of the scheme.
The operational guidelines for FoF 2.0 will cover the detailed segment-wise provisions, eligibility criteria for AIFs and startups, selection and monitoring processes, reporting and assessment requirements, mechanism for disbursal of funds to implementation agencies and AIFs, and composition of investment committee.
Small Industries Development Bank of India (SIDBI), which was the implementation agency of FFS 1.0, will also be the implementing agency for FoF 2.0.
In addition, another domestic agency shall be selected to implement the scheme.
An empowered committee chaired by Secretary, DPIIT will be constituted to monitor implementation and performance of the scheme.
The second tranche of Fund of Funds was approved by the Cabinet in February. It is aimed at mobilising venture capital (VC) and support deep tech, tech-driven innovative manufacturing startups, and early-growth stage enterprises.
The FoF 2.0 has been designed to continue the momentum of investments in startups, with an expanded scope over Fund of Funds Scheme (FFS 1.0).
"Startup India Fund of Funds 2.0 will have an expanded scope with segmented approach to target key segments for real innovation," the notification by Department for Promotion of Industry and Internal Trade (DPIIT) said.
The scheme will contribute to the corpus of SEBI-registered Alternative Investment Funds (AIFs) for investing in equity and equity-linked instruments of entities recognised as startups by the central government.
The first segment will focus on AIFs supporting deep tech, that is, startups engaged in developing novel solutions addressing complex problems that involve longer R&D cycles, and higher costs.
The second segment will provide capital to smaller AIFs ( micro VCs) supporting early growth stage startups, that is enterprises which are in the early phases of developing a technology, product or service.
On the other hand, the third segment will support tech-driven innovative manufacturing startups, while the fourth will cater to AIFs supporting sector/stage agnostic startups, it said.
It added that operational flexibilities will be incorporated in the guidelines to address the unique requirements of the segments.
This will include supporting AIFs with larger corpuses to increase the availability of funds required for capital intensive segments such as deep tech and manufacturing; and supporting longer duration AIFs to cater to startups having longer R&D cycles and gestation periods.
The guidelines will be issued by the department. It will also include other aspects important to realise the expanded scope of the scheme.
The operational guidelines for FoF 2.0 will cover the detailed segment-wise provisions, eligibility criteria for AIFs and startups, selection and monitoring processes, reporting and assessment requirements, mechanism for disbursal of funds to implementation agencies and AIFs, and composition of investment committee.
Small Industries Development Bank of India (SIDBI), which was the implementation agency of FFS 1.0, will also be the implementing agency for FoF 2.0.
In addition, another domestic agency shall be selected to implement the scheme.
An empowered committee chaired by Secretary, DPIIT will be constituted to monitor implementation and performance of the scheme.
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