Fund of Funds Scheme (FFS): Powering
India’s Startup Revolution
 |
| Credit: SIDBI |
The Fund of Funds for
Startups (FFS), launched in 2016 under the Startup India initiative,
has emerged as a cornerstone of India’s entrepreneurial ecosystem. As of
December 31, 2022, the scheme has committed ₹7,980 crore to 99
Alternative Investment Funds (AIFs) and disbursed ₹3,400
crore to 72 AIFs, enabling investments worth ₹14,077
crore in 791 startups. Managed by the Small Industries Development
Bank of India (SIDBI), FFS bridges the funding gap for early to growth-stage
startups while fostering domestic capital and reducing reliance on foreign
investments.
How FFS Works
·
Indirect Funding Model: FFS
does not invest directly in startups. Instead, it channels capital to
SEBI-registered AIFs (“daughter funds”), which must invest at
least twice the FFS commitment into startups via equity or
equity-linked instruments.
·
Corpus & Timeline: With a
₹10,000 crore corpus spread over the 14th and 15th Finance Commission cycles,
FFS prioritizes long-term support for innovation-driven enterprises.
Key Achievements of FFS (2016–2022)
1.
Job Creation & Economic Growth:
Startups supported by FFS have generated significant employment and contributed
to wealth creation, aligning with India’s goals of inclusive development.
2.
Geographic Diversity: Startups
from 25 states/UTs have benefited, with Karnataka
(240 startups), Maharashtra (176), and Delhi (138) leading in numbers.
3.
Sectoral Impact: Investments span
sectors like fintech, healthtech, edtech, and agritech, addressing critical
challenges through innovation.
State-Wise Distribution of FFS Investments (Top 5)
|
State |
Startups Funded |
Amount Invested (₹ Crore) |
|
Karnataka |
240 |
4,687 |
|
Maharashtra |
176 |
3,426 |
|
Delhi |
138 |
2,254 |
|
Haryana |
60 |
1,148 |
|
Tamil Nadu |
29 |
826 |
For a full breakdown, refer to the PIB
release.
Beyond FFS: Startup India’s Holistic Ecosystem
The government complements FFS with
flagship programs to nurture startups at every stage:
1. Startup India
Seed Fund Scheme (SISFS)
·
Purpose: Provides early-stage
funding (up to ₹20 lakh for validation, ₹50 lakh for commercialization).
·
Corpus: ₹945 crore allocated to
boost proof-of-concept and product trials.
2. Credit Guarantee
Scheme (CGSS)
·
Risk Mitigation: Offers credit
guarantees up to ₹10 crore per startup for loans from banks, NBFCs, or venture
debt funds.
3. Regulatory
Reforms & Incentives
·
Tax Exemptions: Startups enjoy
a 3-year income tax holiday and 80% patent fee rebates.
·
Self-Certification: Compliance
ease under labor/environmental laws for 3–5 years.
·
Fast-Track Exits: Startups can
wind up operations in 90 days vs. 180 days for other firms.
4. Global Market
Access
·
International Bridges:
Partnerships with 15+ nations, including the UK, Japan, and UAE, facilitate
cross-border collaboration.
Also Read: Mutual Credit Guarantee Scheme for MSMEs
Driving Recognition & Competition
·
National Startup Awards: Honors
innovators driving social impact and scalability.
·
States’ Startup Ranking:
Encourages states to improve policies through competitive federalism.
·
Startup India Innovation Week:
Annual event connecting stakeholders to celebrate entrepreneurship.
Why FFS Matters for India’s Future
·
Empowering Entrepreneurs: FFS
democratizes access to capital, enabling grassroots innovation.
·
Reducing Foreign Dependency: By
mobilizing domestic AIFs, India retains economic sovereignty.
·
Sustainable Development:
Startups under FFS address SDGs through tech-driven solutions in healthcare,
education, and sustainability.
Conclusion
The Fund of Funds Scheme has transformed
India’s startup landscape, turning ideas into scalable businesses while
fostering regional inclusivity. Coupled with initiatives like SISFS, CGSS, and
regulatory reforms, Startup India is poised to cement the nation’s position as
a global innovation hub. For aspiring entrepreneurs, these schemes offer not
just funding but a robust ecosystem to thrive in a competitive economy.
Source: PIB Release