The SIDBI Fund of Funds for Startups (FFS) is an initiative by the Small Industries Development Bank of India (SIDBI), launched under the Startup India Action Plan in 2016. It aims to provide financial support to startups in India by investing in Venture Capital (VC) funds, which then invest in startups.
The Government of India formed a fund of INR 10,000 crore to increase capital availability as well as to catalyse private investments and thereby accelerate the growth of the Indian startup ecosystem. The Fund was set up as a Fund of Funds for Startups (FFS), approved by the Cabinet, and established by the Department for Promotion of Industry and Internal Trade (DPIIT) in June 2016. FFS does not invest in startups directly but provides capital to SEBI-registered Alternate Investment Funds (AIFs), known as daughter funds, who in turn invest money in high-potential Indian startups. SIDBI has been given the mandate of managing the FFS through the selection of daughter funds and overseeing the disbursal of committed capital. The fund of funds makes downstream investments in venture capital and alternative investment funds that in turn invest in startups. The fund has been formed in a way that creates a catalysing effect. Funding is provided to startups across different life cycles.
Key Features of the SIDBI Fund of Funds Scheme
- Fund Size: ₹10,000 crore, managed by SIDBI.
- Objective: To boost the Indian startup ecosystem by providing equity-based funding.
- Mode of Investment: Instead of investing directly in startups, SIDBI invests in Alternative Investment Funds (AIFs), which then invest in eligible startups.
- Eligibility: Startups recognized by DPIIT (Department for Promotion of Industry and Internal Trade).
- Sector Focus: Technology, manufacturing, healthcare, fintech, agritech, and more.
- Support for Women Entrepreneurs: Encourages AIFs to invest in women-led startups
How the Fund of Funds Scheme Works?
- Step 1: SIDBI selects Alternative Investment Funds (AIFs) as partners.
- Step 2: These AIFs raise capital from SIDBI and other investors.
- Step 3: AIFs identify and invest in promising startups.
- Step 4: Startups receive equity-based funding to scale their business.
Benefits of the Fund of Funds Scheme
No Direct Loan Repayment: Since it’s equity funding, startups don’t have to repay like a loan.
Encourages Private Investments: Attracts private investors into the startup ecosystem.
Sector-Agnostic: Covers multiple industries, including tech, healthcare, and manufacturing.
Boosts Startup Growth: Helps startups scale operations, hire talent, and expand markets.
Eligibility for Startups
- Must be DPIIT-recognized under Startup India.
- Should be working on innovation, technology, or scalable business models.
- Must meet the AIF’s investment criteria.
FAQs
How to Apply?
- For Startups: They cannot apply directly but should approach AIFs funded by SIDBI.
🔹 For Venture Capital Funds: - Submit an application to SIDBI for funding under the Fund of Funds for Startups.
- Must be a SEBI-registered Alternative Investment Fund (AIF).
What is the SIDBI Fund of Funds for Startups (FFS)?
The Fund of Funds for Startups (FFS) is a ₹10,000 crore initiative managed by SIDBI under the Startup India Action Plan. It provides funding support to startups by investing in Venture Capital (VC) funds or Alternative Investment Funds (AIFs), which then invest in startups.
