Out of Rs 10,000 cr startup fund, Govt gave Rs 600 Cr to SIDBI not to startups: RTI

Out of Rs 10,000 crore announced under Fund of Fund for Startups (FFS) by the Government of India, funds of merely Rs 600 crore were given to Small Industries Development Bank of India (SIDBI) not directly to startups.

According to an RTI seeking total amount of investment made by the government in the startups,  SIDBI has received only Rs 600 crore.

As on August 31, 2017, Rs 623.50 crore has been committed to 17 number of Alternative Funds (AIFs). Disbursement of Rs 68.13 crore has been made by 10 AIFs. These AIFs have invested in 72 startups, the document in Entrackr's possession outlined.

Earlier this week, DIPP secretary Ramesh Abhishek in an interview said that the govt have been able to provide $242.7 Mn (INR 1,587 Cr) in funding to startups.

And the funds were available through Fund of Funds and all the various schemes by the Department of Biotechnology, Department of Science and Technology as well as Ministry of Human Resource.  The govt recognised 4700 startups and plans to support about 7,500 startups, he added.

Whereas on the ground there is a different reality for startups as they are facing difficulties in terms of compliance, taxation regulation and legal. Lack of support for early-stage companies, red-tapism deterring companies from either getting started or give up too early. According to a data analytics firm, 212 startups shut down in 2016 in comparison to 140 in 2015.

At present, Indian startups are facing drought as far as funding is concerned. A majority of successful startups have been funded by foreign venture funds and many of them are locating outside the country.

Number of angel funds in the country is also less in comparison to the US and Isreal. The number of startups has also come down. According to data from Tracxn, the number of new internet and technology start-ups launched in the first nine months of this year has slumped to 800 from more than 6,000.

Besides the down graph in new start-up formation, start-up investments have been gone down for the second year. The volume of deals has also gone down, according to data from Tracxn. Start-ups have raised roughly $8 billion in the first nine months of the year, compared with $4.6 billion in all of 2016, data added.

On June 22, 2016, the Union Cabinet, approved the proposal to establish the Fund of Funds for start-ups with a total corpus of Rs.10,000 crore, with an aim to generate employment for 18 lakh persons.