The Small Industries Development Bank of India (Sidbi), which on Saturday announced to commit Rs 200 crore to three AIFs (alternative investment funds), received a shot in the arm when the Department of Industrial Policy and Promotion (DIPP) officially asked the Sidbi to commit Rs 1,600 crore in additional funds.
The Sidbi will provide the funds from the government’s Rs 10,000 crore Fund of Funds launched under the Startup India Action Plan in 2016.
In a tweet, DIPP Secretary Ramesh Abhishek said, “Great! @DIPPGOI has conveyed to @sidbiofficial that they can commit Rs 1,600 cr more from FFS by March. This will take total committed amount to Rs 2,200 cr plus. These will go a long way in supporting venture funding in India.”
Great! @DIPPGOI has conveyed to @sidbiofficial that they can commit Rs.1600 cr more from FFS by March. This will take total committed amount to Rs.2200 cr plus. These will go a long way in supporting venture funding in India ! https://t.co/rlmOf0eplv
— Ramesh Abhishek (@rabhishek1982) January 13, 2018
The three AIFs which will receive the funds from Sidbi were Bharat Innovation Fund, JM Financial Fund II and North Eastern Venture Fund.
Earlier, Sidbi had backed funds such as Pi Ventures, Unicorn India Ventures Fund I, Ankur Capital Stellaris Fund, Menterra Social Impact Fund I and Endiya Seed Co-Creation Fund besides others.
In order to encourage entrepreneurship in the country, DIPP secretary Abhishek in November last year said that the government provided Rs 1587 crore in fund to startups since the launch of Startup India programme.
“We have been able to help more than 14,000 startups in various ways. Almost 4,700 startups have been recognised by DIPP, giving them a host of services, incentives, and facilities. We have been able to provide $242.7 million (Rs 1,587 crore) in funding to startups,” Abhishek had then told in an interview.
However, there is a lot of gap between the statements of the government and the ground reality in startup ecosystem.
According to an RTI application, as on August 31, 2017, Rs 623.50 crore was committed to 17 AIFs. However, only Rs 68.3 crore was disbursed in 72 startups by the 10 AIFs.
At present, Indian startups are still facing drought as far as funding is concerned. A majority of successful startups have been funded by foreign venture funds.
Besides, lack of support for early-stage companies and red-tapism are still prevalent which are creating deterrence in the growth of startup ecosystem. 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.