DPIIT Engages Alternate Investment Funds to Enhance Capital Mobilisation for Startups

The Department for Promotion of Industry and Internal Trade (DPIIT) recently engaged with alternate investment funds (AIFs) to explore strategies for enhancing startup funding in India, according to an official. Numerous AIFs participated in these discussions, which focused on capital mobilisation and boosting investments in startups, particularly in smaller cities.

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Under the Centre's Fund of Funds Scheme (FFS), support is provided to Securities and Exchange Board of India (Sebi)-registered AIFs, which subsequently invest in startups. The FFS was introduced with a Rs 10,000 crore corpus, intended to be accumulated over the 14th and 15th Finance Commission Cycles (2016-2020 and 2021-2025) through DPIIT's budgetary allocations.

Investment Commitments by AIFs

One official highlighted that these AIFs have pledged to invest Rs 1 lakh crore in startups, with over Rs 20,000 crore already invested. Notable AIFs supported under the FFS include Chiratae Ventures, India Quotient, Blume Ventures, IvyCap, Waterbridge, Omnivore, Aavishkaar, JM Financial, and Fireside Ventures.

FFS-supported AIFs are mandated to invest at least twice the amount committed under the FFS in startups. As of October 31, 2024, these AIFs have invested a total of Rs 20,572.14 crore in startups.

The discussions also addressed the challenges of capital mobilisation and strategies to enhance funding for startups in smaller cities. This initiative aims to decentralise startup growth beyond major urban centres.

The DPIIT's efforts reflect a broader strategy to foster innovation and entrepreneurship across India. By supporting AIFs through the FFS, the government seeks to create a robust ecosystem for startups nationwide.