Fund of Funds Scheme (FFS): Powering India’s Startup Revolution
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| 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