Fund of Funds for Startups | SIDBI Venture Capital
Overview
The Fund of Funds for Startups (FFS) is a Government of India initiative managed by the Small Industries Development Bank of India (SIDBI). It channels capital into SEBI-registered Alternative Investment Funds (AIFs) that, in turn, invest in Indian startups. The scheme is part of the Startup India Action Plan.
Objective
The scheme aims to catalyze private venture capital investment in Indian startups, especially those in early and growth stages. By leveraging government funds, it encourages domestic institutional investment in the startup ecosystem.
Benefits
- Government capital deployed into AIFs for startup investments
- Encourages private co-investment alongside government funds
- Supports startups across sectors including tech, manufacturing, and social enterprise
- Helps create a robust domestic venture capital ecosystem
- Reduces dependence on foreign venture capital
Eligibility
- SEBI-registered Category I or Category II Alternative Investment Funds
- AIFs must have a focus on investing in DPIIT-recognized startups
- Fund managers must meet SIDBI’s due diligence criteria
- Startups funded must be Indian incorporated entities
Exclusions
- Funds focused exclusively on real estate or debt instruments are ineligible
- AIFs that do not invest in DPIIT-recognized startups are excluded
- Foreign-registered funds without Indian operations are not eligible
Application Process
- AIF fund managers submit an expression of interest to SIDBI
- SIDBI conducts due diligence on the fund’s track record and team
- Selected AIFs enter into agreements with SIDBI for FFS participation
- Capital is deployed in tranches based on fund drawdown schedules
- Progress reports and portfolio performance are reviewed periodically
Documents Required
- SEBI registration certificate for the AIF
- Fund placement memorandum or information document
- Audited financials of the fund management entity
- KYC documents of fund managers
- Portfolio company details
- Business plan and investment thesis
