Under Fund of Funds (FoF), SIDBI contributes to the corpus of SEBI registered Venture Funds / Alternative Investment Funds [category I & II only]. The VCFs / AIFs supported are required to invest specified amount of their corpus in MSMEs / Startups as per the mandate of the scheme.
SIDBI has been managing three Fund of Funds on behalf of respective Ministry / State Government viz. Fund of Funds for Startup (FFS) (a programme of DPIIT, Ministry of Commerce and Industry, GoI), ASPIRE Fund (Ministry of MSME, GoI) and UP Startup Fund (on behalf of Government of Uttar Pradesh).
A brief outline on the active Fund of Funds are -
Assistance from SIDBI’s own balance sheet / funds from specific sources
SIDBI has been one of the earliest players in the venture capital domain. The initiative for supporting funds started in 1995, when SIDBI began contributing, initially to Regional Venture Funds and then to All India Venture Funds (pursuant to announcement in Union Budget – FY 1997).
SIDBI is also operating the MSME-RCF which was launched pursuant to Budget announcement in FY 2009. The fund stands fully committed. The VCFs / AIFs supported are presently in exit / divestment stage.
IAF was launched on August 18, 2015 by Hon’ble Finance Minister. Total sanctions stand at ₹936 crore. As mentioned, no fresh sanctions are being committed out of IAF. The funds supported under IAF are in investment phase and commitments already made are being released as per requirements.
As mentioned above, presently, fresh investments are being undertaken by SIDBIin the capacity of operating manager / fund manager of 3 funds as per details below:
As part of Startup India Action Plan, in June 2016, Union Cabinet approved Fund of Funds for Startups (FFS) with a corpus of ₹10,000 crore to be managed with SIDBI. This is the flagship programme of the GoI. SIDBI has achieved sanctions of ₹7,225.45 crore and disbursements of ₹2,492.24 crore as of March 31, 2022. A third-party evaluation has been undertaken for DPIIT by Shri Arun Jaitley National Institute of Financial Management recently and the report furnished in March 2021. The report has reflected well on the scheme operations / fund deployment process and multiplier effect.
SIDBI is also managing a ₹310 crore “ASPIRE Fund” of Ministry of MSME, GoI with focus on Agro and Rural enterprises, which was formally launched on October 20, 2016 by Hon’ble Minister of MSME.
SIDBI is managing the ₹1,000 crore “UP Start-up Fund” of Government of Uttar Pradesh. Funds of ₹20 crore have been released by GoUP and the same have been committed.
Risk Management
