SIDBI picks 8 venture funds to invest Rs 428 cr in startups

The Small Industries Development Bank of India (SIDBI) has chosen eight venture funds to invest in startups as defined under the Startup India Action Plan and will support them with a corpus amount of Rs 428 crore, according to a report in The Economic Times.

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SIDBI's Venture Capital Investment Committee (VCIC), which comprises former Infosys CFO Mohandas Pai, former Nasscom chief Kiran Karnik, Indian Angel Network Founder Saurabh Srivastava, Founder of Info Edge Sanjeev Bikhchandani, among others, had screened 13 proposals from VC funds on Tuesday.

The committee recommended eight proposals for an aggregate corpus support of around Rs 428 crore from the 'Fund of Funds' for startups as announced by Prime Minister Narendra Modi earlier this year and cleared by the cabinet last month. The total targeted corpus of these eight funds is Rs 3,130 crore. Citing that rejections after this stage were rare, and official told ET,

While the selected funds still have to be given the final approval by SIDBI's executive board, for all purposes, these eight will receive the fund support from SIDBI.

However, since the final stamp of approval has not yet been given, SIDBI did not share the names of these shortlisted funds. SIDBI has already sanctioned Rs 168 crore to six such funds while six proposals are under different stages of processing for an aggregate support of Rs 271 crore.

The six funds that have already received support from SIDBI to invest in startups are — GVFL, Kae Capital, Orios Venture Partners, Ideaspring Capital, Parampara Early Stage Opportunities Fund, and the IFCI Venture Capital Fund's funds for SME advantage.

SIDBI's CMD Kshatrapati Shivaji though told ET that the funds that were screened on Tuesday were focused on several areas of innovation, including Internet of Things (IoT), artificial intelligence, healthcare, consumer media, fintech, data analytics, cyber security, digital media, machine learning, and agri-related businesses.

SIDBI is also managing a fund of funds set up by Ministry of MSME with a total corpus of Rs 60 crore under “A Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship [ASPIRE]", according to a report from Business World Disrupt. It also states that during the meeting, VCIC recommended proposals from three fund managers for an additional corpus support of Rs 30 crore for coverage under the ASPIRE Fund. These funds would support MSME enterprises in the agro and rural industry segment.

SIDBI has so far supported 97 funds in aggregate including 11 regional funds with an aggregate commitment of Rs 2,602 crore. Businessworld also notes that based on drawal of around Rs 1,065 crores, so far from the above aggregate commitment, these funds have invested in 714 enterprises with an equity support of Rs 9,520 crore out of which Rs 4,794 crore was invested in 604 MSMEs.

While SIDBI's current focus is on stepping up its role in funding startups through its Fund of Funds operations in line with national agenda (Start up India Action Plan), Kshatrapati added that SIDBI also offers other risk capital products through mezzanine structures to growth-stage startups and that SIDBI has been constantly orienting and reinventing itself for bringing out product solutions for various needs of SMEs.

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