SIDBI launches Rs 2,000-crore fund of funds

SIDBI launches Rs 2,000-crore fund of funds

Minister of State for finance Jayant Sinha has pitched for a domestic venture capital industry in the country so that sectors apart from eCommerce can get funding for their expansion plans.

“Some 90-95 per cent of the venture capital funds coming into India are coming from abroad. We need a domestic venture capital industry in India,” Jayant Sinha said.

China has been doing a good job so far when it comes to having a domestic venture capital industry, Sinha said. He added that venture capital funding from outside India has been going mainly into the eCommerce space and is not going into manufacturing, biotechnology, and solar power.

Meanwhile, the Small Industries Development Bank of India (SIDBI) has launched a fund of funds with a corpus of Rs 2,000 crore to pick up equity stakes in startups. This fund is a part of the Rs 10,000 crore corpus announced in Budget 2014 for a fund of funds. The remaining Rs 8,000 crore of the corpus will be utilised towards giving soft loans to micro, small, and medium enterprises (MSME) at an interest rate of 10-12 per cent.

The Reserve Bank has already allocated Rs 10,000 crore to SIDBI, and a venture capital investment committee which has six members — including Mohandas Pai — has been screening applications that have applied and will be receiving the funding.

SIDBI has played a critical role in developing the MSME venture ecosystem in the country. SIDBI has so far contributed to the corpus of 75 venture capital funds which has catalysed investment of more than Rs 5,600 crore to more than 472 MSMEs.

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