Founders, listen up. You know the grind —prototyping, customer traction, burned cash, sleepless nights. Now imagine a source of funding that doesn’t demand repayment, interest clocks, or constant collateral. This is not a dream: this is SIDBI’s Fund of Funds for Startups (FFS), a ₹10,000 crore India startup funding initiative under Startup India, designed to give you equity or equity-linked capital via professional fund managers. If you’re DPIIT-recognised, with innovation in your DNA, the doors are opening wide.
What Is SIDBI’s Fund of Funds for Startups Scheme?
- The FFS was launched on 16 January 2016 under the Startup India Action Plan.
- Managed by SIDBI, with a corpus of ₹10,000 crore, the scheme doesn’t invest directly in startups but channels funds into SEBI-registered Alternative Investment Funds (AIFs), Category I & II. These “daughter funds” then invest in DPIIT-recognised startups.
- AIFs receiving funding must invest at least twice the amount they receive from FFS into eligible startups.
Who Qualifies & How to Apply
Eligibility:
- The startup must be recognized by DPIIT under Startup India.
- The AIF (fund) must be a SEBI-registered Category I or II fund (or in the process of registration).
- Fund size, experience, team credibility: key members (e.g. directors, fund managers) must have prior experience & clean regulatory/credit background.
Application process (for the AIFs):
- AIF submits application via SIDBI’s “Fund of Funds for Startups (FFS)” portal.
- Preliminary questionnaire → due diligence → submission to SIDBI’s Venture Capital Investment Committee (VCIC) → Executive Committee approval.
- Once approved, agreements, Letters of Intent (LOI), terms are finalized; funds flow in tranches.
Important: Startups do not directly apply under FFS. Instead, they need to be DPIIT-recognised and then target funds (AIFs) that are channeling FFS investment.
Key Benefits & What Founders Should Know
- No debt burden: Equity or equity-linked support means founders aren’t burdened with interest or fixed repayments.
- Credibility & follow-on investment: Being backed via an AIF that has SIDBI’s backing increases confidence from other investors.
- Wide sector coverage: Technology, deep tech, health, agriculture, manufacturing, D2C – any startup that meets DPIIT recognition can benefit.
- Scale & visibility: Helps in scaling, mentoring, networks via fund managers.
- Multiplier effect: AIFs invest at least double, so the impact is amplified.
Limitations & Challenges
- The process can be slow: approvals, due diligence, and fund-raising cycles sometimes take time.
- The requirement of DPIIT recognition and SEBI-registration of AIFs can exclude early or informal startups.
- Commitment to invest twice FFS amount means AIF must have large corpus, which smaller funds may struggle with.
- Geographic / demographic gaps: often majority of support has favoured Tier-1 cities/institutions.
FAQs
Q1: Can any startup apply directly for FFS?
A: No. The FFS scheme is indirect. Only SEBI-registered AIFs apply to SIDBI. Startups must be DPIIT-recognised and then approach AIFs that are participating.
Q2: What qualifies a startup under DPIIT recognition?
A: It must be incorporated less than 10 years ago, have original entity status, turnover ≤ ₹100 crores in past years, and be working on innovation/scalability.
Q3: Is there any minimum fund size for AIFs to be eligible under FFS?
A: Yes. The AIF should have a certain corpus and must be SEBI registered, and must agree to invest at least twice the amount requested from the FFS in eligible startups.
Q4: How much has been deployed so far?
A: As of March 31, 2025, SIDBI had committed over ₹10,000 crore to many AIFs, which in turn have invested significantly in startups.
Founders, the time is now. India startup funding has transformed from loans and pitches into equity, recognition, and growth via SIDBI’s FFS scheme. If your startup is DPIIT-recognised and you are backed by or in touch with SEBI-registered AIFs, this scheme could be your roadmap to scale without debt weighing you down.
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