Union Cabinet approves proposal to establish a Fund of Funds for Start-ups

Posted on:24 Mar 2017 09:17:23
Union Cabinet approves proposal to establish a Fund of Funds for Start-ups
24 March 2017 Current Affairs: The Union Cabinet on 22 March 2017 approved the proposal to establish the Fund of Funds of Start-ups (FFS).

The Union Cabinet in 2016 approved the proposal to establish a Fund of Funds for Start-ups (FFS) with a total corpus of Rs 10000 crore.

Highlights : Alternate Investment Funds (AIFs) supported by FFS shall invest at least twice the amount of contribution received from FFS in Start-ups. If the amount committed for a Start-up in whole has not been released before a Start-up ceases to be so, the balance funding can continue thereafter.

It was also decided that operating expenses will be met out of the FFS to the extent of 0.50 per cent of the commitments made to AIFs and outstanding.

 The operating expenses including carrying out due diligence, legal and technical appraisal, convening meeting of Venture Capital Investment Committee, etc. 

 The operating expenses will be debited to the fund at the beginning of each half year that is on 1 April and 1 October.

 Fund of Funds for Start-ups  : The Fund of Funds for Start-ups was approved by Union Government in the year 2016 itself.

It was decided that the FFS shall contribute to the corpus of Alternative Investment Funds (AIFs) for investing in equity and equity linked instruments.

The FFS is being managed and operated by Small Industries Development Bank of India (SIDBI).  

FFS contributes to SEBI registered Alternative Investment Funds (AIFs) that may go up to a maximum of 35 per cent of the corpus of the AIF concerned.

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