Startups in India are raising record funds and many financial instruments are helping them achieve this feat.
The numbers: Indian startups raised over $19 billion in funding in the first half of the calendar year 2022, the highest in nine years. Last year, $10 billion was raised during the corresponding period.
Startups in India are raising record funds and many financial instruments are helping them achieve this feat.
The numbers: Indian startups raised over $19 billion in funding in the first half of the calendar year 2022, the highest in nine years. Last year, $10 billion was raised during the corresponding period.
Rs 7,300 crore is committed to 86 alternative investment funds (AIFs). The AIFs are financial instruments that further invest in venture capital, hedge funds, private equity, and so on. They were introduced in 2012 by the SEBI.
Over Rs 9,500 crore is invested in more than 600 startups under the Fund of Funds for Startups (FFS) scheme. The FFS scheme provides equity funding support for the development and growth of innovation-driven enterprises and is managed by SIDBI.
Under the Startup India Seed Fund scheme, Rs 365.75 crore has been disbursed to 99 incubators and Rs 76 crore has been approved for 436 startups. The total corpus earmarked for providing seed funding to startups through incubators is Rs 945 crore.
Enabling policies: The surge in the growth of startups has drawn the government’s attention to developing a robust investment mechanism within the country to cater to the needs of emerging startups.
As part of the FFS mandate, the government participates in the capital of SEBI-registered venture funds, which invest twice the amount in startups.
Domestic funding is being encouraged to ensure the returns flow back into the country and a good response to that has been recorded.
The DPIIT will also roll out an online platform in two months to facilitate funding for startups with the support of SIDBI, which will allow AIFs to register and help startups in approaching investors and accessing early-stage funding.
Startup ecosystem: 73,205 startups from more than 645 districts are spread across all 28 states and eight Union territories.
About half of the startups are in tier 2 and 3 cities.
India has more than 100 unicorns, of which 44 emerged in 2021.
The GeM has more than 13,000 startups fulfilling over 1.1 lakh orders worth Rs 5,600 crore.
Global opportunity: India is getting close behind the US and China, while China’s ecosystems have declined in the rankings, a reflection of the relative decline in early-stage funding in comparison to other ecosystems..
The government is empowering startups to be able to leverage the global exposure, as international forums like the Dubai Expo can fill in the critical gaps in funding the booming sector.
SLUSH is another big opportunity where selected Indian startups can showcase their proposition to investors, corporate professionals, policymakers, and venture capital firms in Helsinki.
Other reforms: The Centre is also betting big on domestic initiatives like 50 regulatory reforms to enhance ease of doing business and enable raising capital and reducing compliance burden.
A recognised startup now gets blockchain-based recognition, self‐certification under nine labour and three environment laws, relaxations in public procurement, and access to stakeholders and programmes through the Startup India online hub.
As support for their IP protection, filing of applications of startups has been fast-tracked; startups get 80 per cent rebate in filing of patents and 50 per cent rebate in filing of trademark vis-à-vis other companies.
Read More at https://swarajyamag.com/context/how-startups-in-india-are-blooming-with-government-support