Launching at Rs 20bn ($300m), IAF is the delivery of a pledge made by India’s Prime Minister Narendra Modi made on the country’s Independence Day to support Indian entrepreneurship.
IAF will act as a fund of funds to support India’s venture capital scene, and provide advice to VCs on how to get the best out of their investments. Managed by the Small Industries Development Bank of India (SIDBI), the bank said in a statement that IAF’s objective was to “catalyze tens of thousands of crores of equity investment into start-ups and MSMEs (micro and small enterprises), creating employment for lakhs of persons, mostly educated youth, over the next four to five years.”
IAF, which attracted state-owned Life Insurance Corporation of India as a co-investor, has already committed around a third of its overall pot to venture capitalists so far, which include IvyCap Ventures, Blume Ventures, and Carpediem Capital Partners.
The Indian Government hopes that the fund will lead to the creations of 500,000 jobs and help place India towards the top of the global startup generation league table, and plans to top up the fund to $1.12bn by the end of the decade.
IAF is part of the Make in India initiative, and is joined by a loan initiative for small-to-medium enterprises called Make in India Loan for Small Enterprises (SMILE), which has set aside $1.5bn for quasi-equity and short term loans for India’s growing businesses.
Jayant Sinha, minister of state for finance, said: “India is expected to surpass the UK in terms of number of startups launched and would be behind only to the US. There is need for more funds that focus on startups and growth stage MSMEs.”
(source: Global Government Venturing, 07.09.15)