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The venture capital being invested in Indian start-ups should be more balanced between foreign and domestic flows than it is right now, Minister of State for Finance Jayant Sinha said at the launch of two funding facilities by SIDBI here on Tuesday.
“The venture capital industry should be based in India,” he said. “Right now, 95 per cent of venture capital and private equity funding comes from outside India.”
2 funds from SIDBIThe Small Industries Development Bank of India (SIDBI) has announced the launch of its India Aspiration Fund — a fund of funds where the government will be an anchor investor in domestic venture capital funds — and the SIDBI Make in India Loan for Enterprises programme, that will provide loans on soft terms to small and medium enterprises.
The venture capital-funding scheme by SIDBI was created with close collaboration with the Finance Ministry, particularly with Jayant Sinha. It had been announced by Finance Minster Arun Jaitley during his Budget speech in July.
At the launch here, Jaitley said that Indians are becoming more “aspirational than their politicians” and the government is keen to increase funding in what has been up till now an unfunded space, namely, start-ups and small industries.
The fund of funds scheme, Sinha said, would focus on local start-ups that can solve local problems — particularly those in healthcare delivery, manufacturing, biotechnology, solar power, cheap irrigation — and not just those that imitate innovations already happening in Silicon Valley.
With the government willing to take on this risk capital, Sinha said that other investors might be convinced to put in their money as well.
Initial trancheThe initial tranche for the fund of funds scheme is ₹2,000 crore and the two ministers distributed cheques of over ₹100 crore to several VCs, including Blume Ventures, IvyCap Ventures and Carpediem Capital. Sinha said that the two new programmes by SIDBI have the capacity to create close to 10 lakh jobs over the next seven years. UK Sinha, Chairman, Securities and Exchange Board of India, said at the launch that he expects start-ups to begin listing on the new institutional trading platform within the next six months.
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