SIDBI signs MoU with LIC for Fund-of-Fund operations

In a bid to boost the startup ecosystem in the country, Small Industries Development Bank of India (SIDBI) today signed a Memorandum of Understanding [MoU] with Life Insurance Corporation of India (LIC) for supplementing Government’s efforts under Fund-of-Fund operations for the Venture Fund industry.

The MoU was executed with LIC for contributing to the corpus of MSME focused venture capital funds along with India Aspiration Fund (IAF) being managed by SIDBI, said Kshatrapati Shivaji, CMD, SIDBI, while speaking at the SIDBI startup conclave.

As part of its Fund-of-Fund operations, SIDBI has set up IAF with a corpus of ₹ 2,000 crore pursuant to budget announcement of 2015.

LIC will be contributing up to 10 per cent of the Fund size of IAF to be managed by SIDBI, said LIC CMD K Roy

SIDBI has supported 90 Venture Funds including Social Venture Funds such as Samriddhi Fund (anchored by DFID, UK), Ankur Capital and also Funds focused on healthcare and agribusiness. Some of the Startups benefited out of SIDBI’s direct and indirect initiatives include Billdesk.com, Little Eye Labs, Wildcraft, Smaash Entertainment etc.

In order to bring in more professional outlook, SIDBI constituted a Venture Capital Investment Committee (VCIC) comprising experts such as H K Mittal Head, National Science & Tech. Entrepreneurship Dev. Board, Kiran Karnik former Nasscom Chief, Sanjeev Bikhchandani founder, Naukri.com, Saurabh Srivastava Co-Founder, Nasscom and Indian Angel Network, Prof. R. Vaidyanathan IIM, Bangalore and T V Mohandas Pai, former CFO, Infosys.

VCIC so far has cleared proposals for an aggregate commitment of around ₹ 1,400 crore to 38 Venture Capital Funds, said Shivaji.

Jayant Sinha, Minister of State for Finance said that the initiative will augment the sources of domestic capital to support venture funds with focus on startups as currently most of the capital comes from overseas which can lead to volatility.

Sinha said that the country needs to be at the forefront on innovation and consequently the centre has set up a Fund with an initial corpus of ₹ 2,500 crore and a total corpus of ₹ 10,000 crore over a period of four years.

When asked about banks rejecting Vijay Mallya's proposal to pay ₹ 4,000 crore, Sinha said,"Banks are following due process of law, they are ensuring that we peruse every avenue possible for bringing all wilful defaulters to the negotiating table and to be able to seize assets as required so that depositor money and tax payer money which is in stake in these situations is fully protected to the best extent possible."