$2 Billion Fund for Indian Startups

Reports indicates that the Indian Government is in a discussion with a global pension fund and Insurance Regulatory Development Authority of India (IRDAI), on perfusing $2 billion Alternative Investment Fund (AIF) through the vasculature of Indian startups, in order to outreach the startup community. 

To prepare the above mentioned AIF, the Government aims to modify the current laws, including the insurance sector regulations; consequently therefore, the global pension fund and the insurance companies will be among the investors, as well.

In this regard, a report on the creation of AIF has been already submitted to the IRDAI by an expert. As soon as the AIF is incorporated from Individual investors, the insurance companies or the private equity firms, it will be pooled in capital and invested into the startup community.

The goal of this evolution is to reduce the dependency of the startup community on foreign private equity firms- definitely those from the neighboring countries are at the top of the list- and providing them with more domestic investors and funding options, as an alternative.

A little while back, while mentioning that Indian startups must stop relying on foreign investors for their development, the Parliamentary Standing Committee on Finance solicited to outreach the Small Industries Development Bank of India (SIDBI) Fund-of-Funds vehicle, to enable it operating as an anchor investor.

The contention between India and China along the border was followed by some restrictions which have been planned by the Indian government against Chinese investors; hundreds of Chinese mobile applications were banned by the government; also e-commerce platforms have been informed to list the country of origin of all their products which exist in their websites, besides ramping up its Aatmanirbhar Bharat or Self-Reliant India pitch.

In the other hand, according to the recent update on rules of Foreign Direct Investment of India, all the investment in Indian companies from neighboring countries would  mandatorily  require the approval of the Indian government.

Nevertheless, since the domestic funders and investors have been slow on the fresh investment, some of the startups face some challenges.