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Government tweaks AIF norms to boost startups

Government tweaks AIF norms to boost startups
Alternate Investment Funds will now have to invest at least twice the amount they receive from a SIDBI-operated Rs 10,000 crore fund in start-ups, giving a boost to entrepreneurs.
The decision was taken at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi.

Last year, the government had approved the proposal to establish a Fund of Funds for Start-ups (FFS) with a total corpus of Rs 10,000 crore.

"Alternate investment funds (AIFs) supported by FFS shall invest at least twice the amount of contribution received from FFS in start-ups...," an official statement said on Wednesday.
It was also decided that operating expenses for carrying out due diligence, legal and technical appraisal, convening meetings would be met out of the FFS to the extent of 0.5 per cent of the commitments made to AIFs and outstanding.

"This will be debited to the fund at the beginning of each half year, that is April 1 and October 1," it said.

Earlier, it was decided that the FFS shall contribute to the corpus of AIFs for investing in equity and equity-linked instruments of various start-ups at early stage, seed stage and growth stage.
FFS contributes to SEBI registered AIFs that may go up to a maximum of 35 per cent of the corpus of the AIF concerned.
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