The move was widely appreciated and was also showcased as the government's big effort to support entrepreneurship ecosystem in the country. The government promised that the initiative would enable creation of 18 lakh jobs and that a 6X multiple factor (in terms of additional debt and equity investment) would make the fund's impact about Rs 60,000 crore.
The idea of the government providing funding support is not new globally and even in India states like Karnataka had their KITVEN fund operational since 1999, which has had a above average success track record, and is running its 4th fund with several successful exits. Just by the scale of the Central fund, much was expected. Though a number of people, including this writer, were sceptical whether the state should get into funding. There were good reasons for the scepticism.
In India there are already successful angel investors/seed funds/venture capital/private equity available in the country. There is no dearth of funds available for innovative ideas. On the contrary if any, investors chase the few good ideas.
It took the government about 6 months till June 2016, when it was announced that the cabinet had approved funding for this scheme and expertise of SIDBI would be uitlised in deploying it.
In September 2016, it was again announced that six centres of excellence to promote and fund start-ups under National Initiative for Development and Harnessing Innovation (NIDHI) would be setup. There was no clarity whether this was a part of the earlier start-up fund proposed or was a separate initiative.
The curious thing is, nearly a year after a grandiose Rs 10,000 crore sum was announced, there seems to be no start-up which has been funded under this corpus. The government should clarify in the budget what is the current status of the start-up fund, how many, if any start-ups have been funded, who is monitoring the fund, whether the fund is being run by professionals or government bureaucrats. Unless there is clarity, one would not have a clear picture of what happened to the start-up fund.