Govt to invest Rs.2,200 crore in new tech start-ups in two years
The government plans to invest about Rs.2,200 crore in start-ups focused on new technologies over the next two years.
The funding will be done through Electronics Development Fund (EDF), which was set up in 2016 with the government is an anchor investor. Aruna Sundarajan, secretary, ministry of electronics and IT, said the government has been able to mobilise Rs.6,870 crore, of which government’s share is Rs.687 crore. “Our plan is to go up to Rs.22,000 crore by 2019, of which government’s share will be Rs.2,200 crore,” she said.
“One of the major issues had been lack of big VC funding. Mostly, the funds are going into e-commerce and e-tailing but that is not enough. We need to create IPR also… there are large number of tech start-ups, people working in nano-technology etc… but problem is who will fund them, because it is almost like R&D, until they commercialise,” she told InfraCircle.
EDF is a ‘fund of funds’ that works with venture capitalists to create ‘daughter funds’, which will provide risk capital to companies developing new technologies in electronics, nano-electronics and information technology. The EDF will put in 10% of the capital in ‘daughter funds’ and the rest will be invested by venture capitalists, according to the ministry website. Canbank Ventures is the fund manager of EDF.
EDF will also help attract venture funds, angel funds and seed funds in R&D and innovation in the specified areas. EDF was set up with an objective to move to a private-funded model from a government-funded model, where a start-up can raise money from the market. “The plan is to seed the market. Government putting in 10% doesn’t seem to be a big deal but it is a big deal because that is what builds a certain degree of confidence in the investors who put money into the venture fund,” she said.
Under the Digital India initiative, the government plans to develop the electronics system design and manufacturing (ESDM) sector to achieve “net zero imports” by 2020 and setting up of EDF is one of the important strategies which would enable creating a vibrant ecosystem of innovation, research and development (R&D) with an active industry involvement.
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