The government could consider policies to enable insurance companies like LIC and pension funds to invest in start-ups and boost the entire ecosystem. Speaking at the India Economic Summit 2016, organised by the World Economic Forum and CII, on Friday, Department of Industrial Policy and Promotion (DIPP) secretary Ramesh Abhishek said: “LIC and pension funds must step in (in the start-up segment). Employees’ Provident Fund Organisation had recently taken steps to increase their exposure in stock markets. So definitely, their money needs to be leveraged (for start-ups).”
Abhishek’s statement came in response to comments by Seedfund India managing partner Mahesh Murthy that large insurance firms invest mainly in stock but not in start-ups. Even Srivatsan Rajan, chairman of Bain & Company India, said it is difficult for start-ups to tap the large pool of funds that insurance and pension companies have, thanks to complex regulations.
Paytm India founder Vijay Shekhar Sharma said large Indian companies and investors have not been proactive enough to invest in start-ups. OYO Rooms founder Ritesh Agarwal said it was the responsibility of start-ups to proactively inform the government about the need for reforms to ensure that they are in sync with the latest developments in the start-up sector.
DIPP’s Abhishek informed that he has written to over 100 companies himself to use their corporate social responsibility corpus to boost start-ups and incubators. The government has set up a R10,000-crore “fund of funds”, aimed at attracting private investments worth around R50,000 crore into start-ups over the next four years.