Top fund managers and start-up veterans pushed for increasing the domestic capital pool by removing investment restrictions on insurance companies and pension funds. They felt even a fraction of investible funds from these behemoths could bring in a lot more funds than what the government is directly planning to invest through its Fund of Funds.
In a session titled ‘Start Up Nation’ at the India Economic Summit, jointly organised by the Confederation of Indian Industry and the World Economic Forum, Mahesh Murthy, entrepreneur and founder of Seedfund, said: “The largest potential LP (limited partner) in India is LIC (Life Insurance Corporation of India). LIC invests only in stock markets. Even a one per cent allocation of LIC could be more than what the government plans to invest.” Srivatsan Rajan, chairman, Bain & Co India, also felt that regulations by the Insurance Regulatory and Development authority of India and the Pension Fund Regulatory and Development Authority were restricting investments in start-ups. “We have large pools of domestic capital, which lie in insurance and pension funds. We need to find ways to open these up,” said Rajan.
These suggestions came after Paytm founder Vijay Shekhar Sharma made a passionate call to build domestic pools of capital that can support Indian start-ups to take on international competition. Ramesh Abhishek, secretary, department of industrial policy & promotion, said: “I agree that LIC and pension funds must step in. That must be leveraged. I am making a note of it.”
Abhishek added that the government was taking various steps to improve the ecosystem for start-ups in the country. The department has written to about 100 companies to set up incubators that will help start-ups as part of their corporate social responsibility activities.(News Courtesy: business-standard)