IN-SPACe - Cabinet nod to Rs 1000 Crore Venture Capital Fund for Space sector
By TIOL News Service
NEW DELHI, OCT 24, 2024: THE Union Cabinet, has approved setting up of Rs.1000 crore Venture Capital Fund dedicated to space sector, under aegis of IN-SPACe.
Financial implications:
The deployment period of the proposed Rs.1,000 crore VC fund is planned to be up to five years from the actual date of start of the fund operations. The average deployment amount could be Rs.150-250 crore per year, depending on the investment opportunities and fund requirements. The proposed break-up financial year wise is as below:
|
S.No.
|
Financial Year
|
Estimate (In Rs.Crores)
|
|
I
|
2025-26
|
150.00
|
|
2
|
2026-27
|
250.00
|
|
3
|
2027-28
|
250.00
|
|
4
|
2028-29
|
250.00
|
|
5
|
2029-30
|
100,00
|
| |
Total Envelope (VC)
|
1000.00
|
The indicative range of investment is proposed to be Rs.10-Rs.60 Crore, contingent upon the stage of the company, its growth trajectory, and its potential impact on national space capabilities. Indicative Equity Investment Range could be:
Growth Stage: Rs.10 Crore – Rs.30 Crore
Late Growth Stage: Rs.30 Crore – Rs.60 Crore
Based on the above investment range, the fund is expected to support approximately 40 startups.
Details:
The Fund is strategically designed to advance India's space sector, aligning with national priorities and fostering innovation and economic growth through the following key initiatives:
a. Capital Infusion
b. Retaining Companies in India
c. Growing Space Economy
d. Accelerating Space Technology Development
e. Boosting Globa! Competitiveness
f. Supporting Atmanirbhar Bharat
g. Creating a Vibrant Innovation Ecosystem
h. Driving Economic Growth and Job Creation
i. Ensuring Long-Term Sustainability
By addressing these points, the fund aims to strategically position India as one of the leading space economies.
Benefits:
i. Capital infusion to create a multiplier effect by attracting additional funding for later-stage development, thereby instilling confidence in private investors.
ii. Retention of space companies domiciled within India & countering the trend of Indian companies domiciling abroad.
iii. Accelerate private space industry's growth to meet the goal of a five-fold expansion of the Indian Space Economy in next ten years.
iv. Drive advancements in space technology and strengthening India's leadership through private sector participation.
v. Boost global competitiveness.
vi. Supporting Atmanirbhar Bharat.
Impact, including employment generation potential:
The proposed fund is expected to boost employment in the Indian space sector by supporting startups across the entire space supply chain-upstream, midstream, and downstream. It will help businesses scale, invest in R&D, and expand their workforce. Each investment could generate hundreds of direct jobs in fields like engineering, software development, data analysis, and manufacturing, along with thousands of indirect jobs in supply chains, logistics, and professional services. By fostering a strong startup ecosystem, the fund will not only create jobs but also develop a skilled workforce, driving innovation and enhancing India's global competitiveness in the space market.
Background:
The Government of India, as part of its 2020 space sector reforms, established IN-SPACe to promote and oversee private sector participation in space activities. IN-SPACe has proposed a Rs.1000 crore Venture Capital Fund to support the growth of India's space, economy, currently valued at S8.4 billion, with a target to reach billion by 2033. The fund aims to address the critical need for risk capital, as traditional lenders are hesitant to fund startups in this high-tech sector. With nearly 250 space startups emerging across the value chain, timely financial support is crucial to ensure their growth and prevent talent loss overseas. The proposed government-backed fund will boost investor confidence, attract private capital, and signal the government's commitment to advancing space reforms. It will serve as an Alternative investment Fund under SEBI regulations, providing early-stage equity to startups and enabling them to scale for further private equity investments.
