The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, has issued operational guidelines for the Startup India Fund of Funds 2.0 (FoF 2.0). These guidelines lay down a structured framework to operationalise the ₹10,000 crore corpus through clearly defined mechanisms for fund deployment, governance, and monitoring.
Implementation Structure
- FoF 2.0 will be implemented through commitments to SEBI-registered Category I and II Alternative Investment Funds (AIFs), which will invest in DPIIT-recognised startups.
- Small Industries Development Bank of India (SIDBI) will act as the initial Implementation Agency, undertaking AIF selection and monitoring.
- DPIIT will also onboard an additional Implementation Agency to expand reach and enhance sectoral expertise.
AIF Segmentation
- The guidelines introduce a structured segmentation of AIFs into four categories — deep tech-focused funds, micro venture capital funds supporting early-growth startups, funds focused on innovative and technology-led manufacturing sectors, and sector- and stage-agnostic funds.
- Each segment has defined parameters including corpus thresholds, government contribution limits, tenure, and minimum private capital mobilisation ratios.
Two-Stage AIF Selection Process
- Stage 1: Initial screening and due diligence by the Implementation Agency
- Stage 2: Evaluation by the Venture Capital Investment Committee — assessing track record, fund management capability, and investment strategy
The Committee comprises distinguished leaders including Vallabh Bhansali, Dr. Ashok Jhunjhunwala, Dr. Renu Swarup, Dr. Chintan Vaishnav, and Rajesh Gopinathan, along with representatives from the Implementation Agency — bringing expertise across deep tech, manufacturing, policy, and venture ecosystems.
Key Design Features
- FoF 2.0 acts as a catalyst rather than a direct investor, enabling multiplier effects through private capital participation
- Mandates minimum private capital mobilisation — reinforcing market-led investment discipline
- Provision to allocate a portion of returns towards ecosystem capacity-building — mentorship, shared infrastructure, and ecosystem development
- Provides for co-investments from Ministries, Departments, and institutional investors in priority sectors
- Framework incorporates flexibility to evolve based on implementation experience