Government of India has notified the Startup India Fund of Funds (FoF) 2.0 with a corpus of ₹10,000 crore to enhance capital availability in India’s startup ecosystem. The initiative, announced by Ministry of Commerce and Industry, aims to boost investments in priority sectors such as deep technology and early growth-stage startups.
The scheme will be operationalised by Small Industries Development Bank of India as implementation agency, while operational guidelines and the structure of the Venture Capital Investment Committee (VCIC) will be issued by the Department for Promotion of Industry and Internal Trade.
Fund of Funds (FoF) Model
The Startup India FoF 2.0 follows a Fund of Funds approach, wherein the government does not invest directly in startups. Instead, it invests in SEBI-registered Alternative Investment Funds (AIFs), which further invest in startups.
- Venture Capital (VC): Refers to early-stage equity funding provided to startups with high growth potential, along with strategic guidance.
- This model helps leverage private capital and ensures efficient allocation of resources.
Background
- The original Fund of Funds for Startups (FFS) was launched in 2016 under Startup India.
- FoF 2.0 builds upon this framework with greater focus on strategic sectors and innovation-driven growth.
Objectives
- To bridge the funding gap for startups at early and growth stages
- To mobilise private venture capital through government participation
- To promote innovation-led growth in advanced technologies and manufacturing
- To strengthen India’s position as a global startup and innovation hub
Key Features
- Corpus: ₹10,000 crore (spread across 16th & 17th Finance Commission cycles)
- Launch: Notified on April 13, 2026 (Phase 2.0)
- Nodal Department: Department for Promotion of Industry and Internal Trade
- Implementation Agency: Small Industries Development Bank of India
Investment Focus
- Deep-tech startups
- Innovative manufacturing sectors (aligned with “Make in India”)
- Early and growth-stage startups
- Smaller AIFs supporting emerging sectors
Operational Mechanism
- Investment routed through SEBI-registered AIFs
- VCIC-based selection process ensures quality fund allocation
- Provision for co-investment by government and institutional investors
- Mandatory investment in government-recognised startups
Significance
- Enhances domestic capital availability, reducing reliance on foreign funding
- Promotes deep-tech innovation and indigenous manufacturing capabilities
- Supports job creation through scaling of startups
- Strengthens economic resilience and technological self-reliance
- Aligns with national initiatives like Startup India and Make in India