The Government of India has announced a new ₹10,000 crore ($1.2 billion) fund to improve access to capital for domestic startups, with a strong focus on emerging and technology-driven sectors. This move will significantly boost India’s startup ecosystem and strengthen innovation-led growth.
Accordingly, the government has introduced the Startup India Fund of Funds 2.0 (FoF 2.0), building on the earlier programme launched in 2016 to bridge funding gaps and encourage domestic investment. With this new initiative, the government aims to further deepen the availability of venture capital and growth funding for startups across sectors.
Under the scheme, the government will channel the corpus through commitments to eligible Alternative Investment Funds (AIFs) during the 16th and 17th Finance Commission cycles. Subsequently, these AIFs will invest in startups recognised by the government, thereby ensuring structured and efficient capital deployment.
Moreover, the initiative specifically targets high-potential segments such as deeptech, early growth-stage startups, and technology-driven manufacturing ventures. As a result, the programme is expected to support innovation in critical and future-ready industries.
Earlier, the Fund of Funds for Startups (FFS 1.0), launched under the Startup India initiative, operated by investing in SEBI-registered AIFs instead of directly funding startups. Managed by the Small Industries Development Bank of India (SIDBI) under the Department for Promotion of Industry and Internal Trade, the programme supported more than 1,370 startups, thereby playing a key role in strengthening India’s startup landscape.
Similarly, FoF 2.0 will continue to deploy capital through AIFs, investing in equity and equity-linked instruments. Additionally, the fund will focus on four major segments: deep technology, micro venture capital funds supporting early-stage startups, technology-driven manufacturing, and sector-agnostic investments.
To ensure transparency and efficiency, the government has introduced a structured selection process to identify suitable AIFs. A Venture Capital Investment Committee (VCIC), comprising experienced ecosystem participants, will oversee the screening process. Meanwhile, an Empowered Committee will monitor implementation and track performance, ensuring accountability at every stage.
Furthermore, the framework allows for co-investment and additional capital contributions from government ministries, departments, and institutional investors. At the same time, the scheme incorporates oversight mechanisms designed to maintain strong governance standards.
The DPIIT will soon release detailed operational guidelines, including eligibility criteria, fund selection processes, and monitoring and reporting requirements. In addition, a committee chaired by the DPIIT Secretary will supervise the rollout of the scheme to ensure smooth execution.
The government has designated SIDBI as the primary implementing agency for FoF 2.0. Alongside this, it also plans to appoint another domestic agency to support the execution of the programme, thereby strengthening implementation capacity.
The launch of the ₹10,000 crore Startup India Fund of Funds 2.0 marks a significant step in strengthening India’s startup funding ecosystem. By improving access to venture capital, supporting deeptech innovation, and promoting technology-led manufacturing, the initiative is set to accelerate entrepreneurship and economic growth. As India continues to position itself as a global startup hub, such policy-driven funding support will play a crucial role in enabling sustainable and scalable innovation.
