In a major push to strengthen India’s startup ecosystem, the Central Government has approved the launch of ‘Startup India Fund of Funds 2.0’ with a total corpus of ₹10,000 crore.
The scheme, notified by the Department for Promotion of Industry and Internal Trade under the Ministry of Commerce and Industry, aims to improve access to venture capital for startups across stages and sectors.
Startup India FoF 2.0 will come into effect from the date of notification, with commitments to Alternative Investment Funds (AIFs) spread across the 16th and 17th Finance Commission cycles. The structure will follow the earlier Fund of Funds for Startups launched in 2016 under the Startup India Action Plan.
The scheme will contribute to SEBI-registered AIFs, which will invest in equity and equity-linked instruments of startups recognised by the government. After raising funds from other investors, AIFs will evaluate and invest in startups in phases, while also mentoring and supporting them until exit.
It will also focus on innovation-driven manufacturing, long-gestation technologies, and early growth-stage startups through smaller venture capital funds.
A segmented approach has been introduced to target key areas. These include deep-tech startups, early-stage ventures, technology-led manufacturing under the ‘Make in India’ initiative, and sector-agnostic investments.
Operational flexibility is a key feature. The scheme allows larger fund sizes for capital-intensive sectors, longer investment timelines for R&D-heavy startups, higher contributions in segments with limited private funding, and relaxed investment multipliers to encourage broader participation.
The framework also enables co-investment or additional contributions from ministries, departments, and institutional investors, positioning it as an umbrella platform.
For implementation, Small Industries Development Bank of India will continue as the primary agency, along with additional domestic agencies to be selected. These agencies will invite proposals from AIFs and conduct due diligence.
A Venture Capital Investment Committee (VCIC), formed by DPIIT and comprising industry experts, will evaluate and recommend funding proposals. Oversight will be handled by an Empowered Committee chaired by the DPIIT Secretary, with representation from ministries, departments, the National Startup Advisory Council, and the broader startup ecosystem.
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