The government has notified the Startup India Fund of Funds (FoF) 2.0 with a ₹10,000 crore corpus to ease access to capital for emerging ventures and innovation-led enterprises.
FoF 2.0 was cleared by the Union Cabinet in February this year.
Notified by the Department of Promotion for Industry and Trade, the scheme builds on the earlier Fund of Funds for Startups launched in 2016, which sought to address funding gaps in the country’s rapidly growing startup landscape. The new iteration aims to go a step further, targeting sectors that are often underserved by traditional venture capital.
Under FoF 2.0, investments will be routed through SEBI-registered alternative investment funds (AIFs), with a clear focus on deeptech, early growth-stage startups, and technology-driven manufacturing ventures. This is expected to benefit startups operating in capital-intensive, high-risk domains, where private funding can be limited.
The scheme will be operationalised by the Small Industries Development Bank of India, which will act as the primary implementation agency. Another domestic agency is also expected to be onboarded.
A structured selection process for AIFs, overseen by a Venture Capital Investment Committee comprising industry veterans, has been built into the framework to ensure transparency and efficiency.
For startups, the move could not come at a more critical time. While India remains one of the world’s largest startup ecosystems, access to early and growth-stage capital has tightened amid global funding slowdowns. By committing public capital to AIFs, the government aims to crowd in private investment and de-risk participation in emerging sectors.
Importantly, FoF 2.0 introduces provisions for co-investment by government and institutional players, alongside stronger monitoring mechanisms, indicating a more mature and governance-focused approach compared to its predecessor.
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