The Department for Promotion of Industry and Internal Trade (DPIIT) has issued the operational guidelines for the ₹10,000 crore Startup India Fund of Funds 2.0 (FoF 2.0), laying out the framework for how the government plans to channel capital into India’s startup ecosystem through regulated investment funds.
Aimed at streamlining capital deployment, improving governance and monitoring mechanisms, and widening funding access for startups across sectors, stages, and geographies, the scheme will route money through SEBI-registered Category I and II Alternative Investment Funds (AIFs).
These AIFs, in turn, will invest in DPIIT-recognised startups, allowing the government to act as a catalytic investor while leveraging private fund managers’ expertise.
The Small Industries Development Bank of India (SIDBI) has been appointed as the initial implementation agency and will oversee the selection and monitoring of these funds. DPIIT also said it plans to onboard an additional implementation agency to expand sectoral reach and institutional capacity.
A key highlight of the guidelines is the segmentation of funds based on ecosystem needs. The framework includes dedicated buckets for deeptech-focused funds, micro venture capital funds aimed at early-growth startups, technology-led manufacturing funds, and sector-agnostic vehicles.
The government has also built in minimum private capital mobilisation requirements, effectively making FoF 2.0 a multiplier for private investments rather than a standalone public fund. This “crowding-in” mechanism is expected to bring in significantly larger pools of private capital alongside the ₹10,000 crore corpus, per DPIIT.
The guidelines introduce a two-stage selection process for AIFs. The implementation agency will first conduct due diligence and screening, after which proposals will be reviewed by a Venture Capital Investment Committee.
The committee includes prominent names from industry and academia, including Vallabh Bhansali, Ashok Jhunjhunwala, Renu Swarup, Chintan Vaishnav, and Rajesh Gopinathan.
Notably, the framework also allows for co-investments and contributions from ministries, departments, and institutional investors in priority sectors. A portion of returns may also be redirected towards ecosystem-building initiatives such as mentorship, shared infrastructure, and startup support interventions.
The rollout of FoF 2.0 comes months after the Centre approved the fresh ₹10,000 crore corpus as part of its push to strengthen India’s domestic venture capital ecosystem and reduce reliance on foreign capital. Earlier this year, the government had said the second tranche would particularly focus on deeptech and innovative manufacturing startups.
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