The Department for Promotion of Industry and Internal Trade (DPIIT) has released operational guidelines for the ₹10,000 crore Startup India Fund of Funds 2.0 (FoF 2.0), aimed at boosting venture capital for Indian startups. This initiative, approved by the Union Cabinet in February 2026, is designed to support deep tech, early-stage companies, and innovative manufacturing sectors across the country.
The FoF 2.0 will not invest directly in startups. Instead, the government will commit capital to SEBI-registered Category I and II Alternative Investment Funds (AIFs), which will then invest in DPIIT-recognised startups. SIDBI will continue as the primary Implementation Agency, with plans to onboard an additional agency to broaden reach and expertise.
The scheme is divided into four priority segments:
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Deep Tech AIFs: Focus on AI, biotech, space, semiconductors, and robotics, with up to ₹500 crore per fund.
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Micro VCs: For early-stage and seed funding, with government contribution capped at ₹100 crore per fund.
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Manufacturing-focused AIFs: Targeting tech-driven manufacturing in champion sectors, up to ₹200 crore per fund.
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Sector/Stage Agnostic AIFs: Flexible funds with stricter private capital mobilisation requirements.
FoF 2.0 is structured to act as a catalyst, requiring AIFs to mobilise private capital at defined multipliers (ranging from 1.5x to 2.5x), ensuring market discipline and broader investment impact. The guidelines also encourage geographic diversity, supporting startups beyond major metro cities.
Returns from the fund, net of up to 5% allocated for ecosystem capacity-building, will flow back to the Consolidated Fund of India, making the scheme self-sustaining.
FAQs [Frequently Asked Questions]
Q1: Who can benefit from Startup India FoF 2.0?
Only DPIIT-recognised startups are eligible, as the fund invests through SEBI-registered AIFs that must back government-approved startups.
Q2: What sectors does FoF 2.0 prioritize?
Deep tech, early-stage innovation, and advanced manufacturing startups are prioritized, with special segments for micro VCs and sector-agnostic funds.
Q3: How does the fund ensure private capital participation?
AIFs must mobilise private capital at specified multipliers (1.5x–2.5x), ensuring government investment catalyses wider market participation.