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, aimed at boosting venture capital availability for Indian startups. The scheme will be implemented mainly through the Small Industries Development Bank of India (SIDBI), which will channel funds into SEBI-registered Alternative Investment Funds (AIFs) instead of investing directly in startups.
FoF 2.0 focuses on deep tech ventures, technology-driven manufacturing and early-growth stage startups, especially those backed by smaller domestic funds. The government’s contribution to any single AIF will be capped at about 25–40% of the fund size to avoid over-dependence and to attract more private capital alongside public money. The corpus will be deployed over upcoming Finance Commission cycles, with an emphasis on expanding startup funding beyond major metros into emerging cities and smaller ecosystems.
Under the new guidelines, SIDBI will shortlist AIFs through a due diligence process, after which a Venture Capital Investment Committee (VCIC) made up of industry and policy experts will evaluate proposals. An empowered committee chaired by the DPIIT Secretary will review performance from time to time, and third‑party evaluations will track outcomes such as job creation, innovation and geographical spread. A portion of the returns from these investments will be reinvested into ecosystem development activities like mentorship and startup infrastructure, while the rest will flow back to the Consolidated Fund of India.
FAQs [Frequently Asked Questions]
1. What is the Startup India Fund of Funds 2.0?
Startup India Fund of Funds 2.0 is a ₹10,000 crore government-backed corpus that invests in SEBI-registered AIFs, which in turn fund DPIIT-recognised startups across sectors and stages.
2. Will this fund invest directly in startups?
No, the fund will not invest directly in startups; it will route capital through selected SEBI-registered AIFs that then back eligible startups, combining public money with private investment expertise.
3. Which startups and sectors will get priority support?
The scheme prioritises deep tech, tech-driven manufacturing, early-growth startups supported by smaller funds, and sector-agnostic ventures, with a strong focus on expanding support to emerging startup hubs beyond metros.