The Government of India has announced the Startup India Fund of Funds 2.0 (FoF 2.0) with a corpus of ₹10,000 crore. The aim is to accelerate access to capital for startups and strengthen the country’s innovation ecosystem.
The move further strengthens the earlier fund structure and is expected to channel investments through alternative investment funds (AIFs), supporting early- and growth-stage ventures across different sectors.
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Government Expands Funding Pipeline for Startups
The newly notified ‘Fund of Funds 2.0’ will be managed through the Small Industries Development Bank of India (SIDBI). This also continues the framework used in the earlier phase. Instead of direct investments, the fund will push capital into SEBI-registered AIFs, which in turn invest in startups.
The expanded corpus is intended to address funding gaps, particularly for startups seeking scale-up capital. The aim is to catalyse private investment and act as an anchor investor to boost capital flows into new businesses.
The initiative is part of the broader Startup India programme, which focuses on fostering innovation, boosting entrepreneurship, and supporting job creation across the country.
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Focus on Innovation, Deep Tech and Domestic Capital
The second phase of the fund is expected to prioritise sectors such as deep technology, artificial intelligence, fintech, climate tech, and other innovation-driven areas. It also aims to encourage greater domestic capital participation in India’s startup ecosystem.
By backing AIFs with a diverse sectoral focus, the government intends to widen access to funding beyond metro cities. The plan now extends additional support to startups in tier-2 and tier-3 regions. The structure is designed to improve capital efficiency while leveraging professional fund management expertise.
Industry experts note that the move comes at a time when startups are facing tighter funding conditions globally, making government-backed capital support an important stabilising factor for the ecosystem.
