Startup India Fund of Funds 2.0: ₹10,000 Crore Boost for Venture Capital

The Union Cabinet has approved the ₹10,000 crore Startup India Fund of Funds 2.0 to mobilise venture capital and strengthen India’s innovation ecosystem.

Explore UPSC Optional Courses

Explore UPSC Optional Courses

About Startup India Fund of Funds 2.0

• Startup India Fund of Funds 2.0 (FoF 2.0) is a ₹10,000 crore government-backed corpus approved in 2026 to catalyse long-term domestic venture capital investment in Indian startups.
  • It builds upon the earlier Fund of Funds for Startups (FFS 1.0) launched in 2016 under the Startup India initiative.
• Nodal Ministry: The scheme operates under the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, with implementation through SIDBI.
  • SIDBI (Small Industries Development Bank of India) is a statutory financial institution that promotes, finances, and develops MSMEs and startups.
• Objectives
  • To accelerate the next phase of India’s startup growth.
  • To strengthen the domestic venture capital ecosystem.
  • To reduce early-stage funding gaps and high-risk capital constraints.
  • To promote deep-tech and technology-driven manufacturing innovation.
• Funding Mechanism: FoF 2.0 follows a “fund of funds” model, wherein government capital is invested in SEBI-registered Alternative Investment Funds (AIFs), which in turn invest in eligible startups.
  • The approach ensures professional fund management and wider capital mobilisation.
• Beneficiaries
  • Early-growth and deep-tech startups.
  • Technology-driven manufacturing enterprises.
  • Startups beyond major metropolitan cities.
  • Smaller and emerging AIFs which require anchor capital support.
• Significance
  • Built on FFS 1.0, which catalysed investments of over ₹25,500 crore in 1,370+ startups.
  • Promotes innovation in AI, robotics, biotech, clean-tech and advanced manufacturing.
  • Strengthens economic resilience, job creation, and India’s goal of becoming a global innovation hub under Viksit Bharat 2047.

Check Out UPSC CSE Books

Visit PW Store

About Alternative Investment Funds (AIFs)

• AIFs are investment vehicles regulated by the Securities and Exchange Board of India (SEBI).
  • As of February 2026, over 1,768 AIFs were registered in India.
• Role: They gather capital from high-net-worth individuals (HNIs) and institutional investors to invest in startups, mainly through Category I (Venture Capital, Angel Funds) and Category II (Private Equity/Debt).
• Significance: AIFs offer early-stage, growth, and expansion capital to businesses that are high-risk and non-traditional.
  • They often provide strategic mentorship along with funding.

DOWNLOAD PDF