Source: PIB
Subject: Economy
Context: The Government has officially notified the Startup India Fund of Funds 2.0 (FoF 2.0) with a ₹10,000 crore corpus to mobilize venture and growth capital for the domestic startup ecosystem.
About Startup India Fund of Funds 2.0 (FoF 2.0):
What it is?
- Startup India FoF 2.0 is a government-backed investment vehicle designed to catalyze domestic capital for startups by contributing to the corpus of SEBI-registered Alternative Investment Funds (AIFs). Unlike a direct investment fund, it acts as a Fund of Funds, meaning it invests in other venture capital funds which, in turn, invest in individual startups.
Launched in: The second phase (2.0) was notified on April 13, 2026, building on the original FFS launched in 2016.
Nodal Department: Department for Promotion of Industry and Internal Trade (DPIIT).
Aim and Objectives:
- To bridge the funding gap for early and growth-stage startups in India.
- To mobilize private venture capital by providing a cornerstone government commitment.
- To foster innovation-led growth specifically in globally competitive technologies and manufacturing.
Key Features:
- Total Corpus: ₹10,000 crore, spread across the 16th and 17th Finance Commission cycles.
- Target Segments: Focuses on deep tech, innovative manufacturing, and early growth-stage startups supported by smaller AIFs.
- Sector Agnostic: While prioritizing specific segments, the fund remains flexible to support startups across various sectors and stages.
- Selection Process: Follows a structured screening process involving the VCIC to ensure high-quality fund selection.
- Co-investment Framework: Includes provisions for the Government and institutional investors to co-invest under an umbrella framework with strict governance safeguards.
- Compliance: Funds must be SEBI-registered AIFs and invest in entities officially recognized as ‘startups’ by the Central Government.
Significance of FoF 2.0:
- By funding startups that build globally competitive products, the scheme reduces reliance on foreign technology and imports.
- It is expected to generate high-quality jobs by scaling up technology-driven manufacturing and services.
