Articles

In a significant step to strengthen India’s innovation ecosystem, the Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, has approved the Startup India Fund of Funds (FoF) 2.0 with a total corpus of ₹10,000 crore. The new fund is aimed at mobilising venture capital to support the next generation of Indian startups, particularly in deep-tech, deep-science and technology-driven sectors.

Launched under the Startup India initiative, FoF 2.0 is designed to accelerate India’s startup journey by attracting long-term domestic capital, strengthening the venture capital ecosystem, and supporting innovation-led entrepreneurship across the country.

Startup India FoF 2.0 builds upon the success of the Fund of Funds for Startups (FFS 1.0) launched in 2016. The first phase was created to bridge funding gaps and catalyse the domestic venture capital market.

Under FFS 1.0:

• The entire ₹10,000 crore corpus was committed to 145 Alternative Investment Funds (AIFs).

• These AIFs have collectively invested over ₹25,500 crore in more than 1,370 startups.

• Investments spanned sectors such as agriculture, artificial intelligence, robotics, automotive, clean technology, consumer services, e-commerce, education, fintech, food and beverages, healthcare, manufacturing, space technology and biotechnology.

FFS 1.0 played a crucial role in supporting first-time founders, attracting private capital, and laying the foundation of a robust venture capital ecosystem in India.

Focus Areas of Startup India FoF 2.0

While the first phase strengthened the ecosystem, FoF 2.0 aims to scale it to the next level through a more targeted approach. Key focus areas include:

• Deep-tech and innovative manufacturing: Supporting breakthrough technologies that require sustained and patient capital.

• Early-growth stage startups: Providing funding support to promising founders to reduce early-stage failures caused by lack of access to capital.

• National reach: Encouraging investments beyond metropolitan cities to ensure that innovation flourishes across regions.

• Bridging high-risk capital gaps: Channeling funds into priority sectors critical for self-reliance and economic growth.

• Strengthening domestic venture capital: Supporting smaller and emerging funds to deepen India’s investment landscape.

Startup India FoF 2.0 is expected to contribute significantly to India’s economic transformation by nurturing globally competitive technologies, strengthening manufacturing capabilities, generating high-quality employment, and enhancing economic resilience.