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Department for Promotion of Industry and Internal Trade (DPIIT) | Ministry of Commerce and Industry
The Union Cabinet has approved the establishment of the Startup India Fund of Funds 2.0 (Startup India FoF 2.0) with a total corpus of ₹10,000 crore to mobilize long-term venture capital for the nation’s innovation ecosystem. Building on the success of FFS 1.0—which catalyzed over ₹25,500 crore of investment into more than 1,370 startups—the 2.0 framework introduces a segmented approach specifically targeting Deep Tech, tech-driven innovative manufacturing, and early-growth stage founders. Since the launch of the Startup India initiative in 2016, the ecosystem has grown from fewer than 500 to over 2 lakh DPIIT-recognised startups, with 2025 marking the highest annual registrations to date. By prioritizing high-risk capital gaps and encouraging investments beyond major metros, the Fund aims to position India as a global innovation hub while advancing the national vision of Viksit Bharat @ 2047.
Key Pillars of the Startup India FoF 2.0 Framework
Deep Tech & Innovative Manufacturing: Directing patient, long-term capital toward breakthroughs in high-tech areas critical for self-reliance.
Early-Growth Stage Support: Providing a critical safety net for new ideas to reduce early-stage failures caused by lack of funding.
National Innovation Reach: Incentivizing venture capital investment beyond major metropolitan hubs to ensure thriving innovation across all regions.
Domestic VC Base Strengthening: Focusing on supporting smaller and domestic funds to bolster India’s internal investment landscape.
Leveraging FFS 1.0 Momentum: Building on a decade of efforts that supported 145 Alternative Investment Funds (AIFs) across sectors like AI, Space Tech, and Biotech.
What is a “Fund of Funds” (FoF)? A Fund of Funds is a strategic investment vehicle that does not invest directly in startups, but instead invests in other specialized venture capital funds, known as Alternative Investment Funds (AIFs). In the context of Startup India FoF 2.0, the ₹10,000 crore corpus acts as a “catalyst” or force-multiplier; by committing capital to smaller, specialized funds, the government “crowds in” private capital from other investors. This model ensures that for every rupee of government money, multiple rupees of private venture capital are mobilized, effectively addressing the “high-risk capital gap” that often prevents deep-tech and innovative manufacturing startups from scaling.
Policy Relevance
The launch of FoF 2.0 represents a transition from ecosystem building to “Strategic Industrial Scaling”, ensuring that India’s 2 lakh startups can move from software-as-a-service (SaaS) into high-precision, deep-tech manufacturing.
Decoupling from Foreign Venture Dependence: By mobilizing ₹10,000 crore in domestic long-term capital, India reduces its “capital vulnerability,” ensuring that deep-tech startups are not forced to “flip” their headquarters abroad to access patient funding.
Building a National “IP Fortress”: Prioritizing Deep Tech ensures that breakthroughs in AI, Robotics, and Biotech—utilizing India’s 2.5x global AI skill penetration—result in Indian-owned patents, which is critical for long-term economic sovereignty.
Reversing the “Brain Drain” into “Brain Gain”: The fund acts as a pull factor for high-tier Indian researchers and scientists globally, providing the high-risk capital necessary to return and build capital-intensive manufacturing units within India.
Accelerating the “Viksit Bharat” Productivity Frontier: Moving capital into tech-driven manufacturing helps India bypass the middle-income trap by significantly increasing the value-added per worker in the electronics and high-tech sectors.
Standardizing Global Tech Governance: As Indian startups scale via FoF 2.0, India gains a stronger seat at international standards-setting bodies (like the ITU for ION-2030), ensuring global tech protocols align with Indian industrial interests.
Relevant Question for Policy Stakeholders: What Sovereign IP benchmarks should the DPIIT establish to ensure that startups funded under FoF 2.0 retain their primary patents and data assets within Indian jurisdiction?
Follow the full news here: PIB: Cabinet Approves Startup India Fund of Funds 2.0