The Union Cabinet, chaired by Prime Minister Narendra Modi, 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. The initiative aims to mobilise venture capital for strengthening India’s startup ecosystem.
The scheme has been designed to accelerate the next phase of India’s startup journey by attracting long-term domestic capital, strengthening the venture capital framework, and promoting innovation-driven entrepreneurship across the country.
Launched under the Startup India initiative, Startup India FoF 2.0 builds upon nearly a decade of consistent efforts to position India among the world’s leading startup nations. Since the launch of Startup India in 2016, the country’s startup ecosystem has undergone remarkable growth — expanding from fewer than 500 startups to over 2 lakh startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT). Notably, 2025 recorded the highest-ever annual startup registrations.
The first Fund of Funds for Startups (FFS 1.0), launched in 2016 with a corpus of ₹10,000 crore, committed funds to 145 Alternative Investment Funds (AIFs). These AIFs collectively invested more than ₹25,500 crore in over 1,370 startups across diverse sectors including agriculture, artificial intelligence, robotics, automotive, clean technology, consumer goods and services, e-commerce, education, fintech, food and beverages, healthcare, manufacturing, space technology, and biotechnology, among others.
Startup India FoF 2.0 follows the strong performance of FFS 1.0, which was introduced to address funding gaps and catalyse the domestic venture capital market for startups.
Key Features of the Scheme
While the first phase focused on building the ecosystem, Startup India FoF 2.0 is aimed at elevating Indian innovation to the next level. The new fund adopts a targeted and segmented funding approach to support:
- Deep-tech and technology-driven innovative manufacturing: Prioritising high-tech breakthroughs that require patient, long-term capital investment.
- Early-growth stage founders: Providing financial support to new and innovative ideas, thereby reducing early-stage failures due to funding constraints.
- National outreach: Promoting investments beyond major metropolitan cities to ensure innovation flourishes across all regions of the country.
- Addressing high-risk capital gaps: Channelising greater capital into priority sectors critical for self-reliance and economic growth.
- Strengthening domestic venture capital: Supporting smaller domestic funds to enhance India’s internal investment ecosystem.
Startup India FoF 2.0 is expected to play a transformative role in shaping India’s economic trajectory. By supporting startups that develop globally competitive technologies, products, and solutions, the fund will contribute to enhancing economic resilience, boosting manufacturing capacity, generating high-quality employment opportunities, and positioning India as a global innovation hub.
It’s great to see the government taking a proactive step with Startup India FoF 2.0, especially given the increasing focus on building a robust venture capital ecosystem. The move to attract long-term domestic capital will likely help bridge the funding gap that many startups face, particularly in the early stages. This kind of strategic support can truly empower innovation-driven entrepreneurship across the country.
Agreed. Expanding domestic capital pools and supporting early-stage funding is crucial for nurturing innovation and strengthening India’s startup ecosystem.