New Delhi (Economy India): In a major boost to India’s rapidly expanding startup ecosystem, the Union Cabinet chaired by Narendra Modi has approved the establishment of Startup India Fund of Funds 2.0 (FoF 2.0) with a total corpus of ₹10,000 crore. The fund aims to mobilise long-term domestic capital and strengthen India’s venture capital landscape, with a special focus on deep-tech, technology-driven manufacturing, and early-stage startups.
The decision marks a critical step in accelerating the next phase of India’s innovation-led growth journey, building on nearly a decade of sustained policy support under the Startup India initiative.
Strengthening India’s Startup Growth Engine
The primary objective of Startup India FoF 2.0 is to catalyse venture capital funding across the country by investing in SEBI-registered Alternative Investment Funds (AIFs). By doing so, the government aims to address persistent capital gaps—particularly in high-risk, high-innovation sectors that require patient and long-term financing.
Since the launch of Startup India in 2016, India’s startup ecosystem has undergone a structural transformation. The number of startups recognised by the Department for Promotion of Industry and Internal Trade has grown from fewer than 500 to over 200,000, with 2025 recording the highest-ever annual startup registrations.
Building on the Success of Fund of Funds 1.0
Startup India FoF 2.0 builds upon the strong foundation laid by Fund of Funds for Startups (FoF 1.0), launched in 2016 to energise the domestic venture capital market.
Under FoF 1.0:
- The entire ₹10,000 crore corpus was allocated to 145 AIFs
- These funds invested over ₹25,500 crore in 1,370+ startups
- Key sectors included AI, robotics, cleantech, fintech, healthtech, agritech, manufacturing, space technology, biotechnology, and e-commerce
FoF 1.0 played a pivotal role in crowding in private capital, nurturing first-generation entrepreneurs, and establishing India as one of the world’s leading startup hubs.
Key Features of Startup India FoF 2.0
The newly approved FoF 2.0 adopts a more targeted and strategic funding approach, designed to unlock the next wave of innovation:
- Deep Tech & Advanced Manufacturing Focus
Prioritising high-technology domains that demand long-gestation capital and advanced R&D. - Early-Stage Founder Support
Providing a financial safety net to reduce early-stage failures due to capital constraints. - Pan-India Reach
Encouraging investments beyond major metros to promote innovation in Tier-II, Tier-III cities and emerging regions. - Bridging High-Risk Capital Gaps
Supporting strategic sectors critical to self-reliance, productivity growth, and economic resilience. - Strengthening Domestic VC Capacity
Special emphasis on nurturing smaller and first-time venture funds to deepen India’s local investment base.
Aligned with ‘Viksit Bharat @2047’ Vision
Startup India FoF 2.0 is expected to play a transformative role in reshaping India’s economic trajectory. By enabling globally competitive startups, the fund will help:
- Enhance India’s manufacturing and technology capabilities
- Generate high-quality employment
- Drive innovation-led, inclusive economic growth
- Position India as a global innovation and entrepreneurship hub
Aligned with the national vision of Viksit Bharat @2047, the approval of FoF 2.0 underlines the government’s continued commitment to empowering entrepreneurs and unlocking the full potential of India’s startup ecosystem.
(Economy India)
