The Centre has introduced the Startup India Fund of Funds 2.0 (FoF 2.0) with a fresh corpus of Rs 10,000 crore to enhance venture and growth capital accessibility for startups nationwide. This initiative follows the success of the earlier Fund of Funds for Startups (FFS 1.0) launched in 2016 under the Startup India Action Plan to address funding gaps and stimulate domestic capital in the startup ecosystem.
The newly announced Rs 10,000 crore corpus will be allocated through commitments to eligible Alternative Investment Funds (AIFs) during the 16th and 17th Finance Commission cycles. The government aims for this move to improve capital availability, particularly for emerging and high-potential sectors within the startup ecosystem.
The fund will focus on investing in areas like deep technology, early growth-stage startups supported by smaller AIFs, and technology-driven and innovative manufacturing ventures. It will also back sector-agnostic and stage-agnostic startups, ensuring a comprehensive approach to funding innovation.
A rigorous selection process will be in place for selecting AIFs, overseen by a Venture Capital Investment Committee (VCIC) comprising experienced members from the startup ecosystem. Additionally, an Empowered Committee (EC) will be established to supervise the scheme’s implementation and performance.
Provisions for co-investment by the government and institutional investors are included in the framework, with safeguards to ensure proper governance. The Department for Promotion of Industry and Internal Trade (DPIIT) will release detailed operational guidelines, including the VCIC composition, in the near future. The Small Industries Development Bank of India (SIDBI) will serve as the primary Implementation Agency, commencing operationalization upon notification.
The government plans to designate another domestic implementation agency to aid in execution. Through FoF 2.0, the government will contribute to the corpus of SEBI-registered AIFs, which will, in turn, invest in startups recognized by the Centre.
