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The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the launch of the Startup India Fund of Funds 2.0 (FoF 2.0) with a total corpus of ₹10,000 crore. The move aims to strengthen India’s startup ecosystem by mobilising venture capital, especially for deeptech and technology-driven manufacturing ventures.
This strategic decision marks a significant step in advancing India’s innovation-driven growth model and building long-term economic resilience.
Building on the Startup India Legacy
The new fund builds upon nearly a decade of policy support under the Startup India initiative, launched in 2016.
When Startup India was introduced, India had fewer than 500 recognised startups. Today, the country boasts 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, reflecting the rapid expansion of India’s entrepreneurial ecosystem.
Recap: Fund of Funds for Startups (FFS 1.0)
The earlier Fund of Funds for Startups (FFS 1.0) was launched in 2016 to bridge structural funding gaps and encourage domestic venture capital participation.
Key highlights of FFS 1.0:
- ₹10,000 crore corpus fully committed
- Investments routed through 145 SEBI-registered Alternative Investment Funds (AIFs)
- Over ₹25,500 crore mobilised collectively
- More than 1,370 startups funded
The investments spanned across multiple high-growth sectors, including:
- Artificial Intelligence (AI)
- Robotics
- Agriculture
- Clean Tech
- Fintech
- Healthcare
- Manufacturing
- Space Tech
- Biotechnology
- E-commerce and Consumer Services
According to the government, FFS 1.0 played a crucial role in supporting first-time founders, attracting private capital, and laying the foundation for India’s venture capital ecosystem.
What is Startup India FoF 2.0?
Startup India FoF 2.0 will continue the model of investing in SEBI-registered AIFs, which will then deploy funds into startups. However, the second phase introduces a more focused and segmented approach.
Key Objectives of FoF 2.0:
1. Focus on Deeptech and Advanced Manufacturing
The fund will prioritise:
- Deep technology startups
- Innovation-driven manufacturing
- High-tech research-led ventures
These sectors typically require patient, long-term capital due to extended product development cycles and higher risks.
2. Support Early-Growth Stage Startups
FoF 2.0 aims to reduce startup failures caused by limited early-stage funding access by backing early-growth founders.
3. Strengthen Domestic Venture Capital
The scheme seeks to:
- Support smaller and emerging venture funds
- Expand capital availability beyond major metro cities
- Reduce reliance on foreign capital
4. Address High-Risk Capital Gaps
The fund will target priority sectors aligned with India’s self-reliance (Atmanirbhar Bharat) vision and long-term economic development goals.
Why This Matters for India’s Startup Ecosystem
India is currently the world’s third-largest startup ecosystem. However, deeptech and manufacturing startups often struggle to raise capital due to longer gestation periods and higher technology risks.
With FoF 2.0:
- High-quality jobs are expected to increase
- Manufacturing capability will be strengthened
- Globally competitive technologies can emerge
- Economic resilience will improve
- India’s position as a global innovation hub will be reinforced
The government believes that this ₹10,000 crore fund will accelerate innovation-led growth and create a stronger, more self-reliant startup ecosystem.
Final Take
The approval of Startup India Fund of Funds 2.0 signals the government’s continued commitment to nurturing innovation and supporting entrepreneurs. By focusing on deeptech and advanced manufacturing, FoF 2.0 could play a transformative role in shaping the next phase of India’s startup journey.
As India moves toward becoming a $5 trillion economy, policy-backed capital mobilisation like this could become a critical catalyst for sustainable and inclusive growth.