Union Cabinet approves ₹10,000 crore Startup India Fund of Funds 2.0

The Union Cabinet, led by Prime Minister Narendra Modi, has approved the establishment of the Startup India Fund of Funds 2.0 (FoF 2.0) with a significant corpus of ₹10,000 crore. This initiative aims to mobilize long-term domestic venture capital to support India’s vibrant startup ecosystem. Designed to accelerate innovation-led entrepreneurship, the fund seeks to address funding gaps in priority sectors. It specifically targets deep-tech, manufacturing, and early-growth startups, building on the success of the original Startup India initiative launched in 2016. This earlier initiative transformed India into one of the world’s largest startup ecosystems, growing from fewer than 500 startups to over 2 lakh recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) by 2025, which saw the highest annual registrations to date.

The Startup India Fund of Funds 2.0 builds upon the achievements of the Fund of Funds for Startups (FFS 1.0), introduced in 2016. FFS 1.0 aimed to catalyze domestic venture capital participation and bridge early-stage funding gaps. It successfully committed the entire ₹10,000 crore corpus to 145 Alternative Investment Funds (AIFs), which have collectively invested over ₹25,500 crore in more than 1,370 startups across diverse sectors, including agriculture, artificial intelligence, robotics, automotive, clean technology, and more. This established a crucial foundation for future funding initiatives.

The implementation of Startup India FoF 2.0 is expected to adopt a targeted funding approach, with a focus on deep technology and technology-driven manufacturing ventures that require patient, long-term capital. The government aims to encourage investment beyond major metropolitan areas, strengthening the domestic venture capital base, especially for smaller funds. This initiative aligns with strategic sectors that support economic self-reliance and long-term growth, highlighting the government’s commitment to fostering entrepreneurship and innovation.

The anticipated benefits of this fund extend beyond financial support for startups. By prioritizing the development of globally competitive technologies and products, the initiative is expected to significantly contribute to job creation and enhance manufacturing capabilities across the country. This aligns with India's broader vision of becoming a global innovation hub and reinforces the government's focus on entrepreneurship as a key driver of economic growth.

Looking ahead, the Startup India Fund of Funds 2.0 represents a pivotal step toward realizing a self-reliant and prosperous India. The government envisions this initiative as a cornerstone for future economic development, with milestones that include supporting a greater number of startups and fostering innovation that meets global standards. The fund’s establishment underscores the importance of sustained investment in the startup ecosystem as India aims for Viksit Bharat @ 2047.