Cabinet Clears ₹10,000 Crore Startup FoF 2.0
New Delhi: The Union Cabinet today approved the establishment of the Startup India Fund of Funds 2.0 (Startup India FoF 2.0) with a corpus of Rs. 10,000 crore to mobilise venture capital for India’s startup ecosystem. The decision is aimed at accelerating the next phase of the country’s innovation-driven growth by strengthening domestic capital flows and deepening the venture capital landscape.
The scheme is designed to mobilise long-term domestic capital, reinforce the venture capital ecosystem, and support innovation-led entrepreneurship across the country. The new fund builds on nearly a decade of efforts under the Startup India initiative, launched in 2016, which has seen India’s startup ecosystem expand from fewer than 500 startups to more than two lakh startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT). The year 2025 recorded the highest-ever annual startup registrations since the programme’s inception.
Startup India FoF 2.0 follows the implementation of the earlier Fund of Funds for Startups (FFS 1.0), launched in 2016 to address funding gaps and catalyse the domestic venture capital market. Under FFS 1.0, the entire corpus of Rs. 10,000 crore was committed to 145 Alternative Investment Funds (AIFs). These AIFs have collectively invested over Rs. 25,500 crore in more than 1,370 startups across 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. The first phase is credited with nurturing first-time founders, crowding in private capital and laying the foundation for a stronger domestic venture capital ecosystem.
While the first phase focused on building the ecosystem, the newly approved fund adopts a more targeted and segmented approach. It is intended to prioritise deep technology and technology-driven innovative manufacturing, particularly in high-technology areas that require patient, long-term capital. The scheme also seeks to support early-growth stage founders by providing a funding cushion to reduce early-stage failures arising from capital shortages. In addition, it aims to encourage investments beyond major metropolitan centres to promote wider geographic participation in the startup ecosystem and ensure that innovation extends to all parts of the country.
The new fund is also structured to address high-risk capital gaps by allocating more resources to priority sectors deemed significant for self-reliance and economic expansion. It seeks to strengthen India’s domestic venture capital base, with particular emphasis on supporting smaller funds to broaden and deepen the domestic investment landscape.
The government stated that Startup India FoF 2.0 is expected to advance India’s innovation-led growth agenda by enabling startups to develop globally competitive technologies, products, and solutions. The fund is projected to support manufacturing capabilities, enhance economic resilience, generate high-quality employment opportunities and reinforce India’s position as a global innovation hub.
The government said the fund is aligned with the national vision of Viksit Bharat @ 2047.
– global bihari bureau
