Startup India Fund of Funds 2.0

Startup India Fund of Funds 2.0 (FoF 2.0) is a Government of India initiative approved by the Ministry of Commerce and Industry to strengthen the startup funding ecosystem by enabling access to venture capital across stages and sectors.

Unlike direct grant or equity programs, FoF 2.0 operates through a fund-of-funds model, where the government does not invest directly into startups. Instead, it contributes capital to SEBI-registered Alternative Investment Funds (AIFs), which then invest in DPIIT-recognized startups through equity and equity-linked instruments.

The scheme builds upon the original Fund of Funds launched in 2016 but expands its scope to address current ecosystem gaps. It is specifically structured to:

• Improve capital access for startups across early, growth, and sector-agnostic stages
• Encourage investment in deep tech and innovation-driven sectors that require long R&D cycles and higher capital
• Support the development of smaller venture capital funds (Micro VCs) that focus on early-stage startups
• Strengthen technology-driven manufacturing aligned with national priorities like “Make in India”

A key structural feature is its segmented investment approach, which channels capital into four targeted categories:

• Deep tech-focused funds
• Early-stage focused micro VCs
• Manufacturing and innovation-led startups
• Sector-agnostic funds

This makes FoF 2.0 less generic and more strategically aligned with India’s long-term innovation and industrial goals.

The program is particularly relevant for founders who:

• Are raising venture capital (not grants)
• Are building in capital-intensive or research-heavy sectors
• Need access to institutional investors via AIFs rather than direct government funding

Additionally, FoF 2.0 also allocates up to 5% of returns for ecosystem development, including mentorship, capacity building, workshops, and shared infrastructure indicating a broader intent beyond just capital deployment.

Overall, this scheme fits into the startup journey at the fundraising stage, acting as an indirect but significant enabler of venture funding through institutional channels.