New Delhi: In a significant push to India’s innovation economy, the Union Cabinet chaired by Prime Minister Narendra Modi has approved the establishment of the Startup India Fund of Funds 2.0 (FoF 2.0) with a corpus of ₹10,000 crore, aimed at mobilising long-term domestic capital for the country’s startup ecosystem.
Announced by the Ministry of Commerce & Industry, the second iteration of the Fund of Funds seeks to address persistent funding gaps in high-risk and capital-intensive sectors, particularly deep tech and technology-driven manufacturing.
Launched under the broader Startup India initiative in 2016, India’s startup ecosystem has expanded dramatically over the past decade. From fewer than 500 startups in 2016, the country now hosts over 2 lakh startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT), with 2025 marking the highest-ever annual registrations.
The first Fund of Funds for Startups (FFS 1.0), also launched in 2016, committed its entire ₹10,000 crore corpus to 145 Alternative Investment Funds (AIFs). These AIFs have collectively invested more than ₹25,500 crore in over 1,370 startups spanning sectors such as artificial intelligence, robotics, clean tech, fintech, healthcare, space tech, and biotechnology.
Officials said FFS 1.0 played a catalytic role in crowding in private capital and strengthening India’s venture capital architecture, particularly for first-time founders.
What Changes in FoF 2.0
Unlike its predecessor, Startup India FoF 2.0 will adopt a more segmented and targeted funding approach.
Key thrust areas include:
Deep tech and advanced manufacturing: Directing patient, long-term capital toward breakthrough technologies requiring sustained R&D investment.
Early-growth stage support: Providing a safety net to reduce startup mortality due to funding constraints in the initial scale-up phase.
National reach: Encouraging investments beyond major metropolitan hubs to widen geographic participation in innovation.
Addressing high-risk capital gaps: Channeling capital to priority sectors critical for economic self-reliance.
Strengthening domestic VC base: Supporting smaller domestic venture funds to deepen India’s homegrown capital pools.
Policy analysts say the emphasis on domestic capital formation comes amid global venture funding volatility and tighter liquidity conditions.
Strategic Alignment with Viksit Bharat 2047
The government has positioned FoF 2.0 as a strategic instrument aligned with the vision of “Viksit Bharat @ 2047,” aiming to position India as a global innovation hub.
By supporting globally competitive technologies and scalable manufacturing startups, the fund is expected to boost job creation, strengthen supply-chain resilience, and accelerate innovation-led growth.
Industry stakeholders note that as Indian startups move from consumer internet models to deep-tech and industrial innovation, access to patient capital will be crucial. FoF 2.0 could therefore play a decisive role in the next phase of India’s startup evolution — shifting the narrative from unicorn creation to sustainable, technology-led economic transformation.
With ₹10,000 crore earmarked, the government is betting that catalytic public capital can once again crowd in significantly higher private investment, replicating — and potentially exceeding — the multiplier effect seen under the first fund.