The Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, has issued operational guidelines for the ₹10,000 crore Startup India Fund of Funds 2.0 (FoF 2.0), establishing a structured framework to improve capital deployment into India’s startup ecosystem.
The guidelines outline mechanisms for fund deployment, governance, and monitoring, with a focus on enhancing efficiency and widening access to funding across sectors, stages, and geographies.
Under the framework, the scheme will be implemented through commitments to SEBI-registered Category I and II Alternative Investment Funds (AIFs), which will invest in DPIIT-recognised startups.
This structure is expected to ensure disciplined capital allocation while mobilising private investment into the ecosystem.
The Small Industries Development Bank of India (SIDBI) has been designated as the initial implementation agency and will oversee execution through a structured process of AIF selection and monitoring.
DPIIT will also onboard an additional implementation agency to expand reach, enhance sectoral expertise, and build institutional capacities for managing such schemes.
To address funding gaps, the guidelines segment AIFs into specific categories, including deep-tech focused funds, micro venture capital funds for early-stage startups, manufacturing-focused funds, and sector-agnostic funds.
Each segment has defined parameters such as corpus size, government contribution limits, tenure, and minimum private capital mobilisation requirements.
Read also : India advances silicon photonics capability as indigenously developed PDK, test engine unveiled in Chennai
A two-stage selection process has been introduced, involving initial screening and due diligence by the implementation agency, followed by evaluation by a Venture Capital Investment Committee.
The committee, which will assess proposals based on the track record of the team, fund management capability, and investment strategy, includes industry and academic leaders such as Vallabh Bhansali, Dr Ashok Jhunjhunwala, Dr Renu Swarup, Dr Chintan Vaishnav, and Rajesh Gopinathan, along with representatives from the Implementation Agency, bringing a diverse perspective across deep tech, manufacturing, policy, and venture ecosystems.
According to a statement by the Commerce and Industry ministry, Startup India FoF 2.0 is designed to act as a catalyst rather than a direct investor, enabling multiplier effects through private capital participation.
The guidelines mandate minimum private capital mobilisation, reinforcing market-led investment discipline.
Provision has also been made to allocate a portion of returns towards ecosystem capacity-building initiatives such as mentorship, shared infrastructure, and ecosystem development interventions.
The scheme also enables co-investments and contributions from ministries, departments, and institutional investors in priority sectors.
The operational framework also incorporates flexibility to evolve based on implementation experience, ensuring responsiveness to emerging ecosystem needs.
According to the ministry, the Startup India FoF 2.0, through its structured operational design, is expected to significantly enhance the depth and quality of domestic venture capital, support innovation-driven enterprises, and strengthen India’s position as a leading global startup hub.
Read also : India’s textile exports grow 2.1% in FY26 to ₹3.16 lakh crore, garments remain top driver
