Synopsis
This second tranche of the Fund of Funds will seek to mobilise venture capital and support deeptech, tech-driven, innovative manufacturing startups, and early-growth stage enterprises.It builds on the strong performance of the first edition of the programme, Fund of Funds for Startups (FFS 1.0), launched in 2016 under the Startup India Action Plan to address funding gaps and catalyse domestic capital for startups, the commerce and industry ministry said.
The scheme will contribute to the corpus of Sebi-registered alternative investment funds (AIFs) for investing in equity and equity-linked instruments of entities recognised as startups by the central government.
“We are particularly encouraged by the deliberate focus on deeptech, early growth-stage companies, and technology-driven manufacturing. These are precisely the segments where patient, long-term capital has historically been hardest to access, and where the multiplier effect of government-backed funding is most powerful,” said Shweta Rajpal Kohli, president of the Startup Policy Forum, a lobby group that represents new-age companies such as Cars24, Ixigo, Razorpay, Cred and Snabbit.
The corpus is divided into four segments, including dedicated support for deep-tech and manufacturing startups.
The first segment focusses on AIFs supporting deeptech or startups engaged in developing novel solutions addressing complex problems that involve longer R&D cycles and higher costs. The second seeks to provide capital to smaller AIFs (micro VCs) supporting early growth stage startups. The third segment will support tech-driven innovative manufacturing startups, while the fourth will cater to AIFs supporting sector- or stage-agnostic startups.
“The pipeline is good. The challenge is moving companies through validation and early deployment in India, instead of relying on overseas markets for first scale. So, the focus is well placed,” Nasscom vice-president Ashish Aggarwal said. “The test now is execution—fund selection and deployment—so that this capital translates into products, IP and companies that scale from India.”
The operational guidelines for FoF 2.0 will cover detailed segment-wise provisions, eligibility criteria for AIFs and startups, selection and monitoring processes, reporting and assessment requirements, mechanism for disbursal of funds to implementation agencies and AIFs, and composition of the investment committee.
The Department for Promotion of Industry and Internal Trade (DPIIT) will issue the guidelines. It will also include aspects important to realise the expanded scope of the scheme.
A committee chaired by the DPIIT secretary will be constituted to monitor the implementation and performance of the scheme.
( Originally published on Apr 13, 2026 )
